Exhibit 10.10
2.6.b(3)
EXECUTION COPY
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WAREHOUSE NOTE PURCHASE AND SECURITY AGREEMENT
among
NHELP-III, INC.,
as the Issuer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as the Trustee
and
DELAWARE FUNDING CORPORATION,
as a Note Purchaser
and
THREE RIVERS FUNDING CORPORATION,
as a Note Purchaser
and
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK,
as DFC Agent and Administrative Agent
and
MELLON BANK, N.A.,
as TRFC Agent
Dated as of September 1, 1999
U.S. $400,000,000
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms..................................................................... 1
Section 1.02. Other Terms............................:.................................................. 23
Section 1.03. Computation of Time Periods............................................................... 23
ARTICLE II
THE FACILITY
Section 2.01. Note Issuances and Purchases.............................................................. 24
Section 2.02. The Initial Note Issuance and Subsequent Note Issuances................................... 25
Section 2.03. Termination or Reduction of the Facility Limit............................................ 26
Section 2.04. Collection Account........................................................................ 26
Section 2.05. Transfers from Collection Account......................................................... 26
Section 2.06. Cash Reserve Account...................................................................... 28
Section 2.07. Transfers from the Cash Reserve Account................................................... 28
Section 2.08. Management of Collection Account and Cash Reserve Account................................. 28
Section 2.09. Pledged Collateral Assignment of the Transaction Documents................................ 29
Section 2.10. Grant of a Security Interest.............................................................. 29
Section 2.11. Evidence of Debt.......................................................................... 30
Section 2.12. Special Provisions Governing Note Purchases............................................... 30
Section 2.13. Payments by the Issuer.................................................................... 31
Section 2.14. Payment of Stamp Taxes, Etc................................................................ 31
Section 2.15. Sharing of Payments, Etc................................................................... 31
Section 2.16. Yield Protection.......................................................................... 32
ARTICLE III
THE NOTES
Section 3.01. Form of Notes Generally................................................................... 34
Section 3.02. Securities Legend......................................................................... 34
Section 3.03. Priority.................................................................................. 35
Section 3.04. Execution, Delivery and Dating............................................................ 35
Section 3.05. Registration, Registration of Transfer and Exchange, Transfer Restrictions................ 35
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes............................................... 36
Section 3.07. Persons Deemed Owners..................................................................... 37
Section 3.08. Cancellation.............................................................................. 37
ARTICLE IV
CONDITIONS TO NOTE PURCHASES
Section 4.01. Conditions Precedent to Initial Issuance.................................................. 37
Section 4.02. Conditions Precedent to All Note Purchases................................................ 37
ARTICLE V
REPRESENTATIONS AND WARRANTIES............................................................................ 38
ARTICLE VI
GENERAL COVENANTS OF THE ISSUER
Section 6.01. General Covenants......................................................................... 41
Section 6.02. Acquisition, Collection and Assignment of Student Loans................................... 45
Section 6.03. Enforcement of Financed Loans............................................................. 46
Section 6.04. Enforcement of Servicing Agreements....................................................... 46
Section 6.05. Administration and Collection of Financed Loans........................................... 46
Section 6.06. Amendment of Form of Sale and Purchase Agreement.......................................... 47
Section 6.07. Custodian................................................................................. 47
Section 6.08. Prepayments and Refinancing............................................................... 47
Section 6.09. Periodic Reporting........................................................................ 47
Section 6.10. UCC Matters; Protection and Perfection of Pledged Collateral; Delivery of Documents....... 48
Section 6.11. Obligations of the Issuer With Respect to Pledged Collateral.............................. 49
Section 6.12. Collateral Call........................................................................... 49
Section 6.13. Guarantor Limitations..................................................................... 49
ARTICLE VII
EVENTS OF DEFAULT......................................................................................... 49
ARTICLE VIII
TRUSTEE
Section 8.01. Acceptance of Trust....................................................................... 52
Section 8.02. Trustee's Right to Reliance............................................................... 53
Section 8.03. Compensation of Trustee................................................................... 53
Section 8.04. Resignation of Trustee.................................................................... 53
Section 8.05. Removal of Trustee........................................................................ 54
Section 8.06. Successor Trustee......................................................................... 54
Section 8.07. Manner of Vesting Title in Trustee........................................................ 54
Section 8.08. Servicing Agreement....................................................................... 55
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Section 8.09. Trustee Covenants with Respect to "Eligible Lender" Status................................ 55
Section 8.10. Trustee's Status as an "Eligible Lender".................................................. 55
ARTICLE IX
INDEMNIFICATION........................................................................................... 56
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments and Waivers.................................................................... 57
Section 10.02. Notices, Etc.............................................................................. 58
Section 10.03. No Waiver; Remedies....................................................................... 58
Section 10.04. Binding Effect; Assignability............................................................. 58
Section 10.05. Survival.................................................................................. 59
Section 10.06. Governing Law; Severability............................................................... 59
Section 10.07. Governing Law; Jury Waiver................................................................ 59
Section 10.08. Costs, Expenses and Taxes................................................................. 59
Section 10.09. Recourse Against Certain Parties.......................................................... 60
Section 10.10. Execution in Counterparts; Severability; Integration...................................... 60
Section 10.11. Confidentiality........................................................................... 60
Section 10.12. No Proceedings............................................................................ 61
Section 10.13. Section Titles............................................................................ 61
Section 10.14. Entire Agreement.......................................................................... 61
ARTICLE XI
THE AGENTS
Section 11.01. Authorization and Action of Administrative Agent.......................................... 62
Section 11.02. Authorization and Action of Agents........................................................ 62
Section 11.03. Agency Termination........................................................................ 62
Section 11.04. Agents' Reliance, Etc..................................................................... 62
Section 11.05. Administrative Agent, Agents, and Affiliates.............................................. 63
Section 11.06. [Reserved]................................................................................ 63
Section 11.07. Purchase Decision......................................................................... 63
Section 11.08. Successor Agents.......................................................................... 63
EXHIBIT A FORM OF SALE AND PURCHASE AGREEMENT
EXHIBIT B FORM OF VALUATION AGENT AGREEMENT
EXHIBIT C DRAW NOTICE
EXHIBIT D MONTHLY REPORT
EXHIBIT E-1 FORM OF ASSET COVERAGE RATIO CERTIFICATE
EXHIBIT E-2 FORM OF CASH RELEASE CERTIFICATE
EXHIBIT F TRUSTEE'S FEE LETTER AGREEMENT
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EXHIBIT G COPIES OF SERVICING AND CUSTODIAN AGREEMENTS
EXHIBIT H FORM OF NOTE
EXHIBIT I FORM OF SUMMARY OF SERVICER REPORT
EXHIBIT J FORM OF REPORT ON BALANCES IN COLLECTION ACCOUNT AND
CASH RESERVE ACCOUNT AND LIABILITIES
EXHIBIT K ADDITIONAL CLOSING ITEMS
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THIS WAREHOUSE NOTE PURCHASE AND SECURITY AGREEMENT (this "Agreement")
is made as of September 1, 1999, among: NHELP-III, INC., a corporation duly
organized under the laws of the state of Nevada (the "Issuer"); DELAWARE FUNDING
CORPORATION, a Delaware corporation ("DFC"); THREE RIVERS FUNDING CORPORATION, a
Delaware corporation ("TRFC"); XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, a New
York banking corporation, as DFC Agent (in such capacity, the "DFC Agent") and
Administrative Agent (in such capacity, the "Administrative Agent"); MELLON
BANK, N.A., a national banking association, as TRFC Agent (the "TRFC Agent") and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, as
eligible lender and trustee (the "Trustee").
PRELIMINARY STATEMENTS
1. DFC and TRFC (each, a "Conduit Note Purchaser") are special
purpose corporations engaged in the business of issuing promissory notes in the
domestic commercial paper market and using the proceeds from the sale of such
commercial paper to acquire interests in financial assets from various sellers
from time to time, pursuant to one or more facilities among each seller of
financial assets and the Conduit Note Purchaser, or to purchase notes of certain
entities for the purpose of financing financial assets of such entities.
2. The Issuer proposes to purchase from time to time certain
Eligible Loans (as hereinafter defined) in accordance with various Sale and
Purchase Agreements (as hereinafter defined) (such purchases constituting the
"Transactions").
3. The Issuer desires to fund the Transactions through the
issuance of Notes and sale of the same to the Note Purchasers (and other Note
Purchasers) up to the Facility Limit on the terms and conditions set forth
herein.
4. To provide liquidity support to the Conduit Note Purchasers in
connection with the Notes purchased by them hereunder, the Conduit Note
Purchasers may, from time to time, assign all or a part of such Notes or assign
interests therein or the commitments to purchase such Notes to certain financial
institutions pursuant to the terms of the Liquidity Agreements referred to
below, and as a result of such assignment, such financial institutions would
become Note Purchasers hereunder.
5. Each of the DFC Agent and the TRFC Agent is willing to act as
agent on behalf of its related Conduit Note Purchaser and Liquidity Provider(s)
pursuant to this Agreement and the applicable Liquidity 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.
(a) Certain capitalized terms used throughout this
Agreement are defined above or in this Section 1.01.
'
(b) 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).
"Administrative Agent" means Xxxxxx Guaranty Trust Company of
New York, and its successors and assigns in its capacity as
administrative agent for DFC, the DFC Agent, the DFC Liquidity
Providers, TRFC, the TRFC Agent and the TRFC Liquidity Providers.
"Administrative Agent Fee" means, for each Interest Period,
the per annum fee paid to the Administrative Agent and agreed to from
time to time and as set forth in a letter between the Issuer and the
Administrative Agent, payable monthly in arrears on each Settlement
Date.
"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 each Liquidity Provider and any
assignee or participant of any Liquidity 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.
"Agent" means the DFC Agent, the TRFC Agent or the
Administrative Agent, as applicable, or the successor or assign of any
of them.
"Aggregate 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.
"Aggregate Market Value" means, as of any date of
determination, the sum of (a) with respect to assets in the Trust
Estate 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 to such date, (b) with respect
to assets in the Trust Estate, 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 Issuer and not yet
transferred to the Trustee.
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"Aggregate Note Balance" means the aggregate principal amount
of all Notes Outstanding at the date of determination after giving
effect to all distributions of principal and Note Purchases on such
date of determination.
"Agreement" means this Warehouse Note Purchase and Security
Agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time hereafter.
"Agreement and Acknowledgement" means the Agreement and
Acknowledgement Relating to Student Loan Servicing Agreement dated as
of September 1, 1999, by and among the Issuer, the Note Purchasers,
each Agent and Great Lakes Higher Education Servicing Corporation.
"Alternate Rate" means the higher of (a) the rate of interest
most recently announced by the Administrative Agent in New York, New
York, as its "prime rate" or (b) rate of interest most recently
announced by the Federal Reserve Bank in New York, New York, as the
"federal funds rate" + .50%. The Alternate Rate is not necessarily
intended to be the lowest per annum rate of interest determined by the
Administrative Agent in connection with extensions of credit. The
Alternate Rate shall be computed on the basis of a 365 or, when
applicable, 366-day year, and shall change from time to time as the
Administrative Agent's prime rate changes.
"Asset Coverage Ratio" means, as of the date of any Valuation
Report, the ratio of (a) the Aggregate Market Value of assets in the
Trust Estate as of such date to (b) the Liabilities as of such date.
"Authorized Officer of the Issuer" means the Issuer's
president, chief financial officer or any 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.
"Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which the Issuer or any ERISA
Affiliate of the Issuer is, or at any time during the immediately
preceding six years was, an "employer" as defined in Section 3(5) of
ERISA.
"Business Day" means a day of the year other than a Saturday
or a Sunday on which (a) banks are not authorized or required to close
in New York City, (b) the DFC Agent at the DFC Agent Payment Office is
open for business and (c) the TRFC Agent at the TRFC Agent Payment
Office is open for business; provided, however, if the term "Business
Day" is used in connection with the 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 third Business Day preceding the
end of each month.
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"Calculation Period" means the calendar month in which each
Calculation Date occurs.
"Cash Reserve Account" means the special account created
pursuant to Section 2.06 hereof.
"Cash Reserve Requirement" means, on any Issuance Date,
one-half of one percent (0.50%) of the aggregate principal amount of
Notes issued on such date other than in connection with a Rollover Note
Purchase; provided, however, that in the event that the aggregate
outstanding principal amount of Financed Loans that are unsubsidized
Xxxxxxxx Loans in forbearance, grace or deferment exceeds 50% of the
aggregate outstanding principal amount of all Financed Loans
immediately following any Note Purchase, the "Cash Reserve Requirement"
shall be an amount determined by the Administrative Agent after
consultation with the Issuer.
"Closing Date" means September 16, 1999.
"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.
"Collections" means, (a) all revenues 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, finance charges and payments representing the
repurchase of any Financed Loan or rebate of premium thereon pursuant
to a Sale and Purchase Agreement) received or deemed to have been
received pursuant to Section 2.04 and (b) all other cash collections,
tax refunds and other cash proceeds of the Pledged Collateral.
"Commitment" means the obligation of the Note Purchasers to
fund Note Purchases.
"Commitment Fee" means, for each Interest Period and each
Agent, the per annum fee agreed to from time to time and as set forth
in the Fee Letter between the Issuer and the applicable Agent, payable
monthly in arrears on each Settlement Date to such Agent.
"Conduit Note Purchaser" means each of DFC, TRFC and any
successors or assigns (subject to Section 10.04 hereof) that are
special purpose corporations or other entities that become parties to
this Agreement which obtain funds to purchase financial assets from the
issuance of CP.
"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
4
Loans made by the Department or Xxxxxxxx Loans in accordance with the
Higher Education Act.
"CP" means the commercial paper notes issued by DFC or TRFC or
any assignee (subject to Section 10.04 hereof) of either of them which
is a Conduit Note Purchaser from time to time in the United States
commercial paper market.
"Custodian" means, individually or collectively, UNIPAC
Service Corporation, Great Lakes Higher Education Servicing
Corporation, InTuition, Inc., United Student Aid Funds, Inc. and each
additional Servicer or bailee with which the Issuer has entered into a
Custodian Agreement.
"Custodian Agreement" means, individually or collectively, (a)
the Custodian Agreement dated as of September 16, 1999, among the
Issuer, the Trustee and UNIPAC Service Corporation, (b) the Custodian
Agreement dated as of September 16, 1999, among the Issuer, the Trustee
and Great Lakes Higher Education Servicing Corporation, (c) the
Custodian Agreement dated as of September 16, 1999, among the Issuer,
the Trustee and InTuition, Inc., (d) the Custodian Agreement dated as
of September 16,1999, among the Issuer, the Trustee and United Student
Aid Funds, Inc. and (e) each additional or successor custodian
agreement entered into among the Issuer, the Trustee and a Custodian
and approved by the Required Note Purchasers.
"Custodian Fees" means the fees, expenses and charges of the
Custodian pursuant to the 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 the number of days
past due from the original due date thereof as allowed by the terms of
the Higher Education Act (which number of days, as of the Closing Date,
is 270), 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
5
payment defaults continuing for a period of not more than the number of
days past due from the original due date thereof as allowed by the
terms of the Higher Education Act).
"Deferment" means the period permitted by the Higher Education
Act and the policies of applicable Guarantor as being a period during
which a borrower under a Student Loan may postpone making payments of
principal or interest.
"Department" means the United States Department of Education,
or any successor thereto or to the functions thereof.
"DFC" means Delaware Funding Corporation and its successors
and assigns.
"DFC Agent" means Xxxxxx Guaranty Trust Company of New York,
and its successors and assigns, in its capacity as agent of DFC and the
DFC Liquidity Providers pursuant to the DFC Asset Purchase Agreement or
any other Liquidity Agreement to which DFC and the DFC Agent are
parties.
"DFC Agent Payment Office" means 000 Xxxxxxx Xxxxxxxxxx Xxxx,
Xxxxxx, XX 00000.
"DFC Asset Purchase Agreement" means the Asset Purchase
Agreement dated as of September 16, 1999, among DFC, each of the
Liquidity Providers named therein and the DFC Agent, as the same may be
amended, restated, supplemented or otherwise modified from time to time
hereafter.
"DFC Liquidity Providers" means the Liquidity Providers under
the DFC Asset Purchase Agreement or other Liquidity Agreement as to
which DFC and the DFC Agent are parties.
"Due Diligence Requirements" means the due diligence
requirements established from time to time pursuant to the Higher
Education Act and any regulations promulgated by the Secretary of
Education thereunder from time to time regarding the activities
required to be performed by or on behalf of a lender with respect to
delinquent or defaulted Loans, including the requirements set forth in
34 C.F.R. Section 682.411.
"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 Secretary of
Education and the applicable Guarantor.
"Eligible Lender" means any "eligible lender," as defined in
the Higher Education Act, and which has received an eligible lender
designation from the Guarantor with respect to Guaranteed Loans.
6
"Eligible Loan" means a Student Loan:
(a) which was originated or acquired by the Issuer in the
ordinary course of its business and was originated in the United
States, its territories or possessions;
(b) the payments under which constitute an account or
general intangible as defined in the UCC as in effect in the
jurisdiction that governs the perfection of the interests of the Issuer
therein and the perfection of the Trustee's interest therein under this
Agreement and which has only one set of original documentation;
(c) of which the borrower is an Eligible Borrower
attending an Eligible Institution;
(d) if such Student Loan is a subsidized Xxxxxxxx Loan,
of which such Student Loan qualifies the holder thereof to receive
Interest Subsidy Payments and Special Allowance Payments from the
Department; if such Student Loan is a Consolidation Loan, of which such
Student Loan qualifies the holder thereof to receive Interest Subsidy
Payments and Special Allowance Payments from the Department to the
extent applicable; and if such Student Loan is a PLUS/SLS or an
unsubsidized Xxxxxxxx Loan, of which such Student Loan qualifies the
holder thereof to receive Special Allowance Payments from the
Department to the extent applicable;
(e) at the time of purchase with proceeds from a Note
Purchase, which 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 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 Issuer, 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
Issuer is not in default in any material respect in the performance of
any covenants and agreements made in the applicable Guarantee
7
Agreement, and (iii) with respect to which all amounts due and payable
to the Department 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 an eligible Servicer, with respect to which the Issuer
has executed and delivered a Custodian Agreement, (ii) with respect to
which the Issuer 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;
(l) if such Student Loan is a Proprietary Loan, the
outstanding Principal Balance of which when added to the outstanding
Principal Balance of all other Financed Loans that are Proprietary
Loans does not exceed 20% of the aggregate outstanding Principal
Balance of all Financed Loans;
(m) if such Student Loan is a rehabilitated Consolidation
Loan, the outstanding Principal Balance of which when added to the
outstanding Principal Balance of all other Financed Loans that are
rehabilitated Consolidation Loans does not exceed 3% of the aggregate
outstanding Principal Balance of all Financed Loans; and
(n) if such Student Loan is serviced by a Servicer for
which the reporting of financial information concerning such Servicer
to the Agents is not permitted under its Servicing Agreement, the
outstanding Principal Balance of which when added to the aggregate
outstanding Principal Balance of all other Financed Loans serviced by
such Servicer or other Servicers for which the reporting of financial
information to the Agents is not permitted under their Servicing
Agreements 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 Issuer; (b) a trade or business
(whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with the Issuer or (c) a member of the
same affiliated service group (within the meaning of Section 414(m) of
the Code) as the Issuer, any corporation described in clause (a) above
or any trade or business described in clause (b) above.
"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
8
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
Section 7.01.
"Facility Amount" means at any time the aggregate principal
amount of outstanding Notes purchased by the Note Purchasers under this
Agreement, which amount shall not exceed the Facility Limit.
"Facility Limit" means, at any time, $400,000,000 as such
amount may be adjusted from time to time pursuant to Section 2.03;
provided, however, that at all times on or after the termination of the
Revolving Period, the "Facility Limit" shall mean the Facility Amount.
"Federal Reimbursement Contracts" means any agreement between
any Guarantor 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 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.
"Fee Letter" means that certain letter agreement, dated as of
the Closing Date, by and among the Issuer, the DFC Agent and the TRFC
Agent, as the same may be amended from time to time.
"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,
9
Federal Consolidation Loans authorized under Section 428C thereof and
Unsubsidized Xxxxxxxx Loans authorized under Section 428H thereof.
"Financed Loans" means any Eligible Loans purchased by the
Issuer from a Seller pursuant to a Sale and Purchase Agreement and
financed with the proceeds of Note Purchases under this Agreement.
"Fitch" means Fitch IBCA, Inc. (or its predecessor or
successors in interest) if and so long as it has rated and is
continuing to rate the CP of any Conduit Note Purchaser.
"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 perfected 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.
"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 Agreement and any other similar
guarantee or agreement issued by a Guarantor to the 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
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.
10
"Holder" means the Person in whose name a Note is registered
in the Note Register. The DFC Agent and TRFC shall be the initial
Holders.
"Indemnified Amounts" has the meaning assigned to that term in
Article IX.
"Independent Director" means a Person who (a) is not a
stockholder or other securityholder (whether direct, indirect or
beneficial), customer or supplier of the Issuer or any of its
Affiliates; (b) is not a director, officer, employee, former employee,
Affiliate, member, manager or associate of the Issuer or any of its
Affiliates (other than in its capacity as the Independent Director for
the Issuer 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 Issuer or any of its Affiliates (other
than in its capacity as Independent Director for the Issuer or any of
its Affiliates).
"Interest Period" means a (a) period of one month, commencing
on the second Business Day of each calendar month and ending on (but
excluding) the second Business Day of the immediately succeeding
calendar month or (b) such other period as may be agreed on from time
to time by the Issuer and the Required Note Purchasers. At no time may
there be more than one Interest Period outstanding, unless otherwise
approved by the Required Note Purchasers.
"Interest Rate" means, (a) with respect to a Regular Note
Purchase, the Regular Interest Rate and (b) with respect to a Liquidity
Note Purchase, the applicable Liquidity Interest Rate; provided,
however, that while any Event of Default shall have occurred and be
continuing, the Issuer shall pay interest (after as well as before
entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Note Purchases and other
Obligations, at a rate per annum which is equal to the Alternate Rate
plus 2.0%.
"Interest Subsidy Payments" means the interest subsidy
payments on Student Loans received from the Secretary 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.
"Issuance" means an issuance of Notes by the Issuer to a
Holder under this Agreement.
"Issuance Date" means, with respect to any Issuance, the date
on which such Issuance is funded.
"Liabilities" means the sum of (a) the Facility Amount and (b)
all accrued Yield and Commitment Fees applicable thereto plus (c) any
accrued and unpaid fees, including Custodian Fees, Servicing Fees,
Portfolio Administration Fees, Trustee Fees and any
11
other fees payable pursuant to the Transaction Documents or the
Liquidity Agreements by the Issuer.
"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 corresponding to the number of months in such
Interest Period 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. In the event that LIBOR is not so quoted for the
length of any particular Interest Period, LIBOR for such Interest
Period shall be determined by the Administrative Agent using an
interpolated rate for LIBOR.
"Liquidity Agreement" means, individually or collectively, (a)
the DFC Asset Purchase Agreement, (b) the TRFC Funding Agreement and
(c) any other such agreement entered into among DFC, TRFC or other
Conduit Purchaser, the DFC Agent or TRFC Agent, and any Person
providing liquidity or credit support for the CP issued to finance the
Financed Loans.
"Liquidity Interest Rate" means the yield to be paid on
Liquidity Note Purchases. The Liquidity Interest Rate shall be equal to
either (a) LIBOR + 1.00% or (b) the Alternate Rate, as selected in
accordance with Section 2.02; provided, however, that if (i) LIBOR
cannot be determined, or (ii) it shall become unlawful for the
applicable Liquidity Note Purchaser to obtain funds in the London
interbank market to fund or maintain its interest in a Note, or (iii)
an Agent advises the Issuer that a Note Interest Rate based on LIBOR
will not adequately and fairly reflect the cost to the related
Liquidity Note Purchaser of funding a Note based on LIBOR, then the
Liquidity Interest Rate shall be the Alternate Rate.
"Liquidity Note Purchases" means Note Purchases made by or on
behalf of the Liquidity Providers, or by TRFC in the event TRFC does
not obtain funds to purchase financial assets from the issuance of CP
but instead obtains such funds from a Liquidity Provider.
"Liquidity Note Purchasers" means Note Purchasers who are
Liquidity Providers, or TRFC in the event TRFC does not obtain funds to
purchase financial assets from the issuance of CP but instead obtains
such funds from a Liquidity Provider.
"Liquidity Provider" means, collectively, one or more
financial institutions having a short-term unsecured debt rating of at
least "A-1"/"P-1" by S&P and Moody's, respectively, and which are now
or hereafter parties to a Liquidity Agreement.
"Liquidity Termination Event" means the occurrence of any of
the following events: (a) any Liquidity Provider then providing
liquidity to a Conduit Note Purchaser has its rating lowered below
"A-1" by S&P or "P-1" by Moody's, unless a replacement Liquidity
Provider having ratings of at least "A-1" from S&P and "P-1" by Xxxxx'x
is substituted within 30 days of such downgrade, (b) any Liquidity
Provider shall fail to honor any of its payment obligations under the
related Liquidity Agreement unless such
12
payment obligations are otherwise satisfied by the related Agent,
Conduit Note Purchaser or another financial institution, (c) any
Liquidity Agreement shall cease for any reason to be in full force and
effect or be declared null and void and such Liquidity Agreement is not
replaced or (d) 60 days after written notice has been received by the
Issuer stating that a consolidation of DFC and X.X. Xxxxxx & Co.
Incorporated has occurred.
"Loan Valuation Percentage" as determined pursuant to the
Valuation Agreement by the Valuation Agent means (a) (i) the present
value of the Net Revenues (using the Portfolio Characteristics and the
Valuation Report Assumptions) divided by (ii) the outstanding Principal
Balance of Financed Loans, plus (b) 100%.
"Margin" means, for each Note Purchaser, the per annum rate
agreed to from time to time between the Issuer and each Note Purchaser
and set forth in the Fee Letter.
"Material Adverse Effect" means a material adverse effect on:
(a) the ability of the Issuer to perform its obligations
under this Agreement or any other Transaction Document; or
(b) the status, existence, perfection, priority or
enforceability of the interest in the Pledged Collateral.
"Maturity Date" means the specified maturity of each Note
Purchase, which, unless otherwise extended by mutual agreement between
the Required Note Purchasers and the Issuer, shall be the last day of
the applicable Interest Period.
"Maximum Note Purchase Percentage" means the rate, stated as a
percentage, of the aggregate outstanding 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 Note Purchase Percentage
determined pursuant to any Note Purchase Percentage Calculation Report
with respect to any Financed Loans shall remain in effect with respect
to such Financed Loans until the Issuance Date immediately following
the delivery of the next Valuation Report delivered pursuant to
Section 6.09.
"Minimum Asset Coverage Requirement" means an Asset Coverage
Ratio of 100.25%.
"Monthly Report" means a report, in substantially the form of
Exhibit D, furnished by the Issuer to each Agent, the Valuation Agent
and the Note Purchasers.
"Moody's" means Xxxxx'x Investors Service, Inc. or its
successor if and so long as it has rated and is continuing to rate the
CP of any Conduit Note Purchaser.
"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 Issuer or any ERISA Affiliate on behalf of its employees.
13
"NELNET" means National Education Loan Network, Inc., a Nevada
corporation, or its successors and assigns.
"Note" means each Note issued by the Issuer to a Holder.
"Note Account" has the meaning specified in Section 2.11
hereof.
"Note Purchase" means a purchase, including a Rollover Note
Purchase, of the Issuer's Notes by the Note Purchasers pursuant to
Article II.
"Note Purchase Percentage Calculation Report" means the report
prepared by the Valuation Agent and delivered to the Note Purchasers,
each Agent, the Trustee and the Issuer (a) not later than five Business
Days prior to each Note Purchase, other than a Rollover Note Purchase,
setting forth the Maximum Note Purchase Percentage for the Eligible
Loans to be financed with such Note Purchase, and (b) on each Valuation
Date, setting forth the Maximum Note Purchase Percentage for the
Eligible Loans then financed with Note Purchases, the forms of which
are attached as Exhibit A to the Valuation Agreement. The Maximum Note
Purchase Percentage determined pursuant to any Note Purchase Percentage
Calculation Report with respect to any Financed Loans shall remain in
effect with respect to such Financed Loans until the Issuance Date
immediately following the delivery of the next Valuation Report
delivered pursuant to Section 6.09.
"Note Purchasers" means DFC, TRFC, and their respective
Liquidity Providers, and their respective successors and assigns
(subject to Section 10.04 hereof). DFC and the DFC Liquidity Providers
shall purchase their Notes and otherwise act through the DFC Agent and
the TRFC Liquidity Providers shall purchase their Notes and otherwise
act through TRFC.
"Note Register" has the meaning set forth in Section 3.05(a).
"Note Registrar" has the meaning set forth in Section 3.05(a).
"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 Issuer to the Agents or the Note Purchasers,
the 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 Note
Purchases, any break funding costs attributable to CP Notes of the
Conduit Note Purchasers or funding by the Liquidity Purchaser occurring
after a prepayment made pursuant Section 6.08, 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).
14
"Obligor" means a Person obligated to make payments with
respect to a Student Loan including the student, Guarantors and the
Department.
"Outstanding" when used with respect to Notes, means, as of
the date of determination, all Notes theretofore authenticated and
delivered under this Agreement except,
(a) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation; and
(b) Notes for whose payment or repayment money in the
necessary amount has been theretofore deposited with the Trustee for
the Holders of such Notes; and
(c) Notes which have been exchanged for other Notes, or
in lieu of which other Notes have been delivered, pursuant to this
Agreement.
"Outstanding Balance" means, with respect to a Financed Loan
on any day, the aggregate amount (including outstanding principal and
accrued and unpaid interest) owed by the Obligor thereunder as of the
close of business on the prior Business Day.
"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-1" or the equivalent
thereof from S&P and not less than "F-1" or the equivalent thereof from
Fitch and not less than "P1" or the equivalent thereof from Moody's;
(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-1" or the
equivalent thereof from S&P and not less than "F-1" or the equivalent
thereof from Fitch and not less than "P1" or the equivalent thereof
from Moody's; (e) freely redeemable shares in money market funds having
a rating of "AAA-m" or "AAAM-G" from S&P and "AAA" from Fitch and
"Aaa" from Moody's; and (f) any other investment approved in writing by
the Required Note Purchasers.
"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 428A 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.
15
"Portfolio Administration Fee" means, for each Calculation
Period, one-twelfth of a 0.45% per annum fee payable monthly in arrears
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,
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 principal by or on behalf of
the Obligor of such Student Loan or Financed Loan as of such date.
"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.
"Pro Rata Share" means with respect to any Note Purchaser at
any time, a fraction (expressed as a percentage) the numerator of which
is the Aggregate Note Balance attributable to such Note Purchaser
and/or the Liquidity Note Purchasers (or an Agent or other Note
Purchaser on its behalf), and the denominator of which is the Aggregate
Note Balance. As of the date of this Agreement, the Pro Rata Share of
the DFC Agent shall be 62.5% and the Pro Rata Share of TRFC shall be
37.5%.
"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 Interest Rate" means, with respect to any Note on
any date during an Interest Period, a rate of interest equal to the per
annum rate (expressed as a percentage and an interest yield equivalent
and calculated on the basis of a 360-day year) equivalent to the sum of
the Margin plus the weighted average of the per annum rates paid or
payable by the applicable Note Purchaser from time to time as interest
on or otherwise in respect of the CP issued by such Note Purchaser that
is allocated, in whole or in part, by the applicable Agent to fund the
purchase or continued funding of such Conduit Note Purchaser's Note
(and which may also be allocated in part to the funding of other assets
of such Note Purchaser) during such Interest Period as determined by
the applicable Agent, which rates shall reflect and give effect to
other borrowings by such Note Purchaser, including borrowings to fund
small or odd dollar amounts that are not easily accommodated in the
commercial paper market to the extent such amounts are allocated, in
whole or in part, to such Note by the applicable Agent; provided, that
if any component of such rate is a discount rate, in calculating the
"Regular Interest Rate" for such day the applicable Agent shall for
such component use the rate resulting from converting such discount
rate to an interest bearing equivalent rate per annum.
16
"Regular Note Purchases" means Note Purchases made by either
DFC, TRFC or other Conduit Note Purchasers.
"Regulatory Change" means, relative to any Affected Party:
(a) any change after the date of this Agreement in (or
the adoption, implementation, change in phase-in or commencement or
effectiveness of) any:
(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) 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 Note Purchase Percentage" means the rate, stated as
a percentage, of the aggregate Principal Balance of the Eligible Loans
to be financed by a Note Purchase that is requested by the Issuer, not
to exceed the Maximum Note Purchase Percentage.
"Required Note Purchasers" means (a) prior to any drawing by
DFC or TRFC (or the applicable Agent on its behalf) under the
applicable Liquidity Agreement, DFC and TRFC, except as otherwise
provided in the DFC Asset Purchase Agreement or the TRFC Funding
Agreement, (b) subsequent to any drawing by DFC or TRFC (or the
applicable Agent on its behalf) under the applicable Liquidity
Agreement and written notice to the Issuer of such drawing by the
Agent, so long as any amounts are owed under this Agreement to DFC or
TRFC, DFC or TRFC, as applicable, and a majority of the Liquidity
Providers under the applicable Liquidity Agreement, except as
otherwise provided in the DFC Asset Purchase Agreement or the TRFC
Funding Agreement, and (c) at all times, each Agent.
"Revolving Period" means the period commencing on the Closing
Date and terminating on the Termination Date. 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 Required Note Purchasers.
17
"Rollover Note Purchase" means a Note Purchase the funding of
which would not and does not have the effect of increasing the Facility
Amount.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Inc. (or its predecessor or successors in
interest) if and so long as it has rated and is continuing to rate CP
of any Note Purchaser.
"Sale and Purchase Agreements" means a student loan purchase
agreement between the Issuer and a Seller, substantially in the form
attached hereto as Exhibit A, for the purchase of Eligible Loans, as
the same may be amended from time to time.
"Schedule of Purchased Student Loans" means a listing of
certain Financed Loans of the Issuer delivered to and held by the
Trustee pursuant to Section 6.01(c)(vii) (which Schedule may be in the
form of microfiche or computer file or other medium acceptable to the
Trustee), as from time to time amended, supplemented, or modified,
which Schedule shall be the master list of all Financed Loans then
compromising a part of the Pledged Collateral pursuant to this
Agreement.
"Secretary of Education" or "Secretary" 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 other officer, board, body, commission or agency succeeding to the
functions thereof under the Higher Education Act.
"Secured Creditors" means the Trustee, the Note Purchasers and
the Agents, solely in their capacity as Agents.
"Sellers" means any entity which sells Eligible Loans to the
Issuer pursuant to the terms of a Sale and Purchase Agreement;
including, but not limited to, NEBHELP, INC., NHELP-I, Inc., Union Bank
and Trust Company, NELNET, any Affiliate of NELNET or any other
financial institution with which NELNET or any Affiliate of NELNET has
a purchase agreement.
"Servicer" means, individually or collectively, (a) UNIPAC
Service Corporation, (b) Great Lakes Higher Education Servicing
Corporation, (c) InTuition, Inc., (d) USA Group Loan Services, Inc. and
(e) any other organization with which the Issuer has entered into a
Servicing Agreement with respect to Eligible Loans, with the prior
written approval of the Required Note Purchasers.
"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 a 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 Issuer or the Trustee to the
Issuer 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 a 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 a
18
Servicing Agreement or any information or report delivered pursuant to
a 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 not disclosed in writing by the Servicer to
the Issuer, the Agents or the Note Purchasers prior to the execution
and delivery of this Agreement is pending against a Servicer or any of
its Affiliates at the time of execution hereof, or (ii) any material
development has occurred in any such litigation or proceedings so
disclosed, or (iii) any litigation, governmental proceeding,
arbitration proceeding or other event has occurred since the date of
execution hereof which in the case of clause (i), (ii) or (iii), in the
opinion of the Required Note Purchasers, has a material adverse effect
on the ability of such Servicer to perform its obligations under a
Servicing Agreement.
"Servicing Agreement" means, individually or collectively, (a)
the Servicing Agreement dated as of September 16,1999, between the
Issuer and UNIPAC Service Corporation, (b) the Servicing Agreement
dated as of September 16, 1999, between Great Lakes Higher Education
Servicing Corporation and the Issuer and (c)with the prior written
consent of the Required Note Purchasers (except for a Servicing
Agreement with InTuition, Inc. after receipt of audited financial
statements satisfactory to the Required Note Purchasers), any other
servicing agreement between the Issuer and any Servicer, as any such
agreement may be amended or supplemented from time to time with the
prior written consent of the Required Note Purchasers, under which the
respective Servicer agrees to administer and collect the Financed
Loans.
"Servicing Fees" means any fees payable by the Issuer to a
Servicer with respect of servicing Financed Loans pursuant to the
provisions of a Servicing Agreement, including legal fees and expenses.
"Settlement Date" means the second Business Day of each month
or such other day as may be agreed to by the Issuer and the Note
Purchasers.
"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.
19
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
(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 Allowance Payments" means special allowance payments
authorized to be made by the Secretary of Education by Section 438 of
the Higher Education Act, or similar allowances authorized time to time
by federal law or regulation.
"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.
"Termination Date" means the earliest to occur of (a) the
second Business Day of September, 2004, (b) such other date as may be
agreed in writing by the Required Note Purchasers and the Issuer, (c)
the date of termination of the Facility Limit pursuant to Section 2.03,
(d) the date of the declaration or automatic occurrence of the
Termination Date pursuant to Article VII, (e) the date on which all
Liquidity Agreements are terminated or expires or (f) the occurrence of
any Liquidity Termination Event.
20
"Transaction Documents" means, collectively, this Agreement,
each Note, the Valuation Agent Agreement, all Servicing Agreements, all
Custodian Agreements, all Sale and Purchase Agreements, all Guarantee
Agreements, the Agreement and Acknowledgement 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.
"TRFC" means Three Rivers Funding Corporation and its
successors and assigns.
"TRFC Account" means Bankers Trust Company, ABA 000000000, To
Credit Corporate Trust and Agency Group, Acct. #01419647, Ref: Three
Rivers Funding, Attn: Xxxxx Xxxx.
"TRFC Agent" means Mellon Bank, N.A., and its successors and
assigns, in its capacity as agent for TRFC and the TRFC Liquidity
Providers pursuant to a TRFC Funding Agreement or any other Liquidity
Agreement to which TRFC and the TRFC Agent are parties.
"TRFC Funding Agreement" means the Funding Agreement dated as
of September 16, 1999, among TRFC, each of the Liquidity Providers
named therein and the TRFC Agent, as the same may be amended, restated,
supplemented or otherwise modified from time to time thereafter.
"TRFC Liquidity Providers" means the Liquidity Providers under
the TRFC Funding Agreement or any other Liquidity Agreement as to which
TRFC and the TRFC Agent are parties.
"TRFC Payment Office" means Bankers Trust Company, ABA
000000000, To Credit Corporate Trust and Agency Group, Acct. #01419647,
Ref: Three Rivers Funding, Attn: Xxxxx Xxxx.
"Trigger Rate" means, as to any Guarantor, such Guarantor's
default rate as defined in Section 428(c)(1)(B) of the Higher Education
Act.
"Trust Estate" means all of the Pledged Collateral of the
Issuer pledged and assigned to the Trustee for the benefit of the
Secured Creditors pursuant to this Agreement.
"Trustee" means Norwest Bank Minnesota, National Association,
Minneapolis, Minnesota, 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.
21
"Trustee Guarantee Agreement" means, collectively, the Lender
Agreements for Guarantee of Student Loans with Federal Reinsurance
between the Trustee and the Nebraska Student Loan Program, Inc. as
amended, the Agreement to Guarantee Loans between the Trustee and
United Student Aid Funds, as amended, the Lender Participation
Agreement between the Trustee and the Colorado Student Loan Program, as
amended, the Student Loan Guaranty between the Trustee and Great Lakes
Higher Education Guaranty Corporation, as amended, the Lender Agreement
for Guarantee of Student Loans with Federal Reinsurance between the
Trustee and Education Assistance Corporation, as amended, the Lender
Participation Agreement and Contract of Insurance between the Trustee
and Kentucky Higher Education Assistance Authority, as amended, the
Holder Agreement for Payment on Guarantee of Student Loans with Federal
Reinsurance between the Trustee and Educational Credit Management
Corporation, as amended, the Agreement to Endorse Loans between the
Trustee and Oklahoma Guaranteed Student Loan Program, as amended, the
Lender Participation Agreement between the Trustee and Texas
Guaranteed Student Loan Program, as amended, the Agreement to Guarantee
Loans for Secondary Market between the Trustee and Student Loan
Guarantee Foundation of Arkansas, Inc., as amended, the Loan Holder
Agreement between the Trustee and Georgia Higher Education Assistance
Corporation, as amended, the Lender Agreement between the Trustee and
Illinois Student Assistance Commission, as amended, the Loan Guarantee
Agreement with Lending Institution between the Trustee and New York
State Higher Education Services Corporation, as amended, the Lending
Institution Participation Agreement and Federal Consolidation Loans
Lender Participation Agreement between the Trustee and Florida
Department of Education, Office of Student Financial Assistance, as
amended, the Agreement with Lender between the Trustee and Connecticut
Student Loan Foundation, as amended, the Participation Agreement and
Agreement to Guarantee Consolidation Loans between the Trustee and
Louisiana Student Financial Assistance Commission, as amended, the
Guaranty Loan Agreement between the Trustee and State of New Jersey
Higher Education Student Assistance Authority, as amended, the Lender
Agreement for Guarantee of Student Loans with Federal Reinsurance and
Eligible Holder Agreement between the Trustee and Pennsylvania Higher
Education Assistance Agency, as amended, the Memorandum of
Understanding between the Trustee and Tennessee Student Assistance
Corporation, as amended, the Agreement to Guarantee Loans between the
Trustee and the Finance Authority of Maine, as amended and other
guarantee or agreement issued by any Guarantor to the Trustee, and any
amendment thereto 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.
"Unused Commitment" shall have the meaning set forth in
Section 2.16.
"Valuation Agent" means X.X. Xxxxxx Securities, Inc., or any
other entity appointed as Valuation Agent by the Issuer and approved by
the Required Note Purchasers, which approval shall not be unreasonably
withheld.
22
"Valuation Agent Agreement" means the Valuation Agent
Agreement dated as of September 1, 1999, among the Issuer, each Agent,
DFC, TRFC and the Valuation Agent and any other valuation agent
agreement in the form attached hereto as Exhibit B among the Issuer,
DFC, TRFC, each 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 Required Note Purchasers.
"Valuation Date" means the day either (a) within 30 days after
the Valuation Agent's receipt of a written request for a Valuation
Report from any of the DFC Agent, the TRFC Agent, DFC, TRFC or the
Issuer or (b) not later than the third Business Day preceding the last
day of each month through April 30, 2000 and thereafter, but only with
the consent of each Agent, not later than the third Business Day
preceding each April 30, July 31, October 31 or January 31.
"Valuation Report" means a report furnished by the Valuation
Agent to each Agent, the Required Note Purchasers, the Trustee and the
Issuer pursuant to Section 6.09(a) hereof, the form of which is
attached as Exhibit B to the Valuation Agreement.
"Yield" means, for each Note and for each Interest Period, the
sum of, for each day in such Interest Period,
IRT x C/AP
where:
C = the principal amount of such Note on such day;
IRT = the Interest Rate in effect with respect to such Note;
AP = 360, or if the Interest Rate is computed based on the
Alternate Rate, 365/366, as applicable.
provided, however that (a) no provision of this Agreement shall require
the payment or permit the collection of Yield in excess of the maximum
permitted by applicable law and (b) Yield shall not be considered paid
by any distribution if at any time such distribution is rescinded or
otherwise returned by the Required Note Purchasers to the Issuer or any
other Person for any reason.
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."
23
ARTICLE II
THE FACILITY
SECTION 2.01. NOTE ISSUANCES AND PURCHASES.
(a) On the terms and conditions hereinafter set forth,
the Note Purchasers, agree to purchase Notes issued by the Issuer in
proportion to their respective Pro Rata Shares from time to time up to
an aggregate principal amount outstanding at any one time not to exceed
the Facility Limit in effect at the time of such Note Purchase;
provided that no Note Purchase shall be in an amount less than
$8,000,000. In addition to the other terms and conditions hereinafter
set forth, under no circumstances shall DFC or TRFC be obligated or
committed to make any Note Purchase funded by the issuance of CP (i)
unless the amount available for funding to either DFC or TRFC under the
applicable Liquidity Agreements from Liquidity Providers rated at least
"A-l" and "P-l" by S&P and Xxxxx'x, respectively, shall equal or exceed
the Aggregate Note Balance, or (ii) if DFC or TRFC, as the case may be,
is unable, after making a reasonable effort, to raise funds in the
United States commercial paper market to make such Note Purchases. If
any Note Purchaser is unable to fund a Note Purchase by the issuance of
CP, then said Note Purchaser shall fund its Note Purchase or cause its
obligation to be funded pursuant to the terms of its Liquidity
Agreement. Within the limits set forth in this Section 2.01 and the
other terms and conditions of this Agreement, during the Revolving
Period, the Issuer may issue, prepay and reissue Notes under this
Section 2.01. In addition, the aggregate principal amount of any Note
Purchase, which is not a Rollover Note Purchase, during the Revolving
Period shall not exceed the result of (x) the aggregate Principal
Balance of Eligible Loans to be financed by such Note Purchase,
multiplied by (y) the Requested Note Purchase Percentage related
thereto. All Notes issued hereunder shall be denominated in and be
payable in United States dollars. All then outstanding Notes and other
Obligations hereunder shall be due and payable on September 1, 2004 or
such earlier date as provided in Article VII hereof.
(b) Each Note Purchaser's obligations under this Section
2.01 are several and the failure of any Note Purchaser or any Agent
(acting on behalf of the related Conduit Note Purchaser and/or
Liquidity Note Purchasers, if applicable) to make available its Pro
Rata Share of any requested Note Purchase shall not relieve any other
Note Purchaser of its obligations hereunder or obligate any other Note
Purchaser to honor the obligations of any defaulting Note Purchaser.
Notwithstanding anything contained in this Agreement to the contrary,
no Note Purchaser shall be obligated or committed to fund any portion
of any Note Purchase in excess of its Pro Rata Share thereof.
(c) Each Note shall be issued in the name of a Holder.
(d) Each Note Purchase (other than a Rollover Note
Purchase) shall be purchased at 100% of the principal amount thereof.
24
SECTION 2.02. THE INITIAL NOTE ISSUANCE AND SUBSEQUENT NOTE ISSUANCES.
(a) At the request of the Issuer, any Note Purchase made
by a Note Purchaser during the Revolving Period, will be made on each
Settlement Date (unless otherwise agreed by the Issuer and the Required
Note Purchasers), subject to and in accordance with the terms and
conditions of Section 2.01 and this Section 2.02. After the Revolving
Period and at the request of the Issuer, the Note Purchasers shall make
Note Purchases on each Settlement Date (unless otherwise agreed by the
Issuer and the Required Note Purchasers), subject to and in accordance
with the terms and conditions of Section 2.01 and this Section 2.02,
solely to the extent necessary to refinance any maturing Notes.
(b) Subject to satisfaction of the conditions precedent
set forth in this Agreement and, if the Note Purchase to be made is a
Liquidity Note Purchase, to satisfaction of the conditions precedent in
the applicable Liquidity Agreement, the Issuer may request a Note
Purchase hereunder by giving written notice to each Agent in the form
of Exhibit C hereto not later than 1:00 p.m., New York time, at least
three Business Days prior to the proposed date of such Issuance. Each
such notice shall specify (i) the aggregate amount of such Issuance,
(ii) the date of such Issuance (which may only be a Settlement Date
unless otherwise agreed by the Issuer and the Required Note
Purchasers), (iii) if the Note Purchase to be made is a Liquidity Note
Purchase, the requested applicable Liquidity Interest Rate for such
Issuance and (iv) the Requested Note Purchase Percentage. On the date
of such Issuance and no later than 1:00 p.m., New York time, each
Conduit Note Purchaser or Liquidity Provider(s), shall, upon
satisfaction of the applicable conditions set forth in this Agreement,
make available to the Issuer in same day funds, its respective Pro Rata
Share of the amount of such Issuance by payment to the account which
the Issuer has designated in writing. Unless otherwise agreed by the
Required Note Purchasers, the duration of all Interest Periods shall be
one (1) calendar month.
(c) Except as otherwise provided in Article IX of this
Agreement, principal and accrued Yield on the Note Purchases shall be
payable solely from the Pledged Collateral and from payments made or
owing pursuant to the "Collateral Calls" made in accordance with
Section 6.12. Any Principal and Yield due or accrued on the Note
Purchases on any Settlement Date will be payable to each Note Purchaser
based on its Pro Rata Share no later than 1:00 p.m. (New York time) on
such Settlement Date in accordance with Section 2.05(c) hereof.
Principal of the Notes (net of any Rollover Note Purchases) will be
paid on the applicable Maturity Date and may not be prepaid in whole or
in part on any day other than the applicable Maturity Date without the
consent of the Required Note Purchasers.
(d) If as a result of a funding pursuant to a Liquidity
Agreement a Liquidity Note Purchaser shall become a Note Purchaser on
any day other than the first day of an Interest Period, the Liquidity
Interest Rate applicable to such Liquidity Note Purchaser's Note
Purchases for the remainder of such Interest Period shall be (i) the
Alternate Rate plus 2.0% if such draw is the result of the occurrence
of an Event of Default hereunder, or (ii) at the Issuer's discretion,
(A) the Alternate Rate or (B) the sum of LIBOR plus 1.0% if such draw
is not the result of the occurrence of an Event of Default hereunder
and
25
provided that the Agents shall be given written notice of such draw request not
later than 1:00 p.m., New York time, at least three Business Days prior to the
date of such draw, unless otherwise agreed to by the Note Purchasers.
SECTION 2.03. TERMINATION OR REDUCTION OF THE FACILITY LIMIT. The
Issuer may, upon at least 30 days' written notice to the Required Note
Purchasers terminate in whole or reduce in part the portion of the Facility
Limit that exceeds the outstanding Note Purchases. Any reduction shall be
applied pro rata among the Note Purchasers.
SECTION 2.04. COLLECTION ACCOUNT. On or prior to the date hereof, the
Issuer 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 received by the Issuer, the 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 Issuer shall direct each Servicer,
Seller, Custodian, Student Loan depository or co-depositories, or agent thereof,
to transmit any collections it receives with respect to the Financed Loans
directly to the Trustee for deposit to the Collection Account. Funds on deposit
in the Collection Account may be invested from time to time in Permitted
Investments in accordance with Section 2.08. The Trustee shall apply funds on
deposit in the Collection Account as described in Section 2.05.
SECTION 2.05. TRANSFERS FROM COLLECTION ACCOUNT.
(a) On each date on which any principal or interest is
due with respect to the Notes, the Trustee shall promptly apply moneys
held in the Collection Account to pay to the Holders, the accrued and
unpaid Yield and principal amounts then due and owing. On each date on
which other Obligations are owed to the Note Purchasers or the Agents,
the Trustee shall promptly apply moneys in the Collection Account to
pay to the Holders the obligations then due and owing.
(b) Not later than the Calculation Date each month, the
Issuer shall direct 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 day occurring two business days prior
to the Calculation Date (the "Collection Date") for the period from and
including the Collection Date occurring in the immediately preceding
calendar month, but excluding the current Collection Date (the
"Collection Period"), and cause the Portfolio Administrator to forward
such Monthly Report to the Trustee, the Valuation Agent and the
Required Note Purchasers.
(c) The Trustee, on each Settlement Date, shall apply the
moneys held by the Trustee in the Collection Account, in the following
amounts and priority:
(i) pay as directed by the Issuer, an amount
equal to the estimated taxes owed by the Issuer that are
payable prior to the next Settlement Date and not
26
previously paid, which relate to the net income of the Issuer
realized on the Financed Loans and other assets in the Trust
Estate, as certified by the Portfolio Administrator;
(ii) 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 immediately
preceding Calculation Period, as certified by the Portfolio
Administrator;
(iii) pay to the Holders an amount equal to the
accrued and unpaid Yield, principal and all other Obligations,
net of any Rollover Note Purchases, in each case, due and
owing as of such Settlement Date;
(iv) pay to (A) each Agent the Commitment Fee and
all other fees and expenses of the Agents which are accrued
and unpaid as of the close of business on the last day
preceding such Settlement Date and (B) the Administrative
Agent the Administrative Agent Fee which is accrued and unpaid
as of the close of business on the last day preceding such
Settlement Date;
(v) pay fees and expenses related to the
Financed Loans under the Higher Education Act which are
accrued and unpaid as of the close of business on the
immediately preceding Calculation Period with respect to the
Financed Loans (as certified by the Portfolio Administrator or
the Issuer);
(vi) pay to the Trustee an amount equal to the
Trustee Fee which is accrued and unpaid as of the close of
business on the immediately preceding Calculation Period;
(vii) transfer to the Cash Reserve Account the
amount, if any, necessary to restore the Cash Reserve Account
to the Aggregate Cash Reserve Requirement;
(viii) pay to the Portfolio Administrator the
Portfolio Administration Fee which is accrued and unpaid as of
the close of business on the current Calculation Period, as
certified by the Portfolio Administrator; and
(ix) on the Settlement Date immediately following
each April 30, July 31, October 31 or January 31, if the Asset
Coverage Ratio is greater than 101.25% and any transfer
hereunder will not result in an Event of Default or require a
Collateral Call pursuant to Section 6.12 in this Agreement,
transfer to the Issuer or any other Person as directed by the
Issuer (by wire transfer as directed by the Issuer), any
amounts calculated pursuant to the provisions of Exhibit E -1
hereto and set forth on a certificate substantially in the
form of Exhibit E-2 hereto executed by an authorized officer
the forms of which shall not be changed or amended without the
prior written consent of the Required Note Purchasers.
(d) Any moneys allocated to the payment of Trustee Fees,
Commitment Fees, Administrative Agent Fees, Portfolio Administration
Fees, Servicing Fees, Custodian
27
Fees, principal or accrued Yield on Notes and other Obligations
pursuant to this Section 2.05 shall be transferred to the applicable
payee, to the extent such Obligations are then due and payable. The
Trustee shall make the foregoing transfers in accordance with this
Section 2.05.
SECTION 2.06. CASH RESERVE ACCOUNT. On or prior to the date hereof, the
Issuer 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
Issuance and each subsequent Issuance, other than in connection with a Rollover
Note Purchase, and additional amounts shall be deposited to the Cash Reserve
Account pursuant to Section 2.05(c)(vii) 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. The Trustee shall apply funds on deposit in the
Cash Reserve Account as described in Section 2.07.
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, 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 or Yield is due
and owing with respect to any Note, the Trustee shall promptly apply
moneys held in the Cash Reserve Account to pay to the Note Purchasers
the accrued and unpaid Yield and principal amounts then due and owing;
and
(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 (vi).
SECTION 2.08. MANAGEMENT OF COLLECTION ACCOUNT AND CASH RESERVE
ACCOUNT.
(a) All funds held in the Collection Account and the Cash
Reserve Account (or any subaccount thereof), including investment
earnings thereon, shall be invested at the direction of the Issuer or
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; provided, however, that from and after the Termination
Date or otherwise upon the occurrence and during the continuance of any
Event of Default, the Agents shall have the sole right to restrict the
maturities of any investments held in the Collection Account and/or the
Cash Reserve Account and to direct the withdrawal of any such
investments for the purposes of paying the Obligations, including
principal on the Note Purchases. 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, as the case may
be.
28
(b) The Collection Account and the Cash Reserve Account
shall be established with a securities intermediary (the "Securities
Intermediary") who shall agree with the Trustee (and Norwest Bank
Minnesota, National Association, as Securities Intermediary, hereby
agrees with the Trustee) that (i) the Collection Account and the Cash
Reserve Account shall be securities accounts of the Trustee, (ii) all
property credited to Collection Account or the Cash Reserve 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
or the Cash Reserve 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), the Securities Intermediary shall not
agree to comply with entitlement orders originated by any person or
entity other than the Trustee, (vi) the Collection Account, the Cash
Reserve Account and all property credited to either 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)
such agreement between the Securities Intermediary and the Trustee
shall be governed by the laws of the State of Minnesota. Each term used
in this Section 2.08(b) and defined in the Minnesota Uniform Commercial
Code (the "Minnesota UCC") shall have the meaning set forth in the
Minnesota UCC.
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 Issuer of all of the covenants and obligations to be
performed by it pursuant to this Agreement and each other Transaction Document,
the Issuer 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 Issuer's right and title to and interest in
(but not the obligations of) the Transaction Documents. The Issuer confirms and
agrees that the Trustee shall have, following an Event of Default, the sole
right to enforce the Issuer'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 Issuer 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 Issuer
of all of the covenants and obligations to be performed by it pursuant to this
Agreement and each other Transaction Document, the Issuer hereby Grants to the
Trustee on behalf of the Secured Creditors (and their respective successors and
assigns), a security interest in all of the Issuer's right, title and interest
in and to all accounts, general intangibles, instruments, documents, chattel
paper, goods, money, investment property, advices of credit, letters of credit,
certificates of deposit, deposit accounts and all other 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"):
(a) all Financed Loans;
29
(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;
(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 (including, but
not by way of limitation, all cash proceeds, accounts, accounts
receivables, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of
any and every kind and all other forms of obligations and receivables
and other liquidated property, which at any time constitutes all or
part or are included in the proceeds of any of the foregoing property).
SECTION 2.11. EVIDENCE OF DEBT. Each Agent shall maintain a Note
Account (the "Note Account") on its books in which shall be recorded (a) all
Note Purchases owed to each related Note Purchaser by the Issuer pursuant to
this Agreement, (b) the outstanding principal amount of Note Purchases then
funded by its related Conduit Note Purchaser and Liquidity Provider(s), (c) all
payments of principal and Yield made by the Issuer on all such Note Purchases,
(d) the respective percentages of such Note Purchaser's Pro Rata Share of the
Facility Limit which each Liquidity Provider is obligated to fund under the
applicable Liquidity Agreement and (e) all appropriate debits and credits as
provided in this Agreement including, without limitation, all fees, charges,
expenses and interest. All entries in each Agent's Note Account shall be made in
accordance with such Note Purchaser's customary accounting practices as in
effect from time to time. The entries in the Note 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 Issuer to pay any amount owing with respect to the Notes or
any of the other Obligations.
SECTION 2.12. SPECIAL PROVISIONS GOVERNING NOTE PURCHASES. The Issuer
shall indemnify each Note Purchaser, 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 Note
Purchases), that such Person may sustain: (a) if for any reason other than an
act, default or omission by the Note Purchasers or their Agents (or any of them)
an Issuance of Notes does not occur on a date
30
specified therefor; (b) if the Issuer elects, or is required by reason of a
breach by the Issuer of this Agreement, to fund any Note Purchase through a
Liquidity Note Purchase on a date that is not the last day of the Interest
Period applicable to that Note Purchase; or (c) as a consequence of any other
default by the Issuer to repay its Note Purchases when required by the terms of
this Agreement. Unless otherwise provided herein, the amount specified in the
written statement of any Note Purchaser shall be payable on demand after receipt
by the Issuer thereof.
SECTION 2.13. PAYMENTS BY THE ISSUER. All payments to be made by the
Issuer shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Issuer shall be made
(a) if to TRFC, to the TRFC Account, (b) if to a TRFC Liquidity Provider that is
a Liquidity Note Purchaser, to an account designated by such TRFC Liquidity
Provider and (c) if to a DFC or a DFC Liquidity Provider, to such Agent for the
account of such Note Purchaser at such Agent's Payment Office by 1:00 p.m., New
York time, in Dollars. Such payments shall be made in immediately available
funds so as to be received by the Note Purchasers no later than 1:00 p.m., New
York time, on the date specified herein. Payments shall be applied first against
interest amounts then due and unpaid in respect of any Note Purchase, second,
after all such interest has been paid in full, against fees then due and unpaid
hereunder, and third, after all such interest and fees have been paid in full,
against any principal amounts then due and unpaid in respect of any Note
Purchase. Any payment which is received by any Note Purchaser later than 1:00
p.m., New York 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 Issuer 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 the Trustee, each Agent and each
Note Purchaser 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. SHARING OF PAYMENTS, ETC. If, other than as expressly
provided elsewhere herein, any Note Purchaser shall obtain on account of the
Note Purchases owed to it any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) in excess of its Pro Rata
Share (or other share contemplated hereunder), such Note Purchaser shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Note Purchasers such participations made by them as shall be
necessary to cause such purchasing Note Purchaser to share the excess payment
pro rata (based on the Pro Rata Share of each Note Purchaser) with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Note Purchaser, such purchase shall to
that extent be rescinded and each other Note Purchaser shall repay to the
purchasing Note Purchaser the purchase price paid therefor, together with an
amount equal to such paying Note Purchaser's ratable share (according to the
proportion of (i) the amount of such paying Note Purchaser's required repayment
to (ii) the total amount so recovered from the purchasing Note Purchaser) of any
interest or other amount paid or payable by the purchasing Note Purchaser in
respect of the total amount so recovered. The Issuer agrees that any Note
Purchaser so purchasing a
31
participation from another Note Purchaser may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Note Purchaser was the direct
creditor of the Issuer in the amount of such participation. The Administrative
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section 2.15 and will in
each case notify each Agent following any such purchases or repayments.
SECTION 2.16. 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 commitment under the applicable Liquidity Agreement
(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 any, to fund Note Purchases 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); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed by
the Federal Reserve Board, but excluding any reserve included
in the determination of yield on the Obligations), 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; or
(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
32
(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 applicable Liquidity Agreement or
any other 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 applicable Liquidity
Agreement or any other 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 or under the applicable
Liquidity 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 Issuer 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
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 Issuer
and the Required Note Purchasers of any event of which it has actual
knowledge which will entitle such Affected Party to any compensation
pursuant to this Section 2.16; 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 2.16, 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 2.16 shall submit to the Issuer a statement as to such
increased cost or reduced return (including
33
calculation thereof in reasonable detail), which statement shall, in
the absence of manifest error, be conclusive and binding upon the
Issuer.
ARTICLE III
THE NOTES
SECTION 3.01. FORM OF NOTES GENERALLY.
(a) The Notes shall be in substantially the form set
forth in Exhibit H in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or
permitted by this Agreement, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the officers
executing such Notes, as evidenced by their execution of the Notes.
(b) The Notes shall be printed.
(c) The Notes shall be issuable only in registered form
and with a maximum principal amount that, when aggregated with the
maximum principal amounts of each other Outstanding Note, will equal
the Facility Limit.
(d) All Notes shall be substantially identical except as
to maximum denomination and except as may otherwise be provided in or
pursuant to this Section 3.01.
SECTION 3.02. SECURITIES LEGEND. Each Note issued hereunder will
contain the following legend limiting sales to "Qualified Institutional Buyers"
within the meaning of Rule 144A under the Securities Act:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN
OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF ACKNOWLEDGES THAT THESE
SECURITIES ARE "RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE ISSUER AND
ITS AFFILIATES THAT THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERMITTED ASSIGNEE WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A OR (B) TO A PERMITTED ASSIGNEE
PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), OR (C) TO A PERMITTED ASSIGNEE
PURSUANT TO
34
ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SECTION 5
OF THE SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER JURISDICTION.
SECTION 3.03. PRIORITY. All Notes issued under this Agreement shall be
in all respects equally and ratably entitled to the benefits hereof and secured
by the Pledged Collateral without preference, priority or distinction on account
of the actual time or times of authentication and delivery, all in accordance
with the terms and provisions of this Agreement. Payments of Yield on the Notes
and all other Obligations shall be made pro rata among all Outstanding Notes
based on the amount of interest owed on such Note, without preference or
priority of any kind. Payments of principal on the Notes shall be made pro rata
among all Outstanding Notes, without preference or priority of any kind.
SECTION 3.04. EXECUTION, DELIVERY AND DATING.
(a) The Notes shall be executed on behalf of the Issuer
by any of the Authorized Officers of the Issuer. The signature of any
of these officers on the Notes may be manual or facsimile.
(b) Notes bearing the manual or facsimile signatures of
individuals who were at any time Authorized Officers of the Issuer
shall bind the Issuer, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and
delivery of such Notes or did not hold such offices at the date of such
Notes.
(c) Each Note shall be dated the date of its execution.
SECTION 3.05. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE,
TRANSFER RESTRICTIONS.
(a) The Issuer shall cause to be kept a register (the
"Note Register") in which, subject to such reasonable regulations as
it may prescribe, the Issuer shall provide for the registration of
Notes and of transfers of the Notes. The Trustee shall serve as "Note
Registrar" for the purpose of registering Notes and transfers of the
Notes as herein provided.
(b) Upon surrender for registration of transfer of any
Note at the office or agency of the Issuer to be maintained as
provided in Article V(j), the Issuer shall execute and deliver in the
name of the designated transferee or transferees, one or more new Notes
of any authorized denominations and of a like tenor and aggregate
principal amount.
(c) At the option of the Holder, Notes may be exchanged
for other Notes of like tenor in a maximum principal amount consistent
with Section 3.01(c), upon surrender of the Notes to be exchanged at
such office or agency. Whenever any Notes are so surrendered for
exchange, the Issuer shall execute and deliver the Notes which the
Holder making the exchange is entitled to receive.
35
(d) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Agreement, as the Notes surrendered upon such registration of transfer
or exchange.
(e) Every Note presented or surrendered for registration
of transfer or for exchange shall (if so required by the Issuer or the
Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Note Registrar duly
executed, by the Holder thereof or his attorney duly authorized in
writing with such signature guaranteed by a commercial bank or trust
company, or by a member firm of a national securities exchange, and
such other documents as the Trustee may require.
(f) No service charge shall be made for any registration
of transfer or exchange of Notes, but the Issuer or the Trustee may
require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 3.05(d) not involving any transfer or in connection
with a Rollover Note Purchase.
(g) No Holder of a Note shall transfer its Note unless
such transfer is made (i) in accordance with (A) Rule 144A under the
Securities Act of 1933, as amended, (B) an exemption from registration
provided by Rule 144 under the Securities Act of 1933, as amended, (if
available) or any other exemption from the registration requirements
under Section 5 of the Securities Act of 1933, as amended, provided the
Issuer is provided an Opinion of Counsel that such transfer is so
exempt, and (C) the registration and qualification requirements (or any
applicable exemptions therefrom) under applicable state securities laws
and (ii) pursuant to Section 10.04.
SECTION 3.06. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If any
mutilated Note is surrendered to the Trustee, the Issuer shall execute and
deliver in exchange therefor a new Note of like tenor and maximum principal
amount and bearing a number not contemporaneously outstanding. If there shall be
delivered to the Issuer (a) evidence to the Issuer's satisfaction of the
destruction, loss or theft of any Note and (b) such security or indemnity as may
be required by them to hold the Issuer and any of its agents harmless, then, in
the absence of notice to the Issuer that such Note has been acquired by a bona
fide purchaser, the Issuer shall execute and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of like tenor and principal amount
and maximum principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Issuer in its discretion may, instead
of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 3.06, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed
36
in relation thereto and any other expenses (including the fees and expenses of
the Note Registrar) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 3.07. PERSONS DEEMED OWNERS. Prior to due presentment of a Note
for registration of transfer, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name such Note is registered
as the owner of such Note for the purpose of receiving payment of principal of
and Yield on such Note and for all other purposes whatsoever, whether or not
such Note be overdue, and the Issuer, the Trustee nor any agent of the Issuer or
the Trustee shall be affected by notice to the contrary.
SECTION 3.08. CANCELLATION. Subject to Section 3.04(b), all Notes
surrendered for payment, prepayment in whole, registration of transfer or
exchange shall, if surrendered to any Person other than the Issuer, be delivered
to the Issuer and shall be promptly cancelled by the Issuer. Subject to Section
3.04(b), the Issuer may at any time cancel any Notes previously delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and may
cancel any Notes previously executed hereunder which the Issuer has not issued
and sold. No Notes shall be executed and delivered in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Agreement. All cancelled Notes held by the Issuer shall be held or
destroyed by the Issuer in accordance with its standard retention or disposal
policy as in effect at the time.
ARTICLE IV
CONDITIONS TO NOTE PURCHASES
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL ISSUANCE. The initial
Issuance hereunder is subject to the condition precedent that DFC, TRFC or the
Agents or all, as the case may be, shall have received on or before the date of
such Issuance the items listed in Exhibit K hereto, in form and substance
satisfactory to DFC, TRFC or the Agents or all, as the case may be.
SECTION 4.02. CONDITIONS PRECEDENT TO ALL NOTE PURCHASES. Each Issuance
(including the initial Issuance) hereunder shall be subject to the further
conditions precedent that:
(a) on or prior to the date of such Issuance, the Issuer
shall have delivered to each Agent and the Trustee (i) a Note Purchase
Percentage Calculation Report from the Valuation Agent, (ii) copies of
the relevant Sale and Purchase Agreement (including, upon request, a
Schedule of Financed Loans) and (iii) a request for a Note Purchase in
the form and at the time required in Section 2.02(b) hereof; and
37
(b) on the date of such Issuance, the following
statements shall be true, and the Issuer by accepting the amount of
such Issuance shall be deemed to have certified that:
(i) the representations and warranties contained
in Article V 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 Issuance, which constitutes an Event of
Default or an event 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 Issuance, the Facility Amount would not exceed the
Facility Limit;
(iv) no law or regulation shall prohibit, and no
order, judgment or decree of any federal, state or local court
or governmental body, agency or instrumentality shall prohibit
or enjoin, the making of such Note Purchases by the Note
Purchasers in accordance with the provisions hereof; and
(v) the amount of money equal to the Cash
Reserve Requirement on such date is deposited in the Cash
Reserve Account on such date from the proceeds of such
Issuance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Issuer represents and warrants as follows:
(a) The Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada 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 Issuer
of this Agreement and all Transaction Documents to be delivered by it
in connection herewith or therewith, including the Issuer's use of the
proceeds of Note Purchases, are within the Issuer's organizational
powers, have been duly authorized by all necessary organizational
action, do not contravene (i) the Issuer's Articles of Incorporation or
bylaws, (ii) any law, rule or regulation applicable to the Issuer,
(iii) any contractual restriction binding on or affecting the Issuer or
its property or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting the Issuer or its property, and 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
38
delivered by the Issuer. The Notes have been duly and validly
authorized and when executed and paid for in accordance with the terms
of this Agreement, will be duly and validly issued and outstanding, and
will be entitled to the benefits of this Agreement.
(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 Issuer 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 Issuer is a party constitute the legal, valid and binding
obligations of the Issuer enforceable against the Issuer 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 principles 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
Issuer, threatened, action or proceeding affecting the Issuer before
any court, governmental agency or arbitrator that may materially
adversely affect the financial condition of the Issuer or the ability
of the Issuer to perform its obligations under each Transaction
Document to which it is a party. The Issuer is not in default with
respect to any order of any court, arbitrator or any other Governmental
Authority.
(f) No proceeds of any Notes will be used by the Issuer
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 Issuer 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 filed in favor of
the Trustee relating to this Agreement.
(h) As of the close of business on each Business Day, the
Facility Amount shall not exceed the Facility Limit on such Business
Day.
(i) No Valuation Report (to the extent that information
contained therein is supplied by the Issuer), information, exhibit,
financial statement, document, book, record or report furnished or to
be furnished by the Issuer to any Agent or any Required Note Purchaser
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 any Agent or such Required Note Purchaser 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.
39
(j) The principal place of business and chief executive
office of the Issuer and the office where the Issuer keeps all the
Records are located at the address of the Issuer referred to in Section
10.02 or such other location as the Issuer shall have given notice of
to the Required Note Purchasers pursuant to Section 6.10.
(k) The Issuer 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.
(l) The Issuer is Solvent at the time of (and immediately
after) each "Note Purchase" and each purchase of Eligible Loans made by
the Issuer.
(m) The Issuer 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.
(n) The Issuer 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.
(o) All representations and warranties of the Issuer set
forth in the Transaction Documents to which it is a party are true and
correct in all material respects.
(p) To the Issuer's best knowledge, each Student Loan to
be financed with the proceeds of any Note Purchase constitutes an
Eligible Loan as of the date of such Note Purchase from a Seller
pursuant to a Sale and Purchase Agreement.
(q) The Issuer and its Affiliates have reviewed the areas
within their business and operations which could be adversely affected
by, and have developed or are developing a program to address on a
timely basis, the risk that certain computer applications used by the
Issuer or its Affiliates (or their respective material suppliers or
vendors (other than the Department), including, but not limited to, any
Servicer and the Valuation Agent) may be unable to recognize or perform
properly date-sensitive functions involving dates prior to and after
December 31, 1999 (the "Year 2000 Problem"). On the basis of the
foregoing, to the best knowledge of the Issuer, the Year 2000 Problem
will not have a Material Adverse Effect.
(r) The sale of the Notes pursuant to this Agreement will
not require the registration of the Notes under the Securities Act of
1933, as amended.
(s) The Notes will be characterized as debt for federal
income tax purposes.
40
ARTICLE VI
GENERAL COVENANTS OF THE ISSUER
SECTION 6.01. GENERAL COVENANTS.
(a) COMPLIANCE WITH LAWS; PRESERVATION OF CORPORATE
EXISTENCE. The Issuer 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. The Issuer will not, (i) except
for purposes of serialization, combination, transfer to a Guarantor as
may be required or permitted under the Higher Education Act or
repurchase pursuant to the terms of a Sale and Purchase Agreement of a
Financed Loan, 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 or, (ii) except as
otherwise provided herein, create or suffer to exist any Adverse Claim
upon or with respect to any of the Issuer's assets.
(c) GENERAL REPORTING REQUIREMENTS. The Issuer will
provide to each Agent the following:
(i) as soon as available and in any event within
120 days after the end of each fiscal year of the Issuer, a
copy of the balance sheet of the Issuer 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 and duly
certified by nationally recognized independent certified
public accountants selected by the Issuer;
(ii) as soon as possible and in any event within
five 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 Issuer setting forth details of such Event of Default or
event and the action which the Issuer has taken and proposes
to take with respect thereto;
(iii) promptly following receipt thereof, to the
extent requested by any 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
Issuer by any Person pursuant to the terms of any Transaction
Document;
(iv) promptly following any 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 Issuer as any
Agent may from time to time reasonably request;
(v) with respect to each Guarantor, promptly
after receipt thereof as made available to the Issuer after
request therefor, copies of any audited financial
41
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 Issuer'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 Issuer, (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)(1)(4) of the Higher Education Act; and (C) to the
extent not included in the financial information provided
pursuant to clauses (A) and (B) hereof, such Servicer's net
dollar loss for the year due to servicing errors;
(vii) upon request, a Schedule of Financed Loans;
(viii) as soon as available and in any event within
120 days after the end of each fiscal year of Union Financial
Services, Inc., copies of consolidated financial statements
for it and its consolidated subsidiaries prepared in
accordance with generally accepted accounting principles, duly
certified by independent certified public accountants
of recognized standing selected by it, including 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 the
Issuer files under ERISA with the Internal Revenue Service,
the Pension Benefit Guarantee Corporation or the U.S.
Department of Labor or which the Issuer receives from the
Pension Benefit Guarantee Corporation;
(x) immediately upon becoming aware of the
existence of any Event of Default, a written statement of an
Authorized Officer of the Issuer setting forth details of such
event and the action that the Issuer proposes to take with
respect thereto; and immediately upon becoming aware of any
Servicer Event of Default, written notice thereof;
(xi) as soon as possible and in any event within
three Business Days of the Issuer'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 Issuer, any of the same against a
Servicer;
(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 any
Servicing Agreement, or (B) the collectibility or
enforceability of a material amount of the Financed Loans, or
any
42
Guarantee Agreement or Federal Reimbursement Contract with
respect to a material amount of Financed Loans; and
(xiii) upon request, copies of the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act of 1933, as amended in order to permit
compliance with Rule 144A in connection with assignments of
Notes.
(d) MERGER, ETC. The Issuer 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 Issuer will engage in no
business other than (i) purchases and sales 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 Required Note Purchasers.
(f) TRANSACTION DOCUMENTS. The Issuer (i) will take all
action necessary to perfect, protect and more fully evidence the
ownership interest of the Issuer 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 and (C) 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 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 Issuer will do
all things necessary to maintain its existence as a Nevada
corporation separate and apart from all Affiliates of the Issuer,
including, without limitation, (i) practicing and adhering to
corporate formalities, such as maintaining appropriate books and
records; (ii) maintaining a Person who is an Independent Director;
(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
43
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 Issuer 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 Issuer or
any other Affiliate of the Issuer to substantively consolidate the
assets and liabilities of the Issuer with the assets and liabilities of
any such Person or any other Affiliate of the Issuer; (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 Issuer 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
and from Affiliates) and (ii) other transactions (including, without
limitation, the lease of office space or computer equipment or software
by the Issuer to or from an Affiliate) (A) in the ordinary course of
business, (B) pursuant to the reasonable requirements of the Issuer's
business, (C) upon fair and reasonable terms that are no less favorable
to the Issuer than could be obtained in a comparable arm's-length
transaction with a Person not an Affiliate of the Issuer, and (D) not
inconsistent with the factual assumptions set forth in the opinion
letter issued as of the Closing Date by Xxxxx Xxxx to the Secured
Creditors relating to the issues of substantive consolidation.
(i) DEBT. Except as provided in the Issuer's Articles of
Incorporation, the Issuer will not incur any Debt other than Debt
arising hereunder. The Issuer will not make any Investments other than
Permitted Investments and purchases of Eligible Loans.
(j) EXTENSION OR AMENDMENT OF TRANSACTION DOCUMENTS.
Without the written consent of the Required Note Purchasers, the Issuer
will not:
(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 any Sale and Purchase Agreement, Servicing
Agreement, Custodian Agreement, Financed Loan or 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
44
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 Issuer or its assignees to any
Pledged Collateral or modify, in a manner adverse to the
Issuer or its assignees, the right of the Issuer and its
assignees to demand or receive payment under any of the
Transaction Documents.
(k) ERISA. The Issuer will hot 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.
(l) SERVICERS. The Issuer will not permit any Person
other than the Servicer to collect, service or administer the Financed
Loans.
(m) ELIGIBLE LOANS NOT ORIGINATED BY SELLERS. The Issuer
shall not purchase from a Seller pursuant to a Sale and Purchase
Agreement any Eligible Loan that was originated by a Person other than
the applicable Seller unless the Issuer shall have taken (or caused to
be taken) all steps reasonably necessary to ensure that (i) after
giving effect to such purchase, the Issuer 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 6.02. ACQUISITION, COLLECTION AND ASSIGNMENT OF STUDENT LOANS.
The Issuer shall acquire only Eligible Loans (or beneficial interests therein)
with proceeds of the Note Purchases and shall diligently cause to be collected
all principal and interest payments on all the Financed Loans and all sums to
which the Issuer or Trustee is entitled pursuant to any Sale and 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 Issuer shall also make, or cause to be made by Sellers or Servicers
or Trustees, every effort to collect the Issuer's or such Seller's or Servicer's
or Trustee's claims for payment from the Secretary of Education or any Guarantor
as soon as possible, of all payments related to such Financed Loans. The Issuer
will assign or direct the assignment of such Financed Loans for payment of
guarantee benefits as required by applicable law and regulations. The Issuer
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.
45
SECTION 6.03. ENFORCEMENT OF FINANCED LOANS. The Issuer 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
Issuer and Trustee, as applicable thereunder. The Issuer 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 Issuer, the
Trustee and the Note Purchasers under or with respect to each Financed Loan and
agreement in connection therewith. The Issuer 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 or the Note Purchasers (with respect to the
rights of the Note Purchasers, without the approval of the Required Note
Purchasers, which approval shall not be unreasonably withheld). Nothing in this
Agreement shall be construed to prevent the Issuer 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 6.04. ENFORCEMENT OF SERVICING AGREEMENTS. The Issuer 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 Issuer 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 Secretary of Education which relate to any Financed Loans. The Issuer
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 Issuer and of the Trustee under or with respect to each
Servicing Agreement. The Issuer 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 or the Note
Purchasers, without the written consent of the Required Note Purchasers, 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 Required Note
Purchasers shall not be effective with respect to the servicing of Financed
Loans; provided, however, that the Required Note Purchasers shall respond as
promptly as may be practicable after receipt by the Required Note Purchasers of
a request of the Issuer for the Required Note Purchasers' consent to any
modification, amendment or supplement of, or any waiver with respect to, any
provision of any Servicing Agreement.
SECTION 6.05. ADMINISTRATION AND COLLECTION OF FINANCED LOANS. All
Financed Loans shall be administered and collected either by the Issuer or by a
Servicer in a competent, diligent and orderly fashion and in accordance with all
requirements of the Higher Education Act, the Secretary of Education, this
Agreement, the Federal Reinsurance Agreements, the Trustee Guarantee Agreement
and any other guarantee agreement issued by any Guarantor to the Trustee.
46
SECTION 6.06. AMENDMENT OF FORM OF SALE AND PURCHASE AGREEMENT. The
Issuer shall notify the Trustee, the Required Note Purchasers in writing of any
proposed material amendments to the form of Sale and Purchase Agreement. No such
amendment shall become effective unless and until the Required Note Purchasers
consent in writing thereto (which consent shall not be unreasonably withheld).
SECTION 6.07. 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 Issuer, if any, for
which the Trustee acts in a fiduciary capacity.
SECTION 6.08. PREPAYMENTS AND REFINANCING. The Issuer or its Affiliates
may in the future, upon 30 days' prior written notice to the Agents, enter into
any agreements pursuant to which the Issuer 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, as long as at the time of any such pledge or sale, the conditions
set forth in the following sentence shall be satisfied. If and to the extent the
Issuer 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 Note
Purchasers, and in which the Trustee is granted a valid and perfected first
priority security interest for the benefit of the Secured Creditors subject to
no other lien, claim or encumbrance, an amount equal to, all Note Purchases and
other Obligations relating to such Financed Loans and the Trust Estate or any
interest therein affected by such action (together with all accrued and unpaid
Yield thereon together with all Yield which would accrue through the end of the
related Interest Periods) such Financed Loans shall no longer be security for
the Note Purchases. Notwithstanding anything to the contrary contained herein,
without the prior written consent of the Required Note Purchasers, in no event
shall any such payment to the Note Purchasers occur (i) 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 (ii) on a day other than the first Business Day of a calendar
month.
SECTION 6.09. PERIODIC REPORTING.
(a) The Issuer will cause the Valuation Agent to deliver
to each Agent and the Trustee:
(i) not later than each Valuation Date, a
Valuation Report setting forth the Aggregate Market Value, the
Liabilities and the Asset Coverage Ratio; and
47
(ii) not later than five Business Days prior to
each Note Purchase, other than a Rollover Note Purchase, a
Note Purchase Percentage Calculation Report.
(b) The Issuer will cause to be provided to each Agent
and the Valuation Agent, (i) not later than each Calculation Date, a
summary of each servicer report in the form set forth in Exhibit I
setting forth the Portfolio Characteristics (as defined in the
Valuation Agreement) of the Financed Loans, all as of the last day of
the immediately preceding calendar month and (ii) not later than 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 the Cash Reserve Account and (B) the Liabilities,
all as of the last day of the immediately preceding calendar month in
the form set forth in Exhibit J.
SECTION 6.10. UCC MATTERS; PROTECTION AND PERFECTION OF PLEDGED
COLLATERAL; DELIVERY OF DOCUMENTS. The Issuer will keep its principal place of
business and chief executive office, and the office where it keeps the Records,
at the address of the Issuer referred to in Article V(j) or, upon 30 days' prior
written notice to the Trustee and the Agents, at such other locations within the
United States where all actions reasonably requested by any Agent to protect and
perfect the interest of the Issuer and the Secured Creditors in the Pledged
Collateral have been taken and completed. The Issuer 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 Issuer delivers to each Agent such executed financing
statements as any Agent may request to reflect such name change or use, together
with such other documents and instruments as any Agent may request in connection
therewith. The Issuer 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 any 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
Required Note Purchasers to exercise or enforce any of their respective rights
hereunder. Without limiting the generality of the foregoing, the Issuer will:
(a) execute and file such financing or continuation statements or, upon the
request of any Agent, amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate or as any such Agent
may request, and (b) xxxx its master data processing records evidencing such
Pledged Collateral with a legend acceptable to each Agent, evidencing that the
Trustee, for the benefit of the Secured Creditors, has acquired an interest
therein as provided in this Agreement. The Issuer hereby authorizes the Trustee,
or any Secured Creditor on behalf of the Issuer, to file one or more financing
or continuation statements, and amendments thereto and assignments thereof,
relative to all or any of the Pledged Collateral now existing or hereafter
arising without the signature of the Issuer where permitted by law. 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 Issuer or the Trustee fails to perform any of its
agreements or obligations under this Section 6.10, any Secured Creditor may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of such Secured Creditor incurred in
connection therewith shall be payable by the Issuer upon the such Secured
Creditor's demand therefor. For purposes of enabling any such Secured Creditor
and the Trustee to exercise their respective rights described in the preceding
48
sentence and elsewhere in this Agreement, the Issuer hereby authorizes, and
irrevocably grants a power of attorney to, the Secured Creditors, the Trustee
and their respective successors and assigns to take any and all steps in the
Issuer's name and on behalf of the Issuer necessary or desirable, in the
determination of 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 Issuer's name on checks
and other instruments representing Collections and enforcing such Financed Loans
and other Pledged Collateral.
SECTION 6.11. OBLIGATIONS OF THE ISSUER WITH RESPECT TO PLEDGED
COLLATERAL. The Issuer 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 Issuer
or any of its Affiliates thereunder. The Issuer will timely and fully comply in
all respects with each Transaction Document.
SECTION 6.12. COLLATERAL CALL. The Issuer shall maintain at all times
the Minimum Asset Coverage Requirement. If the Issuer is notified by the
Valuation Agent that the Asset Coverage Ratio is below the Minimum Asset
Coverage Requirement, the Issuer shall deposit cash or Eligible Loans (valued at
no greater than the aggregate Principal Balance thereon), within three Business
Days, or such other period as agreed to by the Required Note Purchasers in
writing, of receipt of notice from the Valuation Agent, in the Collection
Account of the Trust Estate the amount specified by the Valuation Agent as
necessary to meet the Minimum Asset Coverage Requirement.
SECTION 6.13. GUARANTOR LIMITATIONS. The Issuer 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 each Agent in advance in writing.
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
(a) the Issuer 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 Issuer (or any of its officers) under or in connection with
this Agreement or any other
49
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 Issuer 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 6.12
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; the
Issuer shall, for any reason, cease to have a valid and 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 Issuer; or
(f) entry of a judgment or judgments in the aggregate in
excess of $100,000 against the Issuer 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 Issuer in writing within 30 days after entry; or
(g) (i) any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by the Issuer to the Agents, DFC
and TRFC prior to the date of execution and delivery of this Agreement
is pending against Issuer or Affiliate hereof, (ii) any material
development has occurred in any litigation (including, without
limitation, derivative actions), arbitration proceedings or
governmental proceedings so disclosed, or (iii) any litigation,
governmental proceeding, arbitration proceeding or other event has
occurred since the date of execution hereof which, in the case of
clause (i), (ii) or (iii) in the opinion of the Required Note
Purchasers, 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 Issuer 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 Issuer 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 Required Note
Purchasers 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
50
Servicer are released from the Pledged Collateral in accordance with
the terms of this Agreement; or
(j) at any time the sum of the aggregate outstanding
Principal Balance of all Financed Loans that are Proprietary Loans
exceeds 20% of the aggregate outstanding Principal Balance of all
Financed Loans; or
(k) the Issuer shall fail to perform or observe the
covenant set forth in Section 6.12 hereof; or
(l) the occurrence of an event or circumstance that has a
Material Adverse Effect; or
(m) at any time the sum of the aggregate outstanding
Principal Balance of Financed Loans serviced by Servicers for which the
reporting of financial information to the Agents is not permitted under
their Servicing Agreements shall exceed 10% of the aggregate
outstanding Principal Balance of all Financed Loans; or
(n) at any time the sum of the aggregate outstanding
Principal Balance of Financed Loans that are rehabilitated
Consolidation Loans exceeds 3% of the aggregate outstanding Principal
Balance of all Financed Loans; or
(o) after 180 days from any funding under a Liquidity
Agreement, one or more Liquidity Note Purchases remain unpaid to the
Liquidity Note Purchaser; or
(p) information in any of the reports described in
Exhibits C, D or E hereof 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 Agents may, by notice to the Issuer
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 Issuer. Upon any
such declaration or automatic occurrence, the Trustee and the Required
Note Purchasers 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 Required Note Purchasers pursuant
to this Article VII 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
Required Note Purchasers may deem commercially
51
reasonable. Any sale or transfer by the Trustee and/or the Required
Note Purchasers of Financed Loans shall only be made to an Eligible
Lender. The Issuer agrees that, to the extent notice of sale shall be
required by law, 10 Business Days' notice to the Issuer 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.
ARTICLE VIII
TRUSTEE
SECTION 8.01. 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 person 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
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
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(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 8.02. 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 Issuer 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 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 Issuer, an Agent or the Required Note
Purchasers; provided, however, that the Trustee may not delay any action
required hereunder after receipt of a certificate because the Trustee has failed
to receive such certificate.
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 Issuer, Agent or Note Purchaser request, 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 8.03. COMPENSATION OF TRUSTEE. The Issuer shall pay to the
Trustee from time to time pursuant to Section 2.05(c)(vi) reasonable
compensation for all services rendered by it hereunder, as set forth in the
letter agreement dated September 10, 1999 and attached as Exhibit F hereto, and
also all its reasonable 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 Trustee may not change the
amount of its annual compensation without giving the Issuer at least 90 days'
written notice prior to the beginning of a calendar year and without the written
consent of the Agents, which consent shall not be unreasonably withheld.
SECTION 8.04. 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 Issuer and the Agents 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
8.06 hereof (and is qualified to be the Trustee under the requirements of
Section 8.06 hereof). If no
53
successor Trustee has been appointed by the date specified or within a period of
90 days from the receipt of the notice by the Issuer and the Agents, whichever
period is the longer, the Trustee may (a) appoint a temporary successor Trustee
having the qualifications provided in Section 8.06 hereof or (b) request a court
of competent jurisdiction to (i) require the Issuer to appoint a successor, as
provided in Section 8.06 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 8.06 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 Issuer may remove such temporary successor Trustee and appoint a
successor thereto pursuant to Section 8.06 hereof.
SECTION 8.05. REMOVAL OF TRUSTEE. The Trustee or any successor Trustee
may be removed (a) by the Issuer for cause or upon the sale or other disposition
of the Trustee or its trust functions or (b) by the Issuer 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 Issuer 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 8.06. 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 Issuer by an instrument
in writing duly authorized by resolution. In the case of any such appointment by
the Issuer of a successor to the Trustee, the Issuer shall forthwith cause
notice thereof to the Agents.
Every successor Trustee appointed by the Issuer 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.
SECTION 8.07. MANNER OF VESTING TITLE IN TRUSTEE. Any successor Trustee
appointed hereunder shall execute, acknowledge, and deliver to its predecessor
Trustee, and also to the Issuer and the Agents, 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 Issuer, 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
54
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 Issuer 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 Issuer.
SECTION 8.08. SERVICING AGREEMENT. The Trustee acknowledges the receipt
of copies of the Servicing Agreements and Custodian Agreements attached as
Exhibit G hereto.
SECTION 8.09. 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 Issuer 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 Issuer; 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 Issuer is solely responsible.
SECTION 8.10. 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 Issuer hereby
acknowledges the fact that the 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 Trustee is willing to accept the status of "eligible
lender" hereunder as an accommodation to the Issuer, and the Issuer 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 the Agreement or any of the other Transaction Documents that
results from the actions or inactions of the Issuer or any Servicer.
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ARTICLE IX
INDEMNIFICATION
Without limiting any other rights which the Note Purchasers, the
Agents, the Trustee or any of their respective Affiliates may have hereunder or
under applicable law, and notwithstanding any limitation on recourse to the
Issuer set forth in this Agreement or any of the other Transaction Documents or
any Liquidity Agreement, the Issuer hereby agrees to indemnify the Note
Purchasers, the Agents, the Trustee 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, any
Liquidity Agreement or the Pledged Collateral, 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
Issuer shall indemnify the Note Purchasers, the Agents, the Trustee 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
Issuer 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 Issuer, a Servicer 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 Issuer or a 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
56
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 Issuer to perform its duties or
obligations in accordance with the provisions of this Agreement or any
other Transaction Document or any failure by the Issuer to perform its
respective duties in respect of the Financed Loans;
(h) any breach of contract by the Issuer 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;
(j) any repayment by the Note Purchasers of any amount
previously distributed in payment of Note Purchases or payment of Yield
or any other amount due hereunder, in each case which amount any such
Note Purchaser believes in good faith is required to be repaid;
(k) the commingling by the Issuer or any of its
Affiliates of Collections at any time with other funds;
(l) any investigation, litigation or proceeding expressly
related to this Agreement, any Liquidity Agreement or any other
Transaction Document or the use of proceeds of Note Purchases or the
Pledged Collateral or in respect of any Financed Loan;
(m) any failure by the Issuer 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; or
(n) any failure of the Issuer or any of its agents or
representatives to remit to the Trustee, Collections of Financed Loans
and other Pledged Collateral remitted to the Issuer or any such agent
or representative.
Any amounts subject to the indemnification provisions of this Article
IX shall be paid by the Issuer to the Note Purchasers, the Agents, the Trustee
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.
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 Issuer, the Required Note Purchasers and, to the extent affected thereby,
the Trustee, and no termination or
57
waiver of any provision of this Agreement or consent to any departure therefrom
by the Issuer shall be effective without the written concurrence of the Required
Note Purchasers. 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) 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 copy, when verbal
communication of receipt is obtained, except that notices and communications
pursuant to Article II shall not be effective until received.
SECTION 10.03. NO WAIVER; REMEDIES. No failure on the part of the
Trustee, the Agents or the Note Purchasers 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. This Agreement shall be
binding upon and inure to the benefit of the Issuer, the Note Purchasers, the
Agents, the Trustee and their respective successors and permitted assigns
(subject to this Section 10.04). This Agreement and the Note Purchasers' rights
and obligations hereunder and under the Notes and interest herein and in the
Notes shall be assignable in whole or in part (including by way of the sale of
participation interests therein or by assignment by an Agent of any of its
assigns of the whole or any part of the Commitment) by the Note Purchasers and
its successors and assigns; provided, however, that the Note Purchaser shall
not transfer or assign its interests in the Notes if immediately after such
transfer or assignment, the Notes would be owned by more than 100 persons as
described in Treasury Regulation 1.7704-l(h). The Issuer may not assign any of
its rights and obligations hereunder and under the Notes or any interest herein
and in the Notes without the prior written consent of the Agents. The Note
Purchasers and the Agent may not assign any of their rights and obligations
hereunder and under the Notes or any interest herein or in the Notes without the
prior written consent of the Issuer; provided, however, the Note Purchasers and
the Agent may assign their respective rights to any Affiliates, Liquidity
Providers, commercial paper conduits administered by an Agent or for whom an
Agent acts as referral agent and collateral agents without the consent of the
Issuer. The parties to each assignment or participation made pursuant to this
Section 10.04 shall execute and deliver to the applicable Agent and the
Administrative 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 Issuer. 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 Note Purchasers shall
notify the Issuer of any assignment or participation thereof made pursuant
58
to this Section 10.04. Subject to Section 10.11, the Note Purchasers may not, in
connection with any assignment or participation or any proposed assignment or
participation pursuant to this Section 10.04, disclose to the assignee or
participant or proposed assignee or participant any information relating to the
Issuer and the Pledged Collateral furnished to the Note Purchasers by or on
behalf of the Issuer, without either (a) first obtaining the prior written
consent of the Issuer, which consent shall not be unreasonably withheld, or (b)
delivering to the Issuer a written agreement signed by the proposed assignee or
participant, for the Issuer's benefit and otherwise in form and substance
reasonably acceptable to the Issuer pursuant to which the proposed assignee or
participant agrees to maintain the confidentiality of the information concerning
the Issuer and the Financed Loans that may be provided to it by an Agent or any
Note Purchaser.
SECTION 10.05. SURVIVAL. The rights and remedies with respect to any
breach of a representation and warranty made by the Issuer pursuant to Article V
and the indemnification and payment provisions of Articles VIII and IX and
Sections 2.16,10.08, 10.09, 10.11 and 10.12 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.
SECTION 10.07. GOVERNING LAW; JURY WAIVER. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF
THE TRUSTEE, FOR THE BENEFIT OF THE SECURED CREDITORS, IN THE COLLATERAL, OR
REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREUNDER.
SECTION 10.08. COSTS, EXPENSES AND TAXES. In addition to the rights of
indemnification granted to the Note Purchasers, the Agents, the Trustee and
their respective Affiliates under Article IX hereof, and notwithstanding any
limitation on recourse set forth herein, the Issuer agrees to pay on demand all
reasonable costs and expenses of each Note Purchaser, each Agent and the Trustee
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
Agreements or any other Transaction Document, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Trustee and each
of the Note Purchasers and Agents with respect thereto and with respect to
advising the Trustee, the Agents and the Note Purchasers as to their respective
rights and remedies hereunder or thereunder, and all costs and expenses, if any
(including reasonable
59
counsel fees and expenses), incurred by the Trustee, the Agents or the Note
Purchasers in connection with the enforcement of this Agreement, the Liquidity
Agreements 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 Note
Purchasers 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 any Note Purchasers or any incorporator,
affiliate, stockholder, officer, employee or director of any Note Purchasers 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 Note Purchasers
contained in this Agreement and all of the other agreements, instruments and
documents entered into by each such Note Purchaser pursuant hereto or in
connection herewith are, in each case, solely the corporate obligations of such
Note Purchaser, and that no personal liability whatsoever shall attach to or be
incurred by any administrator of any Note Purchaser or any incorporator,
stockholder, affiliate, officer, employee or director of any Note Purchaser or
of any such administrator, as such, or any other them, under or by reason of any
of the obligations, covenants or agreements of any such Note Purchaser 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 any Note Purchaser and each incorporator, stockholder,
affiliate, officer, employee or director of any such Note Purchaser or of any
such administrator, or any of them, for breaches by any Note Purchaser 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 10.09 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, each Agent and each of the
Note Purchasers each agree to keep confidential and not disclose any non-public
information or documents related to the Issuer or any Affiliate of the Issuer
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 Issuer or such Affiliate as
being confidential; provided, however, that each of the Trustee and each of the
Agents and Note Purchasers may disclose any such information (a) to the extent
required or
60
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 DFC or TRFC,
any potential liquidity or credit provider for DFC or TRFC, or any assignee or
participant or potential assignee or participant of any liquidity or credit
provider for DFC or TRFC, 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 Note Purchaser,
any Agent or the Trustee, 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, any Agent, any Note Purchaser, 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 or any
Liquidity Agreement, (g) to any rating agency rating the commercial paper notes
of a Note Purchaser, and (h) to such other Persons as may be approved by the
Issuer. 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 applicable
Note Purchaser, the applicable Agent or any of their respective employees,
directors, officers, advisors, accountants, auditors, or legal counsel to
preserve the confidentiality thereof.
SECTION 10.12. NO PROCEEDINGS.
(a) Each of the Trustee and the Issuer agrees that it
shall not file, or join in the filing of, cooperate with any Person in
the filing of, or encourage any Person with respect to the filing of a
petition against such Conduit Note Purchaser under the federal
bankruptcy laws, or join in the commencement of any bankruptcy,
reorganization, arrangement, insolvency, liquidation or other similar
proceeding against such Conduit Note Purchaser.
(b) Each Note Purchaser and each Agent agrees that it
shall not at any time file, or join in the filing of, cooperate with
any Person in the filing of, or encourage any Person with respect to
the filing of a petition against the Issuer under the federal
bankruptcy laws, or join in the commencement of any bankruptcy,
reorganization, arrangement, insolvency, liquidation or other similar
proceeding against the Issuer.
SECTION 10.13. 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 10.14. 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.
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ARTICLE XI
THE AGENTS
SECTION 11.01. AUTHORIZATION AND ACTION OF ADMINISTRATIVE AGENT. Each
Conduit Note Purchaser and Agent hereby accepts the appointment of and
authorizes the Administrative Agent to take such action as agent on behalf of
such Conduit Note Purchaser and Agent and to exercise such powers as are
delegated to such Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. Except for actions which the
Administrative Agent is expressly required to take pursuant to this Agreement,
the Administrative Agent shall not be required to take any action which exposes
the Administrative Agent to personal liability or which is contrary to
applicable law unless the Administrative Agent shall receive further assurances
to its satisfaction from the applicable Conduit Note Purchaser or Agent, of the
indemnification obligations under Section 11.04 against any and all liability
and expense which may be incurred in taking or continuing to take such action.
Each Agent agrees to give to each of its respective Note Purchasers 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 Note Purchasers) given to it by the Issuer, any
Seller, any Servicer, the Valuation Agent, or the Trustee, pursuant to the terms
of this Agreement.
SECTION 11.02. AUTHORIZATION AND ACTION OF AGENTS. Each Conduit Note
Purchaser hereby accepts the appointment of and authorizes its related Agent to
take such action as agent on its behalf and to exercise such powers as are
delegated to such Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. Each 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. Each Agent agrees to give to
each of its respective Note Purchasers 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 Note
Purchasers) given to it by the Issuer, any Seller, any Servicer, the Valuation
Agent, or the Trustee, pursuant to the terms of this Agreement. Except for
actions which any Agent is expressly required to take pursuant to this
Agreement, as the case may be, such Agent shall not be required to take any
action which exposes such Agent to personal liability or which is contrary to
applicable law unless such Agent shall receive further assurances to its
satisfaction from its related Liquidity Provider(s) of the indemnification
obligations under Section 11.06 against any and all liability and expense which
may be incurred in taking or continuing to take such action.
SECTION 11.03. AGENCY TERMINATION. Subject to Sections 11.06 and 11.08,
the appointment and authority of the Administrative Agent and the Agents
hereunder shall terminate upon the payment to (a) each Note Purchaser of all
amounts owing to such Note Purchaser hereunder and under the Notes and (b) the
Agents and the Administrative Agent of all amounts due hereunder and under the
Notes.
SECTION 11.04. AGENTS' RELIANCE, ETC. Neither the Administrative Agent,
the Agents nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it as
Administrative Agent or as Agents under or in connection with this Agreement or
any related agreement or document, except for its or their own gross
62
negligence or willful misconduct. Without limiting the foregoing, the
Administrative Agent and each 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 any Note Purchaser and shall not be responsible to
any Note Purchaser for any statements, warranties or representations made by the
Issuer, any Seller, any Servicer, any Guarantor, 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 Issuer, any Servicer, any Seller, any
Guarantor or the Valuation Agent or to inspect the property (including the books
and records) of the Issuer, any Servicer, any Seller, any Guarantor or the
Valuation Agent; (d) shall not be responsible to any Note Purchaser, 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 11.05. ADMINISTRATIVE AGENT, AGENTS, AND AFFILIATES. The
Administrative Agent and each Agent and its Affiliates may generally engage in
any kind of business with the Trustee, any Servicer, the Issuer, any Guarantor
or any Seller, any of their respective Affiliates and any Person who may do
business with or own securities of any Servicer, the Issuer, any Guarantor or
any Seller or any of their respective Affiliates, all as if Xxxxxx Guaranty
Trust Company of New York were not the Administrative Agent and without any duty
to account therefor to the Agents or the Note Purchasers and as if such parties
were not Agents and without any duty to account therefor to their respective
related Note Purchasers.
SECTION 11.06. [RESERVED].
SECTION 11.07. PURCHASE DECISION. Each Note Purchaser acknowledges that
it has, independently and without reliance upon its related Agent or the
Administrative 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 purchase an interest in the Notes. Each Note Purchaser also
acknowledges that it will, independently and without reliance upon its related
Agent or the Administrative Agent or any of their respective 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 11.08. SUCCESSOR AGENTS. The Administrative Agent or any Agent
may resign at any time by giving five days' written notice thereof to each Agent
(in the case of the Administrative Agent's resignation) of to the related
Conduit Note Purchaser and Liquidity Provider(s) (in the case of an Agent's
resignation), as applicable, the Issuer and the Trustee. Upon any such
resignation, the Agents or related Note Purchasers, as applicable, shall have
the right to appoint a successor Administrative Agent or Agent approved by the
Issuer (which approval will not be unreasonably withheld or delayed). If no
successor Administrative Agent or
63
Agent shall have been so appointed and shall have accepted such appointment,
within sixty days after the retiring Administrative Agent's or Agent's giving of
notice of resignation, then the retiring Administrative Agent or Agent may, on
behalf of the Agents or the related Note Purchasers, as applicable, appoint a
successor Administrative Agent or Agent. If such successor Administrative Agent
or Agent is not an Affiliate of the resigning Administrative Agent or Agent,
such successor Administrative Agent or Agent shall be subject to the Issuer's
prior written approval (which approval will not be unreasonably withheld or
delayed). Upon the acceptance of any appointment as Administrative Agent or
Agent hereunder by a successor Administrative Agent or Agent, such successor
Administrative Agent or Agent shall thereupon succeed to and become vested with
all of the rights, powers, privileges and duties of the retiring Administrative
Agent or Agent, and the retiring Administrative Agent or Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's or Agent's resignation hereunder as
Administrative Agent or Agent, the provisions of this Article XI shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was an
Administrative Agent or Agent under this Agreement.
64
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 ISSUER:
NHELP-III, INC.
By /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx, Vice President
c/o National Higher Education Loan Program
000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
(000) 000-0000
Fax: (000) 000-0000
THE NOTE PURCHASERS:
DELAWARE FUNDING CORPORATION
By: Xxxxxx Guaranty Trust Company of
New York, as attorney-in-fact for
Delaware Funding Corporation
By /s/ Xxxxxxx Xxxxx
----------------------------------
Xxxxxxx Xxxxx
Vice President
c/x Xxxxxx Guaranty Trust Company of
New York
000 Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Asset Finance Group
(000) 000-0000
Fax: (000) 000-0000
65
THREE RIVERS FUNDING CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name Xxxxxxx X. Xxxxxx
Title Vice President
c/o Global Securitization Services, LLC
00 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to the TRFC Agent.
THE AGENTS:
XXXXXX GUARANTY TRUST COMPANY OF NEW
YORK, as DFC Agent and Administrative
Agent
By /s/ Xxxxxxx Xxxxx
----------------------------------
Xxxxxxx Xxxxx
Vice President
c/x Xxxxxx Guaranty Trust Company of
New York
000 Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Asset Finance Group
(000) 000-0000
Fax: (000) 000-0000
66
MELLON BANK, N.A., as TRFC Agent
By /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name Xxxxxxx Xxxxxx
Title First Vice President
Xxx Xxxxxx Xxxx Xxxxxx
Xxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxxxxxx Xxxx
Fax: (000) 000-0000
THE TRUSTEE:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxx, Corporate Trust
Officer
Norwest Bank Minnesota, National Association
0xx & Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attn: Corporate Trust Services
(000) 000-0000
Fax:(000)000-0000
67
EXHIBIT A
FORM OF SALE AND PURCHASE AGREEMENT
[On file at Perry, Guthery, Xxxxx
& Xxxxxxxx, P.C., L.L.O.]
EXHIBIT B
FORM OF VALUATION AGREEMENT
FORM OF VALUATION AGENT AGREEMENT
among
______________________,
as the Valuation Agent
NHELP-III, INC.,
as the Issuer
and
DELAWARE FUNDING CORPORATION,
as a Conduit Note Purchaser
and
THREE RIVERS FUNDING CORPORATION,
as a Conduit Note Purchaser
and
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK,
as DFC Agent
and
MELLON BANK, N.A.,
as TRFC Agent
Dated as of ___________________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms........................................... 2
Section 1.02. Computation of Time Periods..................................... 5
ARTICLE II
VALUATION AGENT; TERM OF AGREEMENT
Section 2.01. Appointment and Acceptance...................................... 6
Section 2.02. Terms and Conditions............................................ 6
Section 2.03. Resignation and Discharge....................................... 6
Section 2.04. Term of Agreement............................................... 7
ARTICLE III
CALCULATIONS
Section 3.01. Maximum Note Purchase Percentage Calculations................... 7
Section 3.02. Loan Valuation Percentage Calculations.......................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.................................................. 8
ARTICLE V
INDEMNIFICATION................................................................. 9
ARTICLE VI
MISCELLANEOUS
Section 6.01. Confidentiality................................................. 10
Section 6.02. Amendment....................................................... 10
Section 6.03. Notices......................................................... 10
Section 6.04. Third Party Beneficiary......................................... 12
Section 6.05. Assignment by the Conduit Note Purchasers....................... 12
Section 6.06. Governing Law; Severability..................................... 12
Section 6.07. No Petition..................................................... 12
TABLE OF CONTENTS
(continued)
Page
Section 6.08. Limited Recourse Nature of Transactions......................... 12
Section 6.09. Execution in Counterparts....................................... 13
Section 6.10. Section Titles.................................................. 13
Section 6.11. Entire Agreement................................................ 13
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
ii
THIS VALUATION AGENT AGREEMENT (the "Agreement") is made as of
_______________________ by and among _________________________, a corporation
duly organized under the laws of the State of ___________ (the "Valuation
Agent"); NHELP-III, INC., a corporation duly organized under the laws of the
State of Nevada (the "Issuer"); DELAWARE FUNDING CORPORATION, a Delaware
corporation ("DFC"); THREE RIVERS FUNDING CORPORATION, a Delaware corporation
("TRFC," and together with DFC, the "Conduit Note Purchasers"); XXXXXX GUARANTY
TRUST COMPANY OF NEW YORK, a New York banking corporation, as DFC Agent (the
"DFC Agent"); and MELLON BANK, N.A., a national banking association, as TRFC
Agent (the "TRFC Agent," and, together with the DFC Agent, the "Agents").
PRELIMINARY STATEMENTS
WHEREAS the Issuer, the Conduit Note Purchasers, the Agents and Norwest
Bank Minnesota, National Association (the "Trustee") have entered into a
Warehouse Note Purchase and Security Agreement dated as of September 1, 1999
(the "Note Purchase Agreement"), pursuant to which the Conduit Note Purchasers
have agreed to purchase Notes issued by the Issuer 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 "Student Loans," and when financed under
the Note Purchase Agreement, the "Financed Loans");
WHEREAS the Conduit Note Purchasers will enter into Liquidity
Agreements (the "Liquidity Agreements") pursuant to which the Conduit Note
Purchasers may assign to the Liquidity Providers (as defined in the Note
Purchase Agreement) their respective right, title and interest to the whole or
part of the Notes issued by the Issuer or interests therein;
WHEREAS the Note Purchase Agreement and the Liquidity Agreements
provide that, in order to secure the prompt and complete payment of all amounts
due and payable thereunder, the Issuer will grant to the Trustee, for the
benefit of the Conduit Note Purchasers and the Agents, a security interest in
the Financed Loans, all revenues 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 Note Purchase Agreement
(collectively, the "Pledged Collateral");
WHEREAS the maximum principal amount of Notes the Conduit Note
Purchasers will be obligated to purchase from the Issuer 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 Note Purchase 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 Agreement and its
exhibits, the terms set forth above and in this Section 1.01 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 Note Purchase Agreement, in which case the definition
in the Note Purchase Agreement shall be controlling.
"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 "Revenues"),
(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 Revenues").
"Cost of Funds" means the interest rate per annum used by the Valuation
Agent in the Cash Flow Projections for computing debt interest expense.
"Discount Rate" means the rate of discount per annum stipulated in the
Note Purchase Percentage Calculation Assumptions and the Valuation Report
Assumptions, as applicable, to be used by the Valuation Agent in connection with
its determination of the present value of Net Revenues.
"Loan Valuation Percentage" has the meaning set forth in the Note
Purchase Agreement, and is to be determined by the Valuation Agent by: (a)
dividing (i) the present value of the Net Revenues (using the Portfolio
Characteristics and the Valuation Report Assumptions) by (ii) the outstanding
principal balance of Student Loans, and (b) adding 100% to the resulting
percentage.
"Net Revenues" means the projected net income to be received from the
Student Loans after taking into account financing costs, loan defaults and
delinquencies, fees and other charges, all as set forth in the Note Purchase
Percentage Calculation Assumptions and the Valuation Report Assumptions, as
applicable.
"Note Purchase Percentage Calculation Assumptions" means the following
cash flow and related assumptions to be used by the Valuation Agent in
connection with its preparation of each Note Purchase Percentage Calculation
Report:
2
(a) the Cost of Funds shall be a rate per annum equal to
the sum of (i) the weighted average of the Interest Rates applicable to
the Notes Outstanding for the current Interest Period, (ii) the
applicable Margin and (iii) .20%;
(b) the Discount Rate to be applied to the Net Revenues
shall be a rate per annum equal to the sum of (i) the Cost of Funds,
and (ii) .80%;
(c) interest earnings on short-term balances shall be a
rate per annum equal to: (i) LIBOR, less (ii) .10%;
(d) the cumulative default rate shall be 18%;
(e) default occurrences shall be spread out evenly over
each year of repayment in accordance with the following schedule: 70%
in the first year of repayment; 20% in the second year of repayment;
10% in the third year of repayment; and 0% thereafter;
(f) the principal balance of Student Loans that receive
an interest rate reduction pursuant to any Borrower Incentive Program
will equal the product of: (i) the aggregate principal balance (not
including any capitalized interest) of Student Loans eligible to
participate in any such program, and (ii) 20%;
(g) servicing fees for Student Loans will be based upon
the fees stated in the applicable Servicing Agreements covering the
Financed Loans that are then in effect. The presently effective
servicing fees for UNIPAC Service Corporation ("UNIPAC") and Great
Lakes Higher Education Servicing Corporation ("Great Lakes") are
attached hereto as Exhibit D;
(h) fees payable to the U.S. Department of Education on
Consolidation Loans made after October 1, 1993 will be charged at a
rate of 1.05% (or such other rate as may be provided for under
applicable law) per annum on the outstanding principal balance of such
loans, payable monthly;
(i) the Portfolio Administration Fee shall be 0.45% per
annum, payable monthly in arrears based upon the unpaid principal
balance of Financed Loans at the end of the prior month;
(j) claim reimbursement shall occur after 630 days;
(k) receipt of Student Loan Payments shall occur with a
30-day lag;
(l) receipt of SAP and ISP payments shall occur with a
60-day lag;
(m) 12% of the Financed Loans shall be deferred for 12
months; and
(n) 11% of the Financial Loans enter forbearance for 6
months.
3
Pursuant to the terms of the Note Purchase Agreement, the assumptions
in paragraphs (a) through (n) above may be amended from time to time with the
mutual consent of the Issuer, the Conduit Note Purchasers and the Agents (with
notice to the Valuation Agent stating the specific nature of such changes and
that any and all consents and approvals necessary to effect such changes have
been obtained). All other assumptions regarding Financed Loans shall be as set
forth in the Portfolio Characteristics.
"Note Purchase Percentage Calculation Report" has the meaning set forth
in the Note Purchase Agreement, and is to be provided by the Valuation Agent to
the Issuer, the Conduit Note Purchasers, the Agents and the Trustee prior to
each new financing of Student Loans, in the form attached hereto as Exhibit A.
"Portfolio Characteristics" means the information contained in the
reports provided to the Valuation Agent by or at the direction of the Issuer not
later than 10 business days prior to the Calculation Date each month, 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 Note Purchase
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 a report furnished by the Valuation Agent to
the Conduit Note Purchasers, the Agents, the Issuer and the Trustee pursuant to
Section 6.09(a)(i) of the Note Purchase Agreement, in the form attached hereto
as Exhibit B.
"Valuation Report Assumptions" means the following cash flow and
related assumptions to be used by the Valuation Agent in connection with its
preparation of each Valuation Report required under the Note Purchase Agreement:
(a) the Cost of Funds shall be a rate per annum equal to
the sum of (i) the weighted average of the Interest Rates applicable to
Notes Outstanding for the current Interest Period and (ii) the
applicable Margin;
(b) the Discount Rate to be applied to the Net Revenues
shall be a rate per annum equal to the sum of (i) the Cost of Funds,
and (ii).80%;
(c) interest earnings on short-term balances shall be a
rate per annum equal to: (i) LIBOR, less (ii).10%;
(d) the cumulative default rate shall be 18%;
(e) default occurrences shall be spread out evenly over
each year of repayment in accordance with the following schedule: 70%
in the first year of repayment; 20% in the second year of repayment;
10% in the third year of repayment; and 0% thereafter;
4
(f) the principal balance of Student Loans that receive
an interest rate reduction pursuant to any Borrower Incentive Program
will equal the product of: (i) the aggregate principal balance of
Student Loans receiving any such reduced interest rate as shown in the
Portfolio Characteristics, and (ii) 105%;
(g) servicing fees for Student Loans will be based upon
the fees stated in the applicable Servicing Agreements covering the
Financed Loans that are then in effect. The presently effective
servicing fees for UNIPAC Service Corporation ("UNIPAC") and Great
Lakes Higher Education Servicing Corporation ("Great Lakes") are
attached hereto as Exhibit D;
(h) fees payable to the U.S. Department of Education on
Consolidation Loans made after October 1, 1993 will be charged at a
rate of 1.05% per anum (or such other rate as may be provided for under
applicable law) on the outstanding principal balance of such loans,
payable monthly;
(i) the Portfolio Administration fee shall be 0.45% per
annum, payable monthly in arrears based upon the unpaid principal
balance of loans at the end of the prior month.
(j) claim reimbursement shall occur after 630 days;
(k) receipt of Student Loan Payments shall occur with a
30-day lag;
(l) receipt of SAP and ISP payments shall occur with a
60-day lag;
(m) 12% of the Financed Loans shall be deferred for 12
months; and
(n) 11% of the Financed Loans enter forbearance for 6
months.
Pursuant to the terms of the Note Purchase Agreement, the
assumptions in paragraphs (a) through (n) above may be amended from
time to time with the mutual consent of the Issuer, the Conduit Note
Purchaser and the Agents (with notice to the Valuation Agent stating
the specific nature of such changes and that any and all consents and
approvals necessary to effect such changes have been obtained). All
other assumptions regarding Financed Loans shall be as set forth in the
Portfolio Characteristics.
SECTION 1.02. 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."
5
ARTICLE II
VALUATION AGENT; TERM OF AGREEMENT
SECTION 2.01. APPOINTMENT AND ACCEPTANCE. The Issuer hereby appoints
_______ as Valuation Agent, with the approval of the Agents and the Conduit Note
Purchasers, under this Agreement in connection with the Note Purchase Agreement
and ______________hereby accepts such appointment, subject to the terms and
conditions set forth below in Section 2.02. For purposes of this Valuation Agent
Agreement the principal office of _________________shall
be__________________________ , unless otherwise indicated to the other parties
hereto in writing by_______________________________.
SECTION 2.02. TERMS AND CONDITIONS.
(a) The Valuation Agent shall be obligated to perform
hereunder only upon performance by the Issuer (i) of its obligations
to provide statistical information to the Valuation Agent at the times
and in the manner described in the Note Purchase Agreement, and (ii)
of its duties and responsibilities hereunder.
(b) Unless herein otherwise specifically provided, any
order, certificate, notice, request or communication from the Issuer
made or given under any provision of this Agreement shall be sufficient
if signed by any person whom the Valuation Agent reasonably believes to
be a duly authorized officer or attorney-in-fact of the Issuer.
(c) The Valuation Agent shall be obligated to perform
only such duties as are set forth specifically herein any duties
necessarily incidental thereto.
(d) The Valuation Agent shall be protected and shall
incur no liability for or in respect of any action taken or omitted to
be taken or anything suffered in good faith by it in reliance upon
anything contained in the Notes, the Note Purchase Agreement, the
Liquidity Agreement or any information supplied to it by the Issuer
pursuant to this Agreement.
(e) The Valuation Agent shall incur no liability
hereunder except for loss sustained by reason of its or its employee's
or agent's negligence or willful misconduct.
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 Agreement by
giving at least sixty (60) days' written notice to the Issuer, the
Conduit Note Purchasers, the Trustee and the Agents.
(b) The Valuation Agent may be removed upon at least
sixty (60) days' written notice to the Valuation Agent, at the
direction of the Issuer with the consent of the Agents, by an
instrument signed by the Issuer and filed with the Valuation Agent, the
Conduit Note Purchasers, the Trustee and the Agents. Upon the
occurrence of an Event of Default (as defined in the Note Purchase
Agreement), the Agents may remove the Valuation Agent at any time.
6
Notwithstanding the foregoing, no resignation or removal of the
Valuation Agent shall be effective until a successor shall have been appointed
by the Issuer with the consent of the Agents, which shall not be unreasonably
withheld, or by the Agents after an Event of Default (as defined in the Note
Purchase Agreement), 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 Issuer 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 Note Purchase 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 Note Purchase Agreement has not been
satisfied.
SECTION 2.04. TERM OF AGREEMENT. Unless otherwise terminated pursuant
to the provisions of Section 2.03 hereof, this Agreement shall terminate
on_______________, unless extended to such later date as mutually agreed to in
writing by the Issuer and the Valuation Agent, with the consent of the Agents.
ARTICLE III
CALCULATIONS
SECTION 3.01. MAXIMUM NOTE PURCHASE PERCENTAGE CALCULATIONS.
(a) Pursuant to the terms and at the times required in
the Note Purchase Agreement, the Valuation Agent shall compute the
Maximum Note Purchase Percentage by undertaking certain analytical
procedures with respect to the Student Loans to be financed
thereunder. The Maximum Note Purchase Percentage shall be determined
by: (i) dividing (A) the present value of the Net Revenues (using the
Portfolio Characteristics and the Note Purchase Percentage Calculation
Assumptions) by (B) the outstanding principal balance of Student
Loans, and (ii) adding 100% to the resulting percentage.
(b) Not later than five Business Days prior to each Note
Purchase that does not constitute a Rollover Note Purchase, the
Valuation Agent shall:
(i) perform Cash Flow Projections based upon the
Portfolio Characteristics and the Note Purchase Percentage
Calculation Assumptions (both as defined herein);
(ii) calculate the Maximum Note Purchase
Percentage (as defined herein and in the Note Purchase
Agreement) using the results of the Cash Flow Projections
described in Section 3.01(b)(i) above; and
(iii) submit a report to the Conduit Note
Purchasers, the Agents, the Issuer and the Trustee in the form
of Exhibit A attached hereto.
7
SECTION 3.02. LOAN VALUATION PERCENTAGE CALCULATIONS.
(a) Pursuant to the terms and at the times required in
the Note Purchase 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 any of the Conduit Note
Purchasers, the Agents or the Issuer, in the form of Exhibit C attached
hereto, and in any case not later than the third Business Day preceding
the last day of each month through April 30, 2000 and thereafter, but
only with the consent of each Agent, not later than the third Business
Day preceding each January 31, April 30, July 31 and October 31 (each a
"Valuation Date"), the Valuation Agent shall:
(i) perform Cash Flow Projections based upon the
Portfolio Characteristics and the Valuation Report Assumptions
(both as defined herein);
(ii) calculate the Loan Valuation Percentage
using the results of the Cash Flow Projections described in
Section 3.02(b)(i) above; and
(iii) submit a report to the Conduit Note
Purchasers, the Agents, the Issuer and the Trustee in the form
of Exhibit B attached hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Valuation Agent represents and warrants as follows:
(a) The Valuation Agent has been duly organized and is
validly existing as a corporation in good standing under the laws of
the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties are presently owned and
such business is presently conducted.
(b) The Valuation Agent is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires
such qualifications.
(c) The Valuation Agent has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement have been duly
authorized by the Valuation Agent by all necessary corporate action and
this Agreement is the legal, valid, binding and enforceable obligation
of the Valuation Agent.
(d) The fulfillment of the terms of this Agreement do not
conflict with, result in any breach of any of the terms and provisions
of or constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or by laws of the
8
Valuation Agent, or any indenture, agreement or other instrument to
which the Valuation Agent is a party or by which it is bound, or result
in the creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other
instrument, or violate any law or, to the best of the Valuation Agent's
knowledge, any order, rule or regulation applicable to the Valuation
Agent of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Valuation Agent or any of its properties.
(e) 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
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
Issuer set forth in this Agreement, the Issuer 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
expensed, 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, 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 Issuer 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 Issuer under or in connection with this
Agreement, which shall have been false or incorrect when made
or deemed made or delivered;
(ii) the failure by the Issuer to comply with
any term, provision or covenant contained in this Agreement;
and
(iii) any failure of the Issuer to perform its
duties or obligations in accordance with the provisions of
this 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 V shall be paid by the Issuer to the Valuation Agent or its officers,
directors, employees, agents, attorneys-in-fact or Affiliates for the benefit of
the applicable payee, within two Business Days following written demand
therefor.
9
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. CONFIDENTIALITY. Except as permitted by the Note Purchase
Agreement, the Valuation Agent, the Conduit Note Purchasers, the Agents and the
Issuer each agree to keep confidential and not to disclose any non-public
information, calculations, exhibits or documents related to this Agreement or
the Note Purchase 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. NOTICES.
(a) The Conduit Note Purchasers agree to Provide written
notice to the Valuation Agent within three Business Days of the
following:(i) a new Agents and (ii) the assignment by the Conduit Notes
Purchasers of the Investment of the Conduit Note Purchasers in the
Notes issued by the Issuer, such notice to include the amount
of such assignment and the Interest Rate applicable to such assignment.
(b) The Administrative Agent, on behalf of the Conduit
Note Purchasers, agrees to provide written notice to the Valuation
Agent no later than 10 days prior to the Calculation Date of the
applicable Discount Rate to be used to calculate the Maximum Note
Purchase Percentage and the Loan Valuation Percentage.
(c) All notices, requests or other communications to the
Valuation Agent, Issuer, Trustee, the Conduit Note Purchasers and
Agents, 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:
________________________________
________________________________
________________________________
Attn.:__________________________
Telephone:______________________
Facsimile:______________________
If to the Issuer,
10
addressed to it at: NHELP-III, INC.
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 DFC, Xxxxxx Guaranty Trust Company of New York
addressed to it at: 000 Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn.: Asset Finance Group
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to TRFC,
addressed to it at: c/o Global Securitization Services, LLC
00 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xx. Xxxxxxx X. Xxxxxx
Facsimile: (000)000-0000
with a copy to the TRFC Agent.
If to the DFC Agent,
addressed to it at: Xxxxxx Guaranty Trust Company of New York
000 Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn.: Asset Finance Group
Telephone: (000)000-0000
Facsimile: (000) 000-0000
If to the TRFC Agent,
addressed to it at: One Mellon Xxxx Xxxxxx
Xxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attn.: Xx. Xxxxxxxxx Xxxx
Facsimile: (000)000-0000
If to the Trustee,
addressed to it at: Norwest Bank Minnesota, National Association
0xx Xxxxxx & Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn.: Xxxx X. Xxxxxxx, Corporate Trust Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
11
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 6.04. THIRD PARTY BENEFICIARY. The Valuation Agent
acknowledges that the Issuer has granted a security interest in favor of the
Trustee for the benefit of the Secured Creditors (as defined in the Note
Purchase Agreement) all of the Issuer's right, title and interest in, to and
under this 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 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 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 6.05. ASSIGNMENT BY THE CONDUIT NOTE PURCHASERS. The Valuation
Agent and the Issuer acknowledge and agree that to the extent of any
assignment by the Conduit Note Purchasers of its right, title and interest in
and to the Investment of the Conduit Note Purchasers in the Notes issued by the
Issuer pursuant to the terms of the Liquidity Agreement, the Conduit Note
Purchasers shall be released from such obligations without any further act by
the Issuer or the Valuation Agent.
SECTION 6.06. 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.
SECTION 6.07. NO PETITION. Each of the Issuer 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 commercial paper of the Conduit
Note Purchasers, it will not institute against or join any other person or
entity in instituting against the Conduit Note Purchasers, 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 6.08. LIMITED RECOURSE NATURE OF TRANSACTIONS. Each of the
Issuer and the Valuation Agent hereby acknowledges and agrees that all
transactions with the Conduit Note Purchasers hereunder shall be without
recourse of any kind to the Conduit Note Purchasers. The Conduit Note
Purchasers shall have no obligation to pay any amounts owing hereunder unless
and until the Conduit Note Purchasers have received such amounts pursuant to the
Financed Loans. In addition, each of the Issuer and the Valuation Agent agrees
that the Conduit Note Purchasers shall have no obligation to pay any amounts
constituting fees, a reimbursement for
12
expenses or indemnities (collectively, "Expense Claims") and such Expense
Claims shall not constitute a claim against the Conduit Note Purchasers (as
defined in Section 101 of Title 11 of the United States Bankruptcy Code), unless
or until the Conduit Note Purchasers have received amounts sufficient to pay
such Expense Claims pursuant to the Financed Loans and such amounts are not
required to pay the commercial paper of the Conduit Note Purchasers.
SECTION 6.09. EXECUTION IN COUNTERPARTS. This 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 6.10. SECTION TITLES. The section titles contained in this
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 6.11. ENTIRE AGREEMENT. This 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.
13
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE VALUATION AGENT:
[VALUATION AGENT]
By____________________________________________
Name__________________________________________
Title_________________________________________
THE ISSUER:
NHELP-III, TNC.
By____________________________________________
Xxxxx X. Xxxxxx, Vice President
THE CONDUIT NOTE PURCHASERS:
DELAWARE FUNDING CORPORATION
By: Xxxxxx Guaranty Trust Company of New
York, as attorney-in-fact for Delaware
Funding Corporation
By.___________________________________________
Xxxxxxx Xxxxx, Vice President
x/x Xxxxxx Xxxxxxxx Xxxxx Xxxxxxx xx Xxx Xxxx
000 Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn.: Asset Finance Group
(000) 000-0000
Facsimile: (000)000-0000
14
THREE RIVERS FUNDING CORPORATION
By____________________________________________
Name_________________________________________
Title_________________________________________
c/o Global Securitization Services, LLC
00 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xx. Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to the TRFC Agent.
THE AGENTS:
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK, as DFC Agent
By.___________________________________________
Xxxxxxx Xxxxx, Vice President
X/x Xxxxxx Xxxxxxxx Xxxxx Xxxxxxx xx Xxx Xxxx
000 Xxxxxxx Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn.: Asset Finance Group
(000) 000-0000
Facsimile: (000) 000-0000
MELLON BANK, N.A., as TRFC Agent
By____________________________________________
Name_________________________________________
Title_________________________________________
Xxx Xxxxxx Xxxx Xxxxxx
Xxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxxxxxx Xxxx
Facsimile: (000) 000-0000
15
EXHIBIT A
FORM OF NOTE PURCHASE PERCENTAGE CALCULATION REPORT
In accordance with the Valuation Agreement among____________.,
NHELP-III, Inc., Delaware Funding Corporation, Three Rivers Funding Corporation,
Xxxxxx Guaranty Trust Company of New York, as DFC Agent and Mellon Bank, as
TRFC Agent, dated as of ____________,__________has acted as Valuation Agent for
purposes of preparing this Note Purchase Percentage Calculation Report. Based
upon the Portfolio Characteristics and the Note Purchase Percentage Calculation
Assumptions (both as defined therein), we hereby submit the following summary of
our calculations:
Date of Report:
Date of Proposed Note Purchase:
Cut-off Date for Portfolio Characteristics:
A. Principal balance of loans $
B. Total Revenues $
C. Total Expenses $
D. Total Net Revenues (B - C) $
E. Present value of Net Revenues ("PV") $
F. PV AS A % OF LOAN PRINCIPAL BALANCE (E/A), PLUS 100%
("MAXIMUM NOTE PURCHASE PERCENTAGE") %
EXHIBIT B
FORM OF VALUATION REPORT
In accordance with the Valuation Agreement among __________.,
NHELP-III, Inc., Delaware Funding Corporation, Three Rivers Funding Corporation,
Xxxxxx Guaranty Trust Company of New York, as DFC Agent and Mellon Bank, as TRFC
Agent, dated as of_______, _______. has acted as Valuation Agent for purposes of
preparing this Valuation Report. Based upon the Portfolio Characteristics and
the Valuation Report Assumptions (both 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 Revenues $
C. Total Expenses $
D. Total Net Revenues (B - C) $
E. Present value of Net Revenues ("PV") $
F. PV AS A % OF LOAN PRINCIPAL BALANCE (E/A), PLUS 100%
("LOAN VALUATION PERCENTAGE") %
EXHIBIT C
FORM OF REQUEST FOR VALUATION REPORT
__________________
__________________
__________________
Attn:_____________
[and, if requested by the Conduit Note Purchasers or the Agents:
NHELP-III, INC.
000 Xxxxx 00 Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn.: Xxxxx Xxxxxx
Ladies and Gentlemen:
Pursuant to the terms of the Valuation Agent Agreement among______,
NHELP-III, Inc. (the "Issuer"), Delaware Funding Corporation, Three Rivers
Funding Corporation, Xxxxxx Guaranty Trust Company of New York, as DFC Agent and
Mellon Bank, as TRFC Agent, dated as of______________________________, 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 Issuer, in
order that they can prepare the Portfolio Characteristics and other information
required by you to compute the Aggregate Market Value and Liabilities.]
or, if requested by the Issuer:
[The information required for you to prepare the Valuation Report,
including the Portfolio Characteristics and other information required to
compute the Aggregate Market Value and Liabilities 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 30 days from the
date this notice has been provided to you.
Sincerely,
[Conduit Note Purchaser], or
[Agent], or
[NHELP III, INC.]
EXHIBIT D
INITIAL LOAN SERVICING FEES
I. STUDENT LOANS SERVICED BY UNIPAC SERVICE CORPORATION
XXXXXXXX, SLS CONSOLIDATION
PER ACCOUNT SERVICING FEES & PLUS LOANS LOANS
Enrolled $ 1.50 per month N/A
Grace $ 3.20 per month N/A
Deferment $ 3.20 per month $3.75
Forbearance $ 3.20 per month $3.75
Repayment (Current) $ 3.20 per month $3.75
Repayment (More than 30 days past due) $ 5.45 per month $6.00
Default claim filing $ 20 per claim filed $20 per claim filed
II. STUDENT LOANS SERVICED BY GREAT LAKES HIGHER EDUCATION SERVICING CORPORATION
XXXXXXXX, SLS
PER ACCOUNT SERVICING FEES & PLUS LOANS
Enrolled $ 1.45 per month
Grace $ 3.05 per month
Deferment $ 3.05 per month
Forbearance $ 3.05 per month
Repayment (Current; months 1 through 12) $ 3.23 per month
Repayment (Current; months 13+) $ 2.86 per month
Repayment (More than 30 days past due; months 1 through 12) $ 3.55 per month
Repayment (More than 30 days past due; months 13+) $ 3.18 per month
Default claim filing $ 15.90 per claim filed
EXHIBIT C
DRAW NOTICE
NHELP-III, INC.WAREHOUSING FACILITY
Date: [2 Business Days prior to date Note Purchase is to be made]
In accordance with Section 2.02 of the Warehouse Note Purchase and Security
Agreement dated as of September 1, 1999 (the "Agreement"), by and among
NHELP-III, Inc. (the "Issuer"), Norwest Bank Minnesota, National Association
(the "Trustee"), Delaware Funding Corporation, Three Rivers Funding Corporation,
Xxxxxx Guaranty Trust Company of New York, as DFC Agent and Administrative
Agent, and Mellon Bank, as TRFC Agent, the Issuer hereby requests a Note
Purchase in the amount and as of the date provided below. This request is
accompanied by a Note Purchase Percentage Calculation Report as required
pursuant to Section 4.02 of the Agreement.
Date of Issuance ------------
Additional Issuance/Rollover Amount:
Total Required Additional Issuance/Rollover Amount as required ------------
pursuant to Exhibit D of the Agreement
New Issuance for the Funding of Student Loans:
Aggregate Amount of Student Loans to be Financed
Principal ---------------
Maximum Note Purchase Percentage, as provided in the Note Purchase --------------- %
Percentage Calculation Report for the most recently ended quarter
Requested Note Purchase Percentage, not to exceed the Maximum
Note Purchase Percentage provided above
Amount of Issuance required for principal funding (Student Loan --------------- %
Principal multiplied by Requested Note Purchase %)
Amount of Issuance required for interest funding ---------------
Total Amount of New Issuance ============
Total Issuance to be Purchased
(Sum of Additional Issuance/Rollover Amount and Amount of New
Issuance, provided above) ============
If a Liquidity Note Purchase, the requested Applicable Liquidity (Not Applicable)
Interest Rate
Test of Facility Amount:
Total available Facility Amount 400,000,000
Less the sum of:
Total outstanding Note Purchases ---------------
Total projected Yield due on all outstanding Note Purchases ---------------
Total outstanding Note Purchases & Yield ------------
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 above-requested Note
Issuance to be purchased in the amount noted above to the Collection Account
held by the Trustee on [DATE OF ISSUANCE]. Pursuant to Article IV of the
Agreement, I hereby certify that NHELP-III, Inc. has met the Conditions
precedent to a Note Issuance as required and as described in such section. I
further certify that to the best of my knowledge and belief, the amounts
provided above are accurate and complete.
NHELP-III, INC.
By____________________________________
Xxxxx X. Xxxxxx, Vice President
C-2
EXHIBIT D
MONTHLY REPORT
NHELP-III, INC. WAREHOUSING FACILITY
Calculation Date: [3rd Business Day preceding the end of each month]
Calculation Period: [Calendar month immediately preceding the
month in which calculation date occurs]
Settlement Date: [Second 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) ----------- ----------- ---------
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. ----------- ----------- ---------
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 Issuance ---------
Total Collections and Additional Issuance ---------
Payment Waterfall:
1. Estimated Taxes payable prior to the next Settlement Date ---------
2. Accrued and unpaid Servicer Fees and Custodian Fees as of the prior calculation Period ---------
3. Accrued and unpaid Yield due and owing as of such Settlement Date ---------
4. Maturing Principal Amount of Note Purchases which are due as the Settlement Date -----------
Issuer designated Principal Reductions or Additions ----------- ---------
Total Net Rollover Amount of Note Purchases
=========== ---------
5. Accrued and unpaid Commitment Fees, including the Commitment Fee, as of the current
Calculation Period ---------
6. Accrued and unpaid fees and expenses with respect to the Financed Loans as of the
prior Calculation Period ---------
7. Accrued and unpaid Trustee Fees as of the prior Calculation Period ---------
8. Amounts necessary to restore the Cash Reserve Account to the Cash Reserve
Requirement or amounts allowed to be withdrawn from the Cash Reserve Account ---------
9. Accrued and unpaid Portfolio Administration Fees as of the
current Calculation Period ---------
10. On the Settlement Date immediately following each Valuation Date, amounts
Calculated pursuant to the provisions of Exhibit E, and as further directed by
the Issuer ---------
Total Required Payments pursuant to Section 2.05(c) of the Agreement
=========
As an authorized representative of NHELP-III, Inc., I hereby certify that to
the best of my knowledge and belief the amounts provided above are accurate and
complete as determined on the Calculation Date and in accordance with the
provisions of the Warehouse Note Purchase and Security Agreement dated as of
September 1, 1999 (the "Agreement"), by and among NHELP-III, Inc., Delaware
Funding Corporation, Three Rivers Funding Corporation, Xxxxxx Guaranty Trust
Company of New York, Mellon Bank and Norwest Bank Minnesota, National
Association, as trustee.
Capitalized terms not defined herein shall have the meanings assigned to them in
the Agreement.
Date ________________________________
NHELP-III, INC.
By _______________________________
Xxxxx X. Xxxxxx, Vice President
D-2
EXHIBIT E-1
FORM OF ASSET COVERAGE RATIO CERTIFICATE
NHELP-III, INC. WAREHOUSING FACILITY
AGGREGATE MARKET VALUE:*
1. Outstanding principal balance of Financed Loans, multiplied by the Loan
Valuation Percentage
2. Accrued and unpaid borrower interest, federal interest subsidies and
special allowance payments
3. Outstanding principal balance of Permitted Investments, including
accrued and unpaid interest thereon
4. Payments on Financed Loans or other assets received by the Servicer or
the Issuer and not yet transferred to the Trustee
5. The unamortized value of any prepaid expenses
Total Aggregate Market Value
LIABILITIES:*
1. Facility Amount Note Purchases
2. Accrued and unpaid Yield and Commitment Fees
3. Any other accrued and unpaid fees:
(a) Custodian Fees
(b) Commitment Fees
(c) Servicing Fees
(d) Trustee Fees
(e) Portfolio Administration Fees
(f) Other
Total Fees
Total Liabilities
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 NHELP-III, Inc., I hereby certify that to the
best of my knowledge and belief 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 Warehouse Note Purchase and Security Agreement dated
as of September 1, 1999 (the "Agreement"), by and among NHELP-III, Inc.,
Delaware Funding Corporation, Three Rivers Funding Corporation, Xxxxxx Guaranty
Trust Company of New York, Mellon Bank and Norwest Bank Minnesota, National
Association, as trustee.
All capitalized terms not defined herein shall have the meanings assigned to
them in the Agreement.
Date ______________________________
NHELP-III, INC.
By _________________________________
Xxxxx X. Xxxxxx, Vice President
E-1-2
EXHIBIT E-2
FORM OF CASH RELEASE CERTIFICATE
NHELP-III, INC. WAREHOUSING FACILITY
Calculation Date (Quarterly): [3rd Business Day preceding the end of each
January 31, April 30, July 31, and October 31]
Settlement Date following each Quarterly Valuation Date:
[February 1, May 1, August 1, November 1]
Corporate Trust Officer
Norwest Bank Minnesota,
National Association
6th & Marquette
Minneapolis, MN
Pursuant to Section 2.05(c)(ix) of the Warehouse Note Purchase and Security
Agreement dated as of September 1, 1999 (the "Agreement"), by and among
NHELP-III, Inc. (the "Issuer"), Delaware Funding Corporation, Three Rivers
Funding Corporation, Xxxxxx Guaranty Trust Company of New York, Mellon Bank and
Norwest Bank Minnesota, National Association, as trustee, you are hereby
instructed to release funds in the amount of $____________________________(the
"Cash Release Amount") to be transferred to the Issuer or any other Person as
directed by the Issuer (by wire transfer as directed by the Issuer) on the
Settlement Date of___________________________________. The Cash Release Amount
is the amount of funds permitted to be withdrawn pursuant to Exhibit D 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 Cash Release Amount.
Additionally, provided in connection with this Cash Release Certificate is the
Asset Coverage Ratio and the Valuation Report. As an authorized representative
of NHELP-III, Inc., I hereby certify that to the best of my knowledge and belief
the calculation of the Cash Release 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 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 Cash Release Amount (______)
Total Restated Aggregate Market Value
Total Liabilities calculated pursuant to Exhibit______
Restated Asset Coverage Ratio _____%
Required Release Ratio _____%
Date ____________________________
NHELP-III, INC.
By ____________________________________
Xxxxx X. Xxxxxx, Vice President
E-2-2
EXHIBIT F
TRUSTEE'S FEE LETTER AGREEMENT
[NORWEST BANKS LOGO] Norwest Bank Minnesota, N.A.
Corporate Trust
Norwest Center
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
612/667-9165
September 10, 1999
Xx. Xxxxx X. Xxxxxx
Vice President
NHELP, Inc.
0000 "X" Xxxxxx
Xxxxxxx, XX 00000
NHELP-III, INC.
WAREHOUSE NOTE PURCHASE AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 1, 1999
$400,000,000
Dear Xx. Xxxxxx:
On behalf of Norwest Bank I am pleased to provide this fee letter to serve as
Indenture Trustee and Eligible Lender Trustee on the referenced transaction.
Norwest Corporate Trust Services appreciates its present relationship with NHELP
and affiliates, and we value the opportunity to expand this relationship through
this credit facility.
Norwest Corporate Trust Services' fee schedule relating to the Warehouse Note
Purchase and Security Agreement, dated as of September 1, 1999 ($400,000,000) is
as follows:
I. INITIAL FEE: $4,500.00
This fee covers all initial services in connection with acceptance of
the Trust, including the examination and execution of the Trust
agreement and all supporting documents, and establishing the necessary
accounts and records. THIS FEE ALSO INCLUDES AN ENFORCEABILITY OPINION
FROM IN-HOUSE LEGAL COUNSEL ASSOCIATED WITH REVIEW OF THE ORIGINAL
DOCUMENTS. Should other opinions be required, notice will be given in
advance concerning the billing of additional amounts. This is a
one-time fee payable at closing.
LEGAL EXPENSES INCURRED RELATING TO THE PREPARATION OF AMENDMENTS TO
EXISTING GUARANTEE AGREEMENTS WILL BE BILLED TO NHELP AT COST.
EXHIBIT G
COPIES OF SERVICING AND CUSTODIAN AGREEMENTS
UNIPAC SERVICE CORPORATION
GUARANTEED STUDENT LOAN PROGRAM
SERVICING AGREEMENT
THIS AGREEMENT entered into and effective as of the 16th day of September,
1999, by and between UNIPAC SERVICE CORPORATION, a Nebraska corporation,
Aurora, Colorado, herein referred to as "UNIPAC", and NHELP-III, Inc., herein
referred to as "NHELP".
WHEREAS, UNIPAC is in the loan servicing business in the State of
Colorado, and in the ordinary course of such business has processed and serviced
loans to student/parent borrowers (the "Education Loans") which are made and
guaranteed in accordance with the provisions of the Higher Education Act of
1965, as amended (the "Education Act") (references hereinafter to the "Education
Act" include rules and regulations promulgated thereunder as in effect from time
to time) including, but not limited to, the due diligence requirements
established from time to time thereunder regarding the activities required to be
performed by or on behalf of a lender with respect to delinquent or defaulted
loans, including the requirements set forth in 34 C.F.R. Section 682.411 (the
"Due Diligence Requirements"); and
UNIPAC has developed and/or has available to it the systems and
services to enable it to process and service Education Loans in accordance with
(i) the Education Act; and (ii) the rules, regulations and requirements of any
entity authorized under the Higher Education Act to guarantee the Education
Loans that UNIPAC and NHELP mutually agree as the guarantor of the Education
Loans owned by NHELP and serviced by UNIPAC pursuant to this Agreement (each a
"Guarantor" and the rules, regulations and requirements of such Guarantor being
hereafter called the Regulations); and
NHELP in the ordinary course of its business acquires Education Loans;
and
NHELP desires to retain UNIPAC to process and service certain of its
Education Loans.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. TERM.
1.1 The term of the Agreement shall be from the date of this Agreement
for a period of five (5) years ("Initial Term") with respect to certain of
NHELP's Education Loans, subject to earlier termination as provided in Section
15. This Agreement may be renewed for an additional five (5) year term
("Additional Term") provided, (a) NHELP gives written notice not less than
Ninety (90) days and not more than One Hundred Twenty (120) prior to expiration
of the Initial Term to UNIPAC of its intent to renew and (b) after delivery of
such notice and prior to expiration of the Initial Term, UNIPAC and NHELP
mutually agree on the fees to be charged pursuant to Section 8 hereof for the
services to be provided by UNIPAC during the Additional Term. Upon expiration of
the Initial or Additional Terms of this Agreement, all terms and conditions of
this Agreement (except
1
for the fees to be charged pursuant to Section 8 hereof for the services to be
provided by UNIPAC, which shall be subject to redetermination by UNIPAC as
provided below) shall continue on a month to month basis until such time that
either party may terminate this Agreement, with or without cause, upon Sixty
(60) days' prior written notice to the other party. Should this Agreement
continue in force on a month to month basis after expiration, UNIPAC reserves
the right to, at any time, increase, decrease, modify and/or change the Service
Fee as provided for in Section 8 and Schedule A attached hereto, in such manner
as UNIPAC may determine upon Sixty (60) days' prior written notice to NHELP.
1.2 (a) Upon the termination of this Agreement, UNIPAC shall turn over
to NHELP all Education Loan files complete with all information contained
therein and all current computer information on the Education Loans under
service pursuant to this Agreement in such form or fashion as NHELP shall
reasonably specify. At such deconversion, a fee of $12.00 per account plus any
other reasonable expenses incurred in connection with the transfer of such files
and other information shall be paid by NHELP.
(b) UNIPAC and NHELP specifically agree that the format used to transfer
NHELP's data contains confidential and proprietary trade secret information
which is the exclusive property of UNIPAC. UNIPAC and NHELP agree, however,
that all aspects of the underlying computer program, algorithms, methods of
processing, specific design and layout, report format, and the unique processing
techniques and interactions of the various aspects of UNIPAC's computer program
are trade secrets of, proprietary to, and owned exclusively by UNIPAC. The
confidentiality provisions of this Section 1.2(b) shall survive any termination
or expiration of this Agreement. NHELP covenants and agrees to keep confidential
all such information, processes, designs, layouts, and ideas described in this
Section 1.2(b) and all Trade Secrets (as defined in Section 11 below and,
collectively with the information described in this Section 1.2(b), the "UNIPAC
Proprietary Information") and to disclose UNIPAC Confidential Information only
with the prior written consent of UNIPAC. Notwithstanding the foregoing, NHELP
shall be permitted (without UNIPAC's prior consent) to disclose UNIPAC
Proprietary Information to any third party lender or credit provider that has an
interest in the Education Loans serviced by UNIPAC hereunder or for whose
benefit any such loans are pledged as collateral to secure obligations of NHELP
(each an "NHELP Lender"), provided that, prior to such disclosure, such NHELP
Lender delivers to NHELP (for the benefit of UNIPAC) its written acknowledgment
of the proprietary nature of the UNIPAC Proprietary Information and its
agreement to keep such information confidential and executes a UNIPAC
non-disclosure agreement. The specific data contained in any reports or computer
printouts produced by UNIPAC shall not constitute UNIPAC Proprietary Information
and all such data is and shall remain the exclusive property of NHELP.
1.3 NHELP shall have the right to transfer and assign all rights under
this servicing agreement to any affiliate, trustee or other party of interest,
including, but not limited to one or more NHELP Lenders, for the purpose of
securing servicing arrangements for student loans financed through the issuance
of debt instruments or other financing arrangements.
2. DELIVERY OF EDUCATION LOANS FOR SERVICING AND COLLECTION. Subject to
UNIPAC's scheduling requirements, NHELP may from time to time deliver or cause
to be delivered to
2
UNIPAC, Education Loans with respect to which loan processing has been completed
and loan proceeds have been disbursed to the student/parent borrowers prior to
the date of delivery to be serviced pursuant to the terms of this Agreement.
NHELP shall transmit to UNIPAC all such loan documentation as required by UNIPAC
to enable it to service the Education Loans as provided herein.
3. SERVICING OF EDUCATION LOANS. Upon acceptance of any Education Loan
into UNIPAC's computer system and after the sale date (if applicable) of the
Education Loan to NHELP, UNIPAC shall service such Education Loan in accordance
with the Education Act, the Regulations, and except to the extent contrary to
the Education Act or the appropriate Regulations, in accordance with the
provisions of this Agreement, including the following:
(a) UNIPAC shall take all steps necessary to maintain the
insurance on Education Loans in full force at all time.
(b) UNIPAC shall prepare and mail directly to the student/parent
borrower all required statements, notices, disclosures and
demands.
(c) UNIPAC shall retain records (tracked by Education Loan) of
contacts, follow-ups, collection efforts and correspondence
regarding each Education Loan.
(d) UNIPAC shall maintain books of account which shall reflect for
each Education Loan all transactions related thereto,
including, but not limited to, accounting for all payments of
principal and interest upon such Education Loans.
(e) UNIPAC shall process all deferments and forbearances.
(f) UNIPAC shall process all address changes and update address
changes accordingly.
(g) UNIPAC shall retain all documents received by UNIPAC
pertaining to each Education Loan.
(h) When necessary and allowable by the Education Act, UNIPAC
shall take all steps necessary to file a claim for loss with
Guarantor, and shall be responsible for all communication and
contact with that agency necessary or appropriate to
accomplish the same.
(i) UNIPAC shall provide a Lender's Manifest of Education Loans on
all new accounts, accounts paid in full or converted to
repayment, and provide any other information required by
Guarantor.
(j) UNIPAC shall process and add to the UNIPAC Servicing System
repurchased loans from the Guarantor as required by the
Regulations or upon the request of NHELP. The Repurchase Fee
as provided in Schedule A shall apply. This fee will be waived
3
if such repurchase is due to a UNIPAC servicing error or
violations by UNIPAC of the Due Diligence Requirements.
(k) UNIPAC shall provide such other services as UNIPAC customarily
provides and deems appropriate or as shall be necessary to
maintain at all times the eligibility under the Education Act
and the Regulations of the Education Loans for all subsidies,
benefits, guarantees and insurance payments.
4. ADDITIONAL SERVICING ACTIVITIES. At NHELP's request UNIPAC agrees to
perform additional servicing activities not required under the terms of this
Agreement for those Education Loans transferred to UNIPAC which have not been
previously serviced in accordance with the Education Act and Regulations, and
which require additional servicing activity to attempt to maintain or reinstate
the loans' principal and interest guarantee from the Guarantor ("Cure
Procedures"). UNIPAC, utilizing Cure Procedures approved by the Guarantor, will
use its best efforts to cure all defects caused by NHELP. UNIPAC makes no
representation or warranty that the guarantee on each Education Loan will be
reinstated regardless of UNIPAC following the Cure Procedures as approved by the
Guarantor. NHELP agrees to pay UNIPAC those fees for Cure Services described in
Schedule A under the topic entitled "Additional Servicing Activity".
5. PORTFOLIOS SUBJECT TO REJECTION BY UNIPAC. NHELP acknowledges that
certain loan portfolio types pose a risk of financial hardship for UNIPAC to
service under this Agreement. UNIPAC may in its discretion, prior to placing
such loans in the UNIPAC system, reject certain loans or loan portfolios
("Rejected Loans"). UNIPAC shall provide NHELP with reasonable advance notice
as to any Rejected Loans which UNIPAC declines to place on its system. UNIPAC
shall have no right to reject or decline loans after the loans are transferred
to the UNIPAC system.
6. REPORTS TO NHELP. (a) On or before the 15th day of each month,
unless some other time is provided herein, UNIPAC shall prepare and deliver to
NHELP, or to such other person as NHELP may designate, the following reports
with respect to activity during the preceding month:
(i) as of the last day of each month, an unaudited statement, in
reasonable detail, of all transactions during that month on
Education Loans serviced by UNIPAC for NHELP;
(ii) Processing Status Report (daily);
(iii) Check Register (daily);
(iv) Posting Ledger (daily/monthly);
(v) Statistical Report (monthly);
(vi) Loan Ledger/Alpha Report (monthly);
(vii) Guarantor Manifest (monthly);
4
(viii) Delinquency Report (daily/monthly);
(ix) Claims Activity Report (monthly).
NHELP shall receive at no cost one copy of each of the foregoing
reports. UNIPAC will provide extra copies at the request of NHELP. NHELP shall
reimburse UNIPAC its cost in producing such extra copies.
(b) UNIPAC will provide to NHELP: (i) as soon as available and in any
event within 120 days after the end of each fiscal year, copies of consolidated
financial statements for it and its subsidiaries prepared in accordance with
generally accepted accounting principles, duly certified by independent
certified public accountants of recognized standing selected by UNIPAC,
including consolidating statements, which shall set forth therein or in the
footnotes thereto UNIPAC's estimate of the amount of losses which could be
incurred form known and potential errors on Education Loans currently serviced
by UNIPAC, as well as the amount charged off or expensed for such losses during
the year; (ii) on annual basis within ten (10) days after receipt thereof,
copies of SAS 70 reports and any other annual compliance audit required by the
Education Act; and (iii) to the extent not provided in (i) and (ii) above on an
annual basis, its error rate in complying with the Due Diligence Requirements as
such error rate is determined by the annual compliance audit referred to in
clause (b) hereof.
(c) NHELP covenants and agrees to keep confidential all financial
statements and other information provided to it pursuant to Section 7(b)
(collectively, "UNIPAC Financial Information") and to disclose UNIPAC Financial
Information only with the prior written consent of UNIPAC. Notwithstanding the
foregoing, NHELP shall be permitted (without UNIPAC's prior consent) to disclose
UNIPAC Financial Information to any NHELP Lender, provided that, prior to such
disclosure, such NHELP Lender delivers to NHELP (for the benefit of UNIPAC) its
written acknowledgment of the proprietary nature of the UNIPAC Financial
Information and its agreement to keep such information confidential by execution
of a UNIPAC non-disclosure agreement.
7. INTEREST COMPUTATION. UNIPAC shall provide on a quarterly basis
statistical data for the computation of interest and special allowance billable
to the U.S. Department of Education for NHELP's Education Loans. Data will be
computed commencing with the date Education Loans appear on the records of
UNIPAC.
8. SERVICE FEE TO UNIPAC.
(a) NHELP shall pay to UNIPAC, but solely from moneys on deposit
in the Collection Account held pursuant to the Loan Agreement,
within fifteen (15) days of billing statement, for and in
consideration of the services performed by UNIPAC hereunder
for the preceding month, the fee provided for in Schedule A
of this Agreement, as follows:
5
(i) The Servicing Fee shall be as described in Schedule A
of this Agreement which is attached hereto and
incorporated herein by this reference.
(b) In the event Servicing Fees are not paid within Forty-Five
(45) days of the billing statement, (except in the event NHELP
has a bona fide dispute with the accuracy of said billing
statements), NHELP agrees UNIPAC will have the following
rights to (a) withhold reports otherwise due; (b) impose a
late charge of one and one-half percent (1 1/2%) per month
against the entire outstanding balance of the account
including any prior late charge; and (c) terminate services
without notice if nonpayment persists for sixty (60) days from
billing or more.
(c) The parties agree that should UNIPAC be required to make
system wide substantive or material changes to its current
lender servicing practices or servicing system due to changes
to the Education Act, or Regulations or to other costs beyond
UNIPAC's control, UNIPAC may renegotiate the Servicing Fees
with NHELP to reasonably reflect the financial impact on
UNIPAC due to these events at any time during the term of this
Agreement.
9. LOAN PAYMENTS. Student/parent borrowers will make all loan payments
to a third party lockbox established by UNIPAC. All cash receipts will be
remitted daily to the Trustee or as NHELP may otherwise reasonably request.
UNIPAC shall not be entitled to any lien or charge on, or right to set off
against any Education Loans or proceeds therein coming into its possession or
otherwise.
10. DISCLOSURE OF INFORMATION. All data, information, records,
correspondence, reports or other documentation received by UNIPAC pursuant to
this Agreement from NHELP or the school which the student attended or from the
student/parent borrower, or prepared and maintained by UNIPAC in the course of
its activities under this Agreement shall be released or divulged only to
NHELP, or with respect to information or documents relating to a particular
student/parent borrower, to that student/parent borrower, or such other parties
as UNIPAC may be directed in writing by NHELP or such student/parent borrower.
11. INTELLECTUAL PROPERTY PROTECTION. Notwithstanding anything in this
Agreement to the contrary, it is the express intention of the parties to this
Agreement that all right, title and interest of whatever nature in UNIPAC's user
manuals, training materials, all computer programs, routines, structures,
layout, report formats, together with all subsequent versions, enhancements and
supplements to said programs, all copyright rights (including both source and
object code) and all oral or written information relating to UNIPAC's programs
conveyed in confidence by UNIPAC to NHELP pursuant to this Agreement which is
not generally known to the public and which give UNIPAC an advantage over its
competitors who do not know or use such information (hereinafter collectively
referred to as "Trade Secrets"), and all other forms of intellectual property
of whatever nature is and shall remain the sole and exclusive property of
UNIPAC.
12. INQUIRIES; INSPECTIONS. (a) UNIPAC shall answer all inquiries
received by it (including, but not limited to, from NHELP Lenders) pertaining to
Education Loans, school status or refunds, and NHELP shall cooperate to the
extent necessary to gather the information needed to answer such
6
inquiries. Such inquiries may be referred to the school which the Student
Borrower attended or is attending, if necessary. UNIPAC shall have no
responsibility for any disputes between student/parent borrower and schools
regarding tuition, registration, attendance, or quality of education/training.
(b) NHELP, any of NHELP's Lenders or any of their respective designated
representatives may at any time during UNIPAC's regular business hours
examine, at its or their sole cost and expense, the records which UNIPAC
maintains on the Education Loan serviced by UNIPAC hereunder.
13. AGENT AUTHORIZATION. NHELP hereby authorizes UNIPAC to act on
behalf of and as NHELP's Agent in the servicing of certain of NHELP's Education
Loans. Such authorization will include but not be limited to all correspondence
and liaison necessary with Guarantor regarding NHELP's Education Loans,
assignment of claims to Guarantor and any/or all other communications,
correspondence, signatures or other acts appropriate to service NHELP's
Education Loans in accordance with the Education Act and/or Regulations.
14. LIABILITY OF UNIPAC. UNIPAC assumes no responsibility or liability
for failure of NHELP to exercise reasonable care of due diligence and the
results thereof, in making or servicing an Education Loan prior to placing of
the Education Loan on UNIPAC's system and prior to the date NHELP holds
ownership of the Education Loan. UNIPAC also assumes no liability for the
failure of any student/parent borrower to repay his or her loan, nor the failure
of the United States government to pay any principal, interest, subsidy or
special allowance, nor for the failure of Guarantor to make payment of any
principal and/or interest on any of NHELP's Education Loans. UNIPAC shall not be
responsible for consequences of unreasonable acts of any Guarantor. In the
event UNIPAC shall take any action or fail to take any action which causes any
Education Loan in NHELP's portfolio to be denied the benefit of any applicable
guarantee, UNIPAC shall have a reasonable time to cause the benefits of the
guarantee to be reinstated. If the guarantee is not reinstated within twelve
(12) months of denial by Guarantor, UNIPAC shall pay NHELP an amount equal to
the outstanding principal balance plus all accrued interest and other fees due
on the Education Loan to the date of purchase ("Reimbursed Education Loan"), up
to the amounts the applicable Guarantor would have paid under the Education Act,
as amended and the Regulations (as well as the Guarantor's reinsurance agreement
with the U.S. Secretary of Education), but for the action or inaction of UNIPAC
relating to servicing errors of UNIPAC, and thereupon UNIPAC shall be authorized
by NHELP, without limitation, the right to collect on the Reimbursed Education
Loan, the right to federal subsidies otherwise entitled to NHELP, and agency
authorization to utilize litigation in its collection efforts. For any
Reimbursed Education Loan for which the guarantee is fully reinstated by
Guarantor, NHELP shall pay UNIPAC an amount equal to the then outstanding
principle balance plus all accrued interest due thereon, up to the amounts
applicable as Guarantor would have paid under the Education Act, as amended and
the Regulations (as well as the Guarantor's reinsurance agreement with the U.S.
Secretary of Education), but for the servicing errors of UNIPAC, whereupon the
aforementioned authorization of UNIPAC shall terminate.
15. TERMINATION OPTION. If at any time during the term of this
Agreement either party refuses or fails to perform in a material fashion any
portion of this Agreement, and fails or refuses to correct said action or lack
of action within Thirty (30) days after receipt of written notice, the other
party may, upon an additional Thirty (30) days' written notice to NHELP, the
NHELP Lender
7
and the Trustee, terminate this Agreement, but only so long as a Servicer has
been appointed pursuant to the terms of the Loan Agreement.
16. INDEMNIFICATION. NHELP shall indemnify and hold UNIPAC harmless
from and against all claims, liabilities, losses, damages, costs and expenses
(including reasonable attorney's fees) ("Losses") asserted against or incurred
by [UNIPAC as a result of UNIPAC complying with any instruction or directive by
NHELP and UNIPAC shall in like manner indemnify NHELP for any miscompliance with
any such instruction or directive by UNIPAC.
17. STATUTE OF LIMITATIONS. Any action for the breach of any provisions
of this Agreement shall be commenced in accordance with any limitation on
actions for contracts under Nebraska law.
18. THIRD PARTY BENEFICIARIES. The parties hereto acknowledge and agree
that each NHELP Lender, Norwest Bank Minnesota, National Association, as
trustee, Delaware Funding Corporation, Three Rivers Funding Corporation, Xxxxxx
Guaranty Trust Company of New York, and Mellon Bank, N.A. shall be third party
beneficiaries of this Agreement with the power and right to enforce the
provisions of this Agreement against he parties hereto and that a security
interest in the Education Loans has been granted to said entities by NHELP. In
the event that any of such third party beneficiaries become the assignee or
successor of NHELP and, as such assignee or successor of NHELP, enforces this
Agreement against UNIPAC, then said third party beneficiary shall succeed to the
duties and obligations of NHELP under this Agreement.
19. NOTICES. All notices or communications by one of the parties hereto
to the other shall respectfully be addressed as follows: UNIPAC Service
Corporation, 0000 Xxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 and
NHELP-III, Inc., 000 Xxxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, or
to such other address as may be indicated from time to time by one of the
parties to the other party. Except as otherwise expressly provided, any notice
shall have been deemed to have been given upon mailing thereof when mailed by
registered or certified mail, and upon receipt in every other case.
20. GOVERNING LAW. This Agreement is executed and delivered within the
State of Nebraska, and the parties hereto agree that it shall be construed,
interpreted and applied in accordance with the internal laws of that State
without reference to its conflicts of law principles, and that the courts and
authorities within the State of Nebraska shall have sole jurisdiction and venue
over all controversies which may arise with respect to the execution,
interpretation and compliance with this Agreement.
21. CHANGES IN WRITING. This Agreement, including this provision
hereof, shall not be modified or changed in any manner except only by a writing
signed by all parties hereto.
22. SEVERABILITY. In the event a court of competent jurisdiction finds
any of the provisions of this Agreement to be so overly broad as to be
unenforceable or invalid for any other reason, it is the parties' intent that
such invalid provisions be reduced in scope or eliminated by the court, but only
to the extent deemed necessary by the court to render the provisions of this
Agreement reasonable and enforceable.
8
23. PERSONS BOUND. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their legal representatives, heirs,
successors and assigns.
24. ASSIGNMENT. Except as provided in Sections 1.3 and 18 hereof, this
Agreement shall not be assigned by either party without the prior written
consent of the other party which consent shall not be unreasonably withheld.
25. TITLES. The titles used in this Agreement are intended for
convenience and reference only. They are not intended and shall not be construed
to be a substantive part of this Agreement or in any other way to affect the
validity, construction or effect of any of the provisions of this Agreement.
26. WAIVER. The waiver or failure of either party to exercise in any
respect any right provided for herein shall be in writing, and shall not be
deemed a waiver of any further right hereunder.
27. CONTINUITY OF LOAN SERVICING.
27.1 In the event NHELP desires to sell any of its Education Loans,
NHELP shall sell the Education Loans, subject to this Agreement, to a lender
also maintaining an agreement with UNIPAC, in order for the sale to cause no
disruption in service, or change in UNIPAC for the Borrower. If NHELP elects for
any reason to remove from the servicing system of UNIPAC all or any of the
Education Loans that NHELP, now owns or hereafter acquires, NHELP shall give
UNIPAC written notice of such election at least Ninety (90) days prior to the
date NHELP intends to remove such Education Loans. NHELP hereby grants to UNIPAC
or its designee the option then to purchase from NHELP all or any portion of the
Education Loans that NHELP owns on any date selected by UNIPAC prior to such
removal, at a purchase price equal to the fair market value of the Education
Loan(s) as established by third party certification on the date of purchase.
UNIPAC's option to purchase may be exercised by sending written notice thereof
to NHELP within ninety (90) days after UNIPAC's receipt of NHELP's notice of
election to remove Education Loans from the UNIPAC servicing system. The option
to purchase referred to above shall not apply or be available to UNIPAC in the
event UNIPAC terminates the servicing agreement for any reason other than
non-payment of servicing fees applicable under this Agreement.
27.2 Section 27.1 will not apply in (i) the event of UNIPAC breach or
default, (ii) with respect to a sale f the Education Loans to a holder of other
loans for the same borrower, or (iii) upon a sale of an Education Loan by the
Trustee if an Event of Default has occurred under the Loan Agreement.
27.3 The intent of this Section 27 is to assure that every Education
Loan will remain with UNIPAC for servicing for the life of the loan.
27.4 The foregoing provisions of this Section 27 are and shall at all
times remain subordinate and inferior to the rights and interests of any NHELP
Lender in the Education Loans of NHELP and, in the vent of a foreclosure of
ownership of the Education Loans of NHELP pursuant to any security interest held
for the benefit of an NHELP Lender, the foregoing provisions shall terminate
and shall have no force or effect.
9
28. REMOVAL FEE. Should NHELP, remove any of its Education Loans from
the UNIPAC system prior to a scheduled termination or breach of this Agreement,
NHELP agrees to pay to UNIPAC a removal fee of Fifteen Dollars ($15.00) per
loan transferred off the UNIPAC computer system. This removal fee shall be
exclusive of those charges described in Section 1.2 of this Agreement.
29. FORCE MAJEURE. The foregoing provisions of this Agreement are
subject to the following limitation: If by reason of a force majeure UNIPAC is
unable in whole or in part to carry out any agreement on its part herein
contained, UNIPAC shall not be deemed in default during the continuance of such
inability. The term "force majeure" as used herein shall mean, without
limitation, the follows: acts of God; acts of public enemies; insurrections;
riots; landslides; earthquakes; fires; storms; droughts; floods; explosions.
UNIPAC shall at all times during the term of this Agreement, maintain a
business continuance or disaster recovery plan. NHELP shall have the right to
inspect such plan at any time upon request by NHELP.
30. HIRING. NHELP agrees that during the term of this Agreement and
any extensions or renewals thereof, and for one year thereafter, NHELP shall not
solicit for hire, or knowingly allow its employees to solicit for hire, any
employees of UNIPAC.
31. ENTIRE AGREEMENT. This is the entire and exclusive statement of the
Agreement between the parties, which supersedes and merges all prior proposals,
understandings and all other agreements oral and written, between the parties
relating to this Agreement.
32. CONSENTS AND APPROVALS. The parties acknowledge that this Agreement
is subject to certain consents and approvals from one or more of the NHELP
Lenders and that the Education Loans of NHELP being serviced hereunder shall in
part be pledged as collateral security to or for the benefit of the NHELP
Lenders. The parties consent to the pledge of such Education Loans as collateral
security and agree that, after any assignment, transfer or foreclosure of
ownership of the Education Loans pursuant to such collateral security
arrangements, an NHELP Lender shall, without further action or approval from
UNIPAC, succeed to the rights and obligations of NHELP under this Agreement
(except those obligations in Section 27 above) in respect of the transferred
Education Loans. In addition, subsequent to the execution of this Agreement, the
parties shall use their best efforts in good faith to obtain any required
consents and approvals; provided however, that the parties shall amend or modify
this agreement to the extent necessary to obtain any required consent or
approval.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
UNIPAC SERVICE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
Date: September 16, 1999
NHELP-III, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
Date: September 16, 1999
11
SCHEDULE "A"
A. Conversion Fee.
Five Dollars ($5.00) per account acquired by NHELP and added to the
UNIPAC Servicing System during the period of time the borrower is in
school. For periods of time other than when the borrower is in school,
the fee will be Ten Dollars ($10.00) per account. Notwithstanding the
foregoing, no fee will be assessed for the first twenty thousand
Education Loans converted to UNIPAC for full servicing after execution
of this Agreement. All on-system conversions to or from a full service
client of UNIPAC will be performed at no charge to NHELP.
Notwithstanding the foregoing, should any portfolio present an
"Extraordinary Conversion", requiring additional conversion services
materially beyond that customarily provided for a normal acquisition of
Education Loans, then NHELP agrees to pay a conversion fee mutually
agreed to between NHELP and UNIPAC.
For purposes of this Agreement, whether a portfolio presents an
Extraordinary Conversion shall be determined after the data analysis,
and file review, have been conducted of the portfolio by UNIPAC.
Factors to consider in determining whether a portfolio presents an
Extraordinary Conversion are as follows:
1. Unprocessed data.
2. Degree to which the conversion may be automated versus manual.
3. Integrity of the documentation. Are the files complete? Does
the data match the file content?
4. Presence of backlogged processing in the portfolio.
5. Whether prior servicing had substantial noncompliance with the
Education Act and Regulations.
After consideration of the foregoing factors, NHELP and UNIPAC agree to
come to mutual agreement at the beginning and once again at the end of
the conversion of a particular portfolio as to whether they need to
negotiate a mutually agreeable conversion fee.
B. Monthly Servicing Fee - GSL (Xxxxxxxx) Loans in School Status.
One Dollar and Fifty Cents ($1.50) per in-school account per month.
C. Monthly Servicing Fee - GSL (Xxxxxxxx, PLUS, SLS) Loans in Other Than
School Status.
Three Dollars and Twenty Cents ($3.20) per account per month.
12
D. Consolidation Loans.
Three Dollars and Seventy-Five Cents ($3.75) per account per month.
E. Billing for Servicing Fees.
The full monthly servicing fee shall be paid commencing with the
calendar month an account is disbursed on or converted to the UNIPAC
system.
F. Additional Servicing Activity.
Thirty-five Dollars ($35.00) per Education Loan referred for such cure
services, plus ten percent (10%) of all sums made eligible for
reinstatement of guarantee (including principal, interest and special
allowance) as a result of successful performance of the Cure Procedures
required by Guarantor. (This fee shall not apply to loans that have
lost their guarantee due to an error or omission of UNIPAC.)
G. Delinquency Fee.
A surcharge of Two Dollars and Twenty-Five Cents ($2.25) for each
account thirty (30) or more days past due through date of claim payment
by Guarantor, or until account becomes current.
H. Appeal Fee.
A fee of Ten Dollars ($10.00) per month per account will be assessed
for UNIPAC to research and appeal accounts which are rejected or
returned by the guarantor due to acts, errors or omissions that
occurred on the account prior to servicing by UNIPAC.
I. Minimum Monthly Fee.
There will be a minimum monthly fee of Seven Hundred and Fifty Dollars
($750.00) per month.
J. Repurchase Fee.
Twenty Dollars ($20.00) per account repurchased from the Guarantor and
added to the UNIPAC Servicing System.
K. Removal Fee.
Loans transferred off the UNIPAC Servicing System prior to termination
of this Agreement will be assessed a fee of Fifteen Dollars ($15.00)
per account.
L. Deconversion Fee.
Loans transferred off the UNIPAC Servicing System on or after
termination of this Agreement will be assessed a fee of Twelve Dollars
($12.00) per account.
M. PLUS (or Other Loan) Loan Credit Checks.
Fees for obtaining a credit bureau report and evaluation will be Two
Dollars and Fifty Cents ($2.50) per loan application. An additional fee
of Fifty Cents ($.50) will be charged for those applications in which
written authorization must first be obtained prior to pulling a credit
bureau report.
13
N. Other Services.
For services requested by NHELP that are beyond the scope of those
described in this Agreement, the fees shall be quoted and mutually
agreed in accordance with the following guidelines:
(1) Supplies Cost
(2) Training $40.00 per hour
(3) Programming $70.00 per hour
(4) Consulting $80.00 per hour
Projects an services of this type shall be provided only after request
by NHELP and after time and total cost estimate is provided by UNIPAC.
O. Legal Opinions.
Cost of the opinion.
14
UNIPAC SERVICE CORPORATION NONDISCLOSURE AGREEMENT
I. INTRODUCTION
This is an agreement between NHELP-III, Inc. (reviewing organization),
dated September 16, 1999, and UNIPAC Service Corporation (UNIPAC) in
which Reviewing Organization agrees not to disclose certain financial
information belonging to UNIPAC as set forth hereinafter.
II. AGREEMENT
In consideration of being made privy to confidential financial
information belonging to UNIPAC, Reviewing Organization hereby agrees
not to disclose any UNIPAC financial information to any third party or
use the same in competition with UNIPAC. At the request of Reviewing
Organization, UNIPAC may agree to make such financial information
available to persons designated by Reviewing Organization upon
satisfying the requirements stated in Section III.
III. CONFIDENTIALITY
The Reviewing Organization agrees during the review and/or receipt of
certain of UNIPAC'S financial data and forever thereafter to keep
confidential any information and material (both written and verbal)
provided to Reviewing Organization by UNIPAC. Reviewing Organization
agrees not to copy any such materials provided by UNIPAC. Reviewing
Organization further agrees not to release, share, disclose or let
others view the same, except after advising of the nondisclosure
restrictions contained herein, to only those of Reviewing
Organization's employees, agents, or advisors having a need to know for
the purpose of evaluating the financial condition of UNIPAC and its
ability to perform its obligations under a Servicing Agreement.
Individual agents or advisors who have a bonafide need for a copy of
UNIPAC's financial data shall contact UNIPAC and may be provided a copy
after execution of our Agreement with terms identical to those
contained herein. UNIPAC reserves the right to refuse data to agents
and advisors or any other party UNIPAC in its sole discretion deems
ineligible. This written understanding shall survive the termination or
cancellation of this agreement or of completion of a review.
Reviewing Organization recognizes the disclosure of information by
Reviewing Organization or Reviewing Organizations' agents or advisors
may give rise to irreparable injury to UNIPAC inadequately compensable
in damages and that accordingly, UNIPAC may seek and obtain injunctive
relief or damages against the breach or threatened breach of the within
undertakings, in addition to any other legal remedies, including
attorney's fees, which may be available. The parties agree, however,
that the duty to keep confidential UNIPAC's financial data and
information and materials provided in connection with the review
thereof shall not include data, information or materials which the
Reviewing Organization can demonstrate is publicly available by other
than unauthorized disclosures by other parties.
15
IV. EXECUTION
This agreement is executed as of the date first written above, and
shall remain in effect until UNIPAC sends Reviewing Organization
written notice releasing it from the obligations of this agreement.
NHELP-III, INC. UNIPAC SERVICE CORPORATION
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxxx
------------------------------ -----------------------------------
Signature Signature
Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxx
------------------------------ -----------------------------------
Name Name
(Please Print) (Please Print)
16
SUBROGATION AGREEMENT
THIS AGREEMENT, effective the 16th day of September, 1999, by and
between UNIPAC Service Corporation (herein "UNIPAC") and NHELP-III, Inc. (herein
"Lender").
WHEREAS, pursuant to that certain Guaranteed Student Loan Program
Subservicing Agreement between UNIPAC and Lender (the "Servicing Agreement"),
UNIPAC has serviced certain Education Loans (as defined in the Servicing
Agreement) for Lender, some of which have been rejected by guarantors for
guarantee claim.
WHEREAS, UNIPAC has agreed to pay certain losses to Lender such
Education Loan claim(s) rejected by the guarantor(s).
NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration hereby acknowledged, the
parties agree as follows:
1. The term of this Subrogation shall expire on the expiration of the
term of the currently existing Servicing Agreement.
2. This Agreement will apply only to Education Loans subject to payment
by UNIPAC where the principal has become uninsured by the guarantor(s). A
detailed list of such loans shall be clearly identified and provided to Lender
by UNIPAC from time to time. Such loans as identified shall be subject to the
terms of this Agreement.
3. Lender agrees to subrogate to UNIPAC all rights to collect on any
such an Education Loan including agency authorization to litigate, including any
and all other rights Lender may have on the loan account, including but not
limited to federal subsidies if the loan is cured for which UNIPAC has made
payment with respect to an Education Loan rejected for guarantee by the
guarantor(s). Upon such payment, the Loan will be considered a "Subrogated
Loan".
4. For any Subrogated Education Loan for which insurance is reinstated
in accordance with guarantor policy, Lender will pay UNIPAC an amount equal to
the then outstanding principal balance and interest of the Subrogated Education
Loan. After such payment, the subrogation rights granted to UNTPAC by Lender in
Section 3 of this Agreement are revoked and such loan shall be deemed no longer
to be a Subrogated Loan.
5. Each party will identify a representative to develop the procedures
necessary to implement this Amendment.
NHELP-III, INC. UNIPAC SERVICE CORPORATION
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------- ------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxxxx
------------------------
(Please Print) Title: Senior Vice President
Title: V.P.
17
[LETTERHEAD OF UNIPAC]
September 21, 1999
NHELP-III, Inc.
000 Xxxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Re: SERVICING AGREEMENT
Gentlemen:
This letter is written with reference to that certain Servicing
Agreement (the "Agreement") dated as of September 16, 1999, between UNIPAC
Service Corporation (the "Servicer") and NHELP-III, Inc. (the "Lender").
Servicer hereby discloses that, as of the date of this letter, there is no
litigation (including, without limitation, derivative actions), arbitration
proceedings or governmental proceedings pending against Servicer (or, to the
knowledge of Servicer, any person or entity controlled by, controlling or under
control with Servicer) which, if decided adversely to the Servicer or to such
affiliate, either individually or in the aggregate, would have a material
adverse effect on the ability of the Servicer to perform its obligations under
the Agreement. Servicer shall hereafter give immediate notice to the Lender of
initiation of any such litigation which, if decided adversely to the Servicer or
its affiliates, could reasonably have a material adverse effect on the ability
of the Servicer to perform its obligations under the Agreement. This letter may
be relied upon by the "Agents" and "Note Purchasers" as defined in that certain
Warehouse Note Purchase and Security Agreement dated as of September 16, 1999,
to which the Lender is party, as well as by Lender pursuant to the Agreement.
Yours very truly,
UNIPAC Service Corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxx
Title: Executive Vice President
GREAT LAKES HIGHER EDUCATION SERVICING CORPORATION
STUDENT LOAN SERVICING AGREEMENT
This Agreement, is made as of September 16, 1999, between the GREAT LAKES HIGHER
EDUCATION SERVICING CORPORATION ("Great Lakes"), a non-profit corporation, and
NHELP-III, INC., (the "Lender"), Lender #833670, an institution engaged in
acquiring loans ("Loans") to students and parents under Title IV, Part B of the
Higher Education Act of 1965, as amended (hereinafter the "Act").
W I T N E S S E T H:
Whereas, Great Lakes has established a program for originating and servicing
Loans under the Act; and
Whereas, the Lender desires that Great Lakes service certain Loans which are
made or purchased by the Lender and which are covered by the Act, according to
the terms and conditions set forth herein.
Now Therefore, in consideration of the promises and the terms and conditions set
forth herein, the Lender agrees as follows:
1. Loans to be Serviced. Great Lakes and the Lender agree that Great Lakes
shall service all Loans covered by the Act which are made or purchased by the
Lender and which are guaranteed by Great Lakes Higher Education Guaranty
Corporation ("GLHEGC"), and which are submitted to Great Lakes by the Lender and
accepted by Great Lakes for servicing.
2. Great Lakes' Duties as Servicer.
(a) Great Lakes as servicer of the Loans shall perform all of the
Lender's obligations as holder of Loans as required by the Act and all
regulations issued by the U.S. Department of Education or by GLHEGC to
implement the Act. Great Lakes shall have full power to sign and act on the
Lender's behalf as the Lender's agent in all transactions with borrowers
serviced hereunder. Lender does hereby authorize, constitute and appoint Great
Lakes on its behalf and as its attorney in fact, to endorse those promissory
notes for which a claim has been filed with the Guarantor. Great Lakes will
carry out its responsibilities hereunder in a diligent and lawful manner.
(b) Great Lakes shall complete all forms and reports required by
the U. S. Department of Education and by GLHEGC as guarantor of the Loans.
(c) Great Lakes shall prepare a "Lender's Request for Payment of
Interest and Special Allowance" to be used in billing the U. S. Department of
Education (the "Department") for interest and the special allowance for all
eligible loans on a quarterly basis. If requested by Lender, Great Lakes agrees
to submit the billing to the Department within 30 days following the last day of
each quarter (March 31, June 30, September 30, December 31).
Great Lakes shall accrue and capitalize interest on those Loans not
eligible for interest subsidy.
(d) Great Lakes shall verify the current status of all borrowers
not less often than annually through direct contact with each borrower to ensure
correct account information. Great Lakes shall also seek to verify the
borrower's status by direct or indirect contact with educational institutions.
(e) Great Lakes shall respond to all borrower inquiries in a
prompt, courteous and thorough manner.
(f) When a Loan becomes due for repayment, Great Lakes shall
prepare a payment schedule and disclosures statement and mail it to the borrower
for signature(s). Prior to the first payment due date, repayment coupons will be
prepared and sent to the borrowers.
(g) Great Lakes shall post to the borrower's account all payments
of principal, interest and other charges. The day after receipt, Great Lakes
will initiate an ACH transfer of all collections to an account established by
the Lender.
(h) Great Lakes shall provide reports to the Lender of all
monetary transactions as well as periodic summary and account information as
required in the "Lender Service Manual" including such items as:
(1) A "monetary transactions journal" including a
detailed report to support all cash transactions processed;
(2) A monthly "portfolio status report" including a
listing of each account with key activity and performance data;
(3) A monthly listing of delinquent accounts; and
(4) A quarterly report of xxxxxxxx to the U.S.
Department of Education for interest and special allowances.
(i) Great Lakes shall automatically credit the Lender's account
whenever a borrower overpays an account by less than $5.00, and the Lender, at
its discretion, can reimburse the borrower. When the overpayment is more than
$5.00, Great Lakes shall remit the overpayment directly to the borrower. When a
borrower's balance owing is less than $10.00, Great Lakes may, at its
discretion, write-off the balance.
(j) Great Lakes shall handle all required borrower contact
functions and shall meet all servicing "due diligence" requirements, as that
term is used under the Act. Such functions include, for example, skip tracing,
contacting delinquent borrowers, handling borrower's requests for extensions or
deferments and preparing and processing default claims, including death,
disability and bankruptcy.
-2-
(k) Great Lakes agrees to prepare and submit all papers and
documents necessary to strictly follow reimbursement procedures specified in the
guarantor's Common Manual upon default of borrower and further agrees to
promptly remit proceeds to Lender upon receipt from the guarantor.
(l) Great Lakes shall capture and retain a copy of all purchased
promissory notes and supporting documentation on its image system and shall
store a backup image copy in a facility remote from Great Lakes' premises. Great
Lakes shall hold the original loan documents for safekeeping in accordance with
the terms of the Custodian Agreement dated as of even date herewith between
Great Lakes and the Lender.
3. LENDER'S RESPONSIBILITIES. Lender further agrees to promptly notify
Great Lakes in such form as may from time to time be specified by Great Lakes in
the Lender Service Manual, of any transactions involving the Lender and the
borrower and/or changes in status or demographic data on any of its accounts if
received from sources other than Great Lakes. Lender specifically agrees to
promptly notify Great Lakes of any bankruptcy action taken with respect to any
Loan.
4. FEES. The Lender agrees to pay Great Lakes the fees established by
Great Lakes from time to time for services rendered pursuant to this Agreement.
The current fee schedule is attached to this Agreement as Schedule A. Increases
or decreases in such schedule may be made from time to time; provided however,
that the Lender shall be given 60 days written notice prior to the effective
date of any change in the fee schedule. Such effective date shall be the
beginning of a calendar quarter (April 1, July 1, October 1, January 1). The
current fee schedule cannot be changed for at least twelve months from the date
of this contract. Statements for services rendered will be provided on a monthly
basis and are payable upon receipt. If servicing fees are not paid within 60
days of the Lender's receipt of a statement, Great Lakes shall have the option
to offset servicing fees against borrower payment collections or submit a 30-day
termination notice to the Lender.
5. LIABILITY. Great Lakes shall exercise care and due diligence in
performing the services required by this Agreement. To the extent that Great
Lakes is required to appear in, or is made a defendant in any legal action or
other proceeding commenced by a party other than Lender with respect to any
matter arising hereunder, Lender shall indemnify and hold Great Lakes harmless
from all loss, liability and expense (including reasonable attorney's fees)
except for any loss, liability or expense arising out of or relating to Great
Lakes' acts or omissions with regard to the performance of services hereunder.
Subject to Section 13 below, if by reason of any (direct or indirect) negligent
act or omission of Great Lakes in the servicing of any Loan, the guarantor shall
deny or reject any claim made to the guarantor with respect to such Loan or such
Loan shall be ineligible for interest benefits or for special allowance
payments, then, upon demand by Lender, and after attempted mitigation by Great
Lakes (to the extent mitigation by Great Lakes is possible), but in no event
later than one year after such demand by Lender, Great Lakes shall purchase such
Loan at a price equal to the unpaid principal amount thereof plus accrued and
unpaid interest thereon; provided, however, that if such Loan has been removed
from Great Lakes' system, Great Lakes' liability with respect to such Loan shall
be limited to a return of the actual amount of the servicing fees paid by Lender
to Great Lakes with respect to such Loan, unless Great Lakes is provided with
the loan documentation and all servicing history entries with respect to such
Loan within one year of the first denial or rejection or the first determination
of ineligibility of such Loan and is afforded the opportunity to exercise its
right of mitigation with respect to such Loan; and provided further, however,
that in no event shall Great Lakes be responsible or liable for any
consequential damages with respect to any matter whatsoever arising out of this
Agreement, (other than the payment as aforesaid of the principal, and interest
on Loans).
Either party shall have the right, at its own cost and expense, to
mitigate its liability under this Agreement by taking such actions as may be
appropriate, including but not limited to reperformance; provided, however, that
such right on the part of Great Lakes shall not extend the time for purchase of
Loans by Great Lakes under the preceding paragraph of this Section 5.
Great Lakes does not assume, and acceptance for servicing shall not
result in, any responsibility for the correctness or completeness of
Loan-related papers transmitted to Great Lakes as a part of or in conjunction
with the commitment of any Loans to Great Lakes for servicing, and Great Lakes
shall not be responsible for any procedural errors or omissions (including due
diligence violations) which may have occurred prior to initiation of servicing
of a Loan hereunder by Great Lakes.
6. CONFIDENTIALITY. Information about each borrower furnished to Great
Lakes hereunder is furnished upon the express condition that the information
will be kept confidential by Great Lakes. All such information, except as may be
otherwise required by statute, by court order or as may be necessary in Great
Lakes' reasonable judgment to the performance of the services required under
this Agreement, shall be held in confidence by Great Lakes.
7. EXAMINATION OF RECORDS. The Lender or its designated representative may
at any time during Great Lakes' regular business hours examine, at the sole
expense of the Lender, the records which Great Lakes maintains on the Lender's
loans.
8. TERMINATION.
(a) This Agreement shall remain in full force and effect until
terminated or modified as provided herein. This Agreement may be terminated only
at the end of a calendar quarter (March 31, June 30, September 30, December 31),
and only if written notice is given: (i) by the Lender to Great Lakes at least
60 days prior to the end of a calendar quarter; provided, however, that no
termination shall become effective until a new servicer, satisfactory to the
Lender and Concord, shall be appointed, or (ii) by Great Lakes to the Lender at
least 180 days prior to the end of a calendar quarter.
(b) In the event that this Agreement is terminated as provided in
subsection (a) above, Great Lakes shall continue its full servicing until the
date of termination and shall provide to the Lender a full set of periodic
reports, adjusted through the date of termination. Great Lakes shall retain all
notes, records and papers, as well as a copy of all computer stored data
relating to the Lender's accounts as required by the Act. Great Lakes shall make
available to the Lender on demand copies of all records relating to the Lender's
accounts. Such copies of the records will be provided and updated at the times
and in the format desired by Lender in order to facilitate a transfer to
another servicing agent. The Lender agrees to pay Great Lakes the servicing
removal fee identified on Schedule A. Upon the Lender's request, Great Lakes may
agree to provide servicing removal services beyond those identified in this
section. Such agreement between Great Lakes and the Lender shall include
sufficient additional charges to cover Great Lakes' costs. Great Lakes agrees
that Lender shall be entitled to injunctive relief to enforce the provisions of
this subsection.
(c) The Lender shall be liable for all charges incurred for
services performed pursuant to this Agreement up to the termination date.
(d) Great Lakes shall continue to be liable for all acts or
failures to act prior to termination but not after except that Great Lakes shall
be obligated to remit to the Lender any collections received by Great Lakes
subsequent to termination and to provide the reports and records herein
required.
(e) Great Lakes' servicing obligations hereunder and, except as
specifically provided in Section 5, Great Lakes' liabilities hereunder, in each
case, on individual loans shall terminate if the loan is sold or transferred to
another Lender or guarantor, is returned to the Lender with the Lender's
consent, is purchased by the guarantor or is paid in full.
9. AMENDMENTS. Except as provided in section 4, this Agreement may be
amended by Great Lakes at anytime upon 30 days written notice to the Lender,
provided that the provisions of this Agreement shall at all times be consistent
with the Act and applicable regulations. In the event of any such modification
by Great Lakes the Lender has 30 days in which to accept or reject the
modification by notice in writing. In the event of rejection of proposed
modification, either party may exercise its right to terminate as provided in
section 8. In the event of termination for this reason, such modification
shall not apply to the Lender.
10. GOVERNING LAW. This Agreement shall be interpreted under the laws of
the State of Wisconsin.
11. NO IMPLIED WAIVER. Any waiver or modification, expressed or implied,
by Great Lakes or by the Lender of any breach of this Agreement shall not be
construed to be a waiver of any such breach or any acquiescence thereto; nor
shall any delay or omission by Great Lakes or by the Lender to exercise any
right arising from any such breach affect or impair the respective party's right
to such breach or any future breach.
12. ARBITRATION. In the event that the parties hereto shall fail to agree
regarding any provision of this Agreement, such disputes shall be resolved by
arbitration procedures established by the American Arbitration Association. The
decision of any arbitrator under this paragraph shall be final and binding upon
the parties.
13. LIMITATION OF LIABILITY. Great Lakes and the Lender recognize that
Great Lakes' Lender servicing program is separate and distinct from GLHEGC's
guarantee program. The Lender specifically agrees to look only to Great Lakes
in its capacity as a servicing agent for any claims under this Agreement
relating to its functions as servicing agent. Lender specifically waives any
claim against GLHEGC's Guarantee Fund as defined in 34 CFR 682.410(a)(1) for
claims under this Agreement.
14. OTHER AGREEMENTS. The parties acknowledge that this agreement is an
integral element of and shall be construed in conjunction with the following
related agreements: (1) Custodian Agreement and (2) Agreement and
Acknowledgement Relating to Student Loan Servicing Agreement. The parties
acknowledge that the above-identified agreements are interrelated and shall be
construed and interpreted as part of the contractual servicing relationship.
15. NOTICES. All notices, requests, demands or other instruments which may
or are required to be given by any party to any other party shall be in writing
and such shall be deemed to have been properly given when served personally on
an officer of the entity to which such notice is to be 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, addressed as
follows:
If intended for Great Lakes Higher Education Servicing Corporation:
Executive Vice President
Great Lakes Higher Education Servicing Corporation
0000 Xxxxxxxxxxxxx Xxxx
X.0. Xxx 0000
Xxxxxxx, XX 00000
If intended for Lender:
NHELP-III, Inc.
c/o National Higher Education Loan Program
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
16. THIRD PARTY BENEFICIARIES. The parties hereto acknowledge and agree
that Norwest Bank Minnesota, National Association, as Trustee, Delaware Funding
Corporation, Xxxxxx Guaranty Trust Company of New York, Mellon Bank, N.A. and
all Secured Creditors as defined in and pursuant to a Warehouse Note Purchase
and Security Agreement to which the Lender is a party, shall be third party
beneficiaries of this Agreement, as it may be amended, with the power and right
to enforce the provisions of this Agreement, against the parties. In the event
that any of said third party beneficiaries become an assignee or successor to
Lender and, as such assignee or successor of Lender, enforce this Agreement, as
it may be amended, against Great Lakes, then said third party beneficiary shall
succeed to the duties and obligations of the Lender under this Agreement, as it
may be amended.
In Witness Whereof, the parties hereto have executed this Agreement as of the
date and year first above written.
NHELP-III, INC. GREAT LAKES HIGHER EDUCATION
SERVICING CORPORATION
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------- ------------------------------
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxx
Vice President & Treasurer Executive Vice President
7
GREAT LAKES HIGHER EDUCATION SERVICING CORPORATION
STUDENT LOAN SERVICING AGREEMENT
NHELP-III, INC.
SCHEDULE A - FEES
The lender agrees to pay the following fees to Great Lakes upon receipt of a
monthly statement for services rendered pursuant to this agreement:
MONTHLY SERVICE FEES:
$1.45 per borrower per month during interim (in-school) period
$3.05 per borrower per month during grace period
$3.23 per borrower per month during first 12 months of repayment
servicing
$2.86 per borrower per month during the remainder of the repayment
period
SERVICING REMOVAL FEE:
$14.00 per account or actual cost, if higher, to remove an
active account from the servicing system
Both PLUS and SLS loans made for attendance at non-proprietary schools will be
considered in-school loans for fee purposes as long as they are initially
deferred and interest is to be capitalized and not collected on an on-going
basis. All other PLUS and SLS loans will be charged the standard repayment
servicing fees.
The total monthly amount due will be the actual fees calculated as described
above or $75, whichever is greater.
Great Lakes may agree to provide the lender with services beyond those normally
included in the servicing program. Such agreement between Great Lakes and the
lender shall include sufficient additional charges to cover Great Lakes' costs.
Increases or decreases to this fee schedule may be made from time to time as
provided in Section 4 of this agreement.
[COMPANY LOGO]
GREAT LAKES HIGHER EDUCATION SERVICING CORPORATION
0000 XXXXXXXXXXXXX XXXX XXXXXXX, XXXXXXXXX 00000-0000 (608) 246-1800
September 21, 1999
NHELP-III, Inc.
000 Xxxxx 00 Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Re: Servicing Agreement
Gentlemen:
This letter is written with reference to that certain Student Loan Servicing
Agreement (the "Agreement") dated as of September 16, 1999, between Great Lakes
Higher Education Servicing Corporation (the "Servicer") and NHELP-III, Inc. (the
"Lender"). Servicer hereby discloses that, as of the date of this letter, there
is no litigation (including, without limitation, derivative actions),
arbitration proceedings or governmental proceedings pending against Servicer
(or, to the knowledge of Servicer, any person or entity controlled by,
controlling or under, control with Servicer) which, if decided adversely to the
Servicer or to such affiliate, either individually or in the aggregate, would
have a material adverse effect on the ability of the Servicer to perform its
obligations under the Agreement. Servicer shall hereafter give immediate notice
to the Lender of initiation of any such litigation which, if decided adversely
to the Servicer or its affiliate, could have a material adverse effect on the
ability of the Servicer to perform its obligations under the Agreement. This
letter may be relied upon by the "Agents" and "Note Purchasers" as defined in
that certain Warehouse Note Purchase and Security Agreement dated as of
September 16, 1999 to which the Lender is party, as well as by Lender pursuant
to the Agreement.
Very truly yours,
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Executive Vice President
LOAN SUB-SERVICING AGREEMENT
THIS LOAN SUB-SERVICING AGREEMENT is made as of the 16th day of September, 1999,
by and between INTUITION, INC., a Florida corporation (the "Sub-Servicer"), and
UNIPAC Service Corporation, a Nebraska corporation (the "Primary Servicer").
WITNESSETH:
WHEREAS, the Primary Servicer and NHELP-III, Inc., a Nevada corporation (the
"Customer"), are parties to that certain Servicing Agreement dated as of
September 16, 1999 (the "Primary Servicing Agreement"); and
WHEREAS, the Customer is engaged in a program of acquiring and holding
beneficial interests in Loans (as defined below) through a trustee which acts on
behalf of the Customer and which is an "eligible lender" within the meaning of
the Act (as defined below); and
WHEREAS, the Customer will acquire the beneficial interests in certain Loans
pursuant to that certain Amended and Restated Loan Sale Agreement dated as of
December 18, 1998, by and among InTuition Holdings, Inc., NHELP, Inc., Union
Bank and Trust Company, solely in its capacity as trustee of the InTuition
Student Loan Trust II, and Student Loan Funding Resources, Inc. (the "Loan Sale
Agreement"), or will acquire from NHELP, Inc. or an assignee thereof which
acquired the Loans pursuant to the Loan Sale Agreement, which Loans have been
previously serviced by the Sub-Servicer, or will acquire Loans originated by or
on behalf of Nova Southeastern University, Inc.; and
WHEREAS, the Customer is required by its credit providers to utilize the Primary
Servicer for servicing Loans pending approval by such credit providers of the
Sub-Servicer to provide the services contemplated by this Agreement directly to
the Customer; and
WHEREAS, the Customer and the Primary Servicer desire for the Sub-Servicer to
continue the servicing, on behalf of the Primary Servicer pending approval of
the Sub-Servicer by the credit providers, of the Loans acquired pursuant to the
Loan Sale Agreement, in accordance with the terms and conditions of this
Agreement;
ACCORDINGLY, in consideration of the foregoing premises and the mutual covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Definitions. Unless the context clearly indicates otherwise, the terms
set forth below shall have the following meanings:
"ACCOUNT" OR "ACCOUNT GROUP" shall mean those combined Loans for a
Borrower with the same lender, branch and guarantor, which Loans are in the same
status, are the same Loan type (Loan types being Xxxxxxxx, Xxxxxxxx
Unsubsidized, PLUS, SLS, or Alternative), and which have the same repayment
terms and common characteristics for processing and billing. Only with respect
to Loans serviced by Sub-servicer and not subserviced by USA Group Loan
Services, Inc. ("USA Group") as of January 1, 1999,
the number of Accounts or Account Groups in connection with delinquent Loans
(for billing purposes only) shall be determined by multiplying the total number
of Borrowers (excluding co-signers) on such delinquent Loans by a factor of
1.40. If Loans are moved to the system of Sub-servicer from USA Group, or to USA
Group from Sub-servicer, then the parties shall use good faith best efforts to
determine the number of Accounts or Account Groups in such manner as to not
materially affect the numbers of such Accounts or Account Groups after such
move.
"ACT" means Title IV, Part B of the Higher Education Act of 1965 (20
USC Section 1071 et. seq.), as amended and in effect from time to time, or any
successor enactment thereto, the effective administrative regulations
promulgated thereunder, and any binding directives issued by the Secretary of
Education pursuant thereto.
"AGREEMENT" OR "SERVICING AGREEMENT" means this Servicing Agreement by
and between the Customer and the Servicer and any and all Schedules or written
amendments thereto.
"BORROWER" means an individual who is the maker of a Note.
"BUSINESS DAY" means any day, other than Saturday, Sunday, any holiday
recognized nationally or by the State of Florida as such, or any other day on
which the post offices located in Jacksonville, Florida are not open for
business in the normal course. Any other references to "days" shall mean
calendar days.
"CONSOLIDATION LOAN" means a Loan that is a product of consolidation of
other Loans in accordance with the Act.
"CURE" OR "CURED" means steps taken to restore the eligibility of a
Loan for Guarantee, based upon the requirements of the Act, the Regulations,
and the Guarantor's policies.
"CUSTOMER" means NHELP-III, Inc., a Nevada Corporation, on behalf of
which an eligible lender trustee acts in the capacity of a legal title holder
of Notes or originator of Loans, or other successor in interest to NHELP-III,
Inc., in accordance with the provisions of Section 10.4 hereof, which successor
qualifies as an "eligible lender" under the Act and which is an "eligible
lender" in good standing with a Guarantor.
"DEFAULT" means, with respect to any Note, the occurrence of any event
which shall constitute a default under the terms of the Act.
"DEFERMENT" means the period defined by the Act and applicable
Regulations during which a Borrower (in Repayment) may postpone making payments.
"ELIGIBLE INSTITUTION" means any institution of postsecondary education
which is an "eligible institution" under the Act and which is deemed eligible by
the Guarantor.
"FORBEARANCE" means the period permitted by the Act and the policies of
the Guarantor during which a Borrower (in Repayment) is permitted to temporarily
forgo payments or make reduced payments.
"GRACE" means the initial period following reduction by the student
Borrower to less than the minimum course load required by the Act, during which
the student Borrower is not required to make payments on the principal amount of
his or her Note(s).
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"Guarantee or Guaranteed" means a written commitment by a Guarantor to
pay the Customer the unpaid principal balance plus accrued unpaid interest of a
Loan or any portion thereof upon submission of a valid default, death,
disability or bankruptcy claim in accordance with the Act and applicable
Regulations.
"Guarantor" means any state or private nonprofit organization which has
entered into agreements with the Secretary to Guarantee Loans under the Act.
"In-School" means the period, excluding periods of in-school Deferment,
during which a student Borrower is enrolled at an Eligible Institution for at
least the minimum course load required by the Act and the policies of the
Guarantor to maintain such student Borrower's eligibility to borrow under the
education loan programs existing under the Act and administered by a Guarantor.
"Loan" means a disbursement of money to or on behalf of an eligible
student attending an Eligible Institution, contingent upon an agreement to
repay, secured by a Note and Guaranteed in accordance with the Act and
applicable Regulations, which loan was originated hereunder or for which
information and Loan Documentation necessary to enable the Servicer to
adequately provide Services is delivered by, or is directed by, the Customer to
the Servicer and shall include, without limitation, disbursements made in
accordance with the federal Xxxxxxxx Loan (subsidized and unsubsidized), Parent
Loan for Undergraduate/Graduate Students (PLUS), Supplemental Loan for Students
(SLS), and Consolidation Loan under GSLP and FFELP programs.
"Loan Documentation" means with respect to any Loan, all documentation
which is required by the Guarantor of such Loan for the payment of a Default
claim. Without limiting the generality of the forgoing, such documentation shall
at a minimum include:
(a) the Borrower's application for such Loan;
(b) the original Note (or certified copy thereof);
(c) evidence of Guarantee of the Loan by a Guarantor;
(d) evidence of full disbursement;
(e) evidence of due diligence servicing in accordance with the
requirements of the Act and applicable Regulations;
(f) if applicable, adequate evidence of the validity of the
conveyance of such Loan to the Customer; and
(g) Repayment history, including, but not limited to, payment
transaction history and documentation of Deferments and
Forbearances.
"Note" or "Promissory Note" means a promissory note of a Borrower for a
Loan set forth on the appropriate form furnished or approved by a Guarantor,
which Note meets the criteria set forth by the Act and applicable Regulations.
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"Previously Defaulted Consolidation Loan" means a Consolidation Loan
which was formed by consolidating Loans, at least one of which had been
defaulted and the Borrower made satisfactory payment arrangements in order to
make the defaulted Loan eligible for consolidation.
"Primary Servicer" means UNIPAC Service Corporation, a Nebraska
corporation.
"Regulations" means any regulations, rules, policies or procedures
promulgated by a Guarantor or the Secretary.
"Rehabilitated Loan" means a Loan which has previously defaulted but
where the Borrower has made satisfactory payments, as defined by the Act or
Guarantor, to have the Loan rehabilitated and sold to the Customer as defined by
the Act.
"Repayment" means the period of time during which a Borrower is
required to make installment payments to repay the aggregate principal amount
plus accrued interest of all amounts borrowed by virtue of the Note(s) executed
by such Borrower.
"Schedule" means any attachment, exhibit, or appendix which is attached
to this Agreement and made a part hereof by reference hereto.
"Secretary" means the Secretary of Education, United States Department
of Education, or any predecessor or successor to the functions thereof under the
Act.
"Sub-Servicer" means In Tuition, Inc., a Florida corporation.
"Services" means all processes and duties contemplated to be performed
by the Sub-Servicer under this Agreement.
"Special Allowances" means those sums which are payable with respect to
a Loan by the Secretary under Section 438 of the Act or any payment of a similar
nature prescribed by law hereafter adopted.
1.2 Interpretation. In this Agreement, unless the context otherwise
requires:
(a) The terms "hereby," "hereof," "hereto," "herein," "hereunder"
and any similar terms refer to this Agreement, and the term
"heretofore" means before, and the term "hereafter" means
after, the effective date of this Agreement;
(b) Words of the masculine gender mean and include correlative
words of feminine and neuter genders, and words importing the
singular number mean and include the plural number and vice
versa;
(c) Words importing persons shall include firms, associations,
partnerships (including limited partnerships), trusts,
corporations and other legal entities, including public
bodies, as well as natural persons; and
(d) Any headings preceding the texts of the several articles and
sections of this Agreement and any marginal notes appending to
copies hereof, shall be solely for convenience of reference
and shall not constitute a part of this Agreement nor shall
they affect its meaning, construction or effect.
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ARTICLE II
TERM OF AGREEMENT
2.1 "Life of Loan" Servicing. Except as expressly provided in Section 7.3
or Article VIII hereof, the term of this Agreement shall continue with respect
to each Loan that becomes subject to servicing by Sub-Servicer until such Loan
is paid off, or otherwise discharged, unless and until such Loan is deconverted
in accordance with Section 7.3 or Article VIII of this Agreement.
ARTICLE III
GENERAL ADMINISTRATION
3.1 The Sub-Servicer as Independent Contractor. It is expressly recognized
by the parties hereto that in performing the duties prescribed by this
Agreement, the Sub-Servicer is acting as an independent contractor employed by
the Customer and is authorized to do and perform the acts and duties, and
receive the documents and other items contemplated hereby. Nothing herein nor
the acts of the parties to this Agreement shall be construed to create a
partnership or joint venture between the Customer, the Primary Servicer or the
Sub-Servicer.
3.2 Reports, Records, Documents, Correspondence. During the term of this
Agreement, the Sub- Servicer shall promptly and routinely furnish the Customer
with copies of all material reports, records and other documents and data as
required by this Agreement or as may otherwise be required by the Act. All
material correspondence received by the Sub-Servicer relating to individual
Loans shall be maintained in microcopy form and/or in summary form in an
automated history file established by the Sub-Servicer. The Sub-Servicer shall
furnish in good condition all forms and supplies as specified in this Agreement
and any Schedules hereto. The Customer may transmit Loan data to the
Sub-Servicer on these forms or by any other mutually acceptable means.
3.3 Servicing Guidelines. In performing its duties hereunder, the
Sub-Servicer shall be guided by, and comply with, the Act and applicable
Regulations. The Sub-Servicer agrees to produce a sufficient audit trail for
each Loan from the Implementation of Services and to comply with such other
reporting, servicing and operating standards as are contained in this Agreement.
3.4 Modification of Equipment, Computer Programs and Procedures. The
Sub-Servicer reserves the right to change any part or all of its equipment and
computer programs, and its procedures, reports and Services, relating to the
manner of, or the methodology used in, servicing Loans as set forth in this
Agreement without the prior consent of the Customer; provided, however, that in
no event shall such change abrogate or in any way modify the obligations of the
Sub-Servicer as they relate to the compliance requirements set forth in Section
3.3 above. It is specifically understood that the intent of this paragraph is to
allow the Sub-Servicer flexibility in the methods and techniques of servicing
subject to full compliance with this Agreement.
3.5 Enhancement of Services. The Sub-Servicer agrees, on a best efforts
basis and at fees to be negotiated between the parties, to provide, at the
request of Customer, enhancements and improvements to the Services which are
technically feasible and reasonable to perform. The Sub-Servicer agrees to keep
the Customer informed of enhancements and improvements to the Services which the
Sub-Servicer may implement generally for all other customers and agrees to
offer such enhancements and improvements to the Customer at fees to be
negotiated by the parties.
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3.6 Confidentiality; Safekeeping. The Sub-Servicer shall keep the Loan
Documentation in its possession in strictest confidence except as shall be (a)
necessary to communicate information to its officers and employees or to the
Customer, (b) needed in connection with the performance of the obligations of
the Sub-Servicer under this Agreement or (c) required by applicable law, the Act
or applicable Regulations. The Sub-Servicer shall also employ all efforts
reasonable and necessary to safeguard the Loan Documentation from fire, flood,
theft, unauthorized disclosure, or other hazard, whether natural or man-made,
which efforts shall include offsite storage of duplicate microfilm or microfiche
of Loan Documentation and disaster recovery plans reasonably acceptable to the
Customer.
3.7 Trade Secrets and Proprietary Information. All materials utilized in
Loan servicing, including procedures, written instruments, files, and records
developed by either party specifically for use in Loan program administration
are and shall be treated as proprietary in nature. Each party to this Agreement
has developed or may develop materials, procedures, written instruments, files
or records which may be similar. Neither party to this Agreement snail have or
acquire any proprietary or any other right whatsoever in any such materials,
procedures, written instruments, files or records developed by the other party.
Neither party to this Agreement may benefit from, deal in, sell, license,
publish, use or otherwise exploit for any purpose those materials, procedures,
written instruments, files or records developed by the other party except as
expressly provided in this Agreement. This Agreement shall not in any way
restrict the right of each party, for its own exclusive benefit to deal in,
sell, license, publish, use or otherwise exploit for all purposes those
materials, procedures, written instruments, files, or records developed by it.
3.8 Possession of Documents and Access. All Loan Documentation in
Sub-Servicer's possession related to Loans shall be available to the Customer
during the normal business hours of the Sub-Servicer for examination or
photocopying at the expense of the Customer on the premises of the Sub-Servicer
provided notice of Customer's intent to so examine or photocopy Loan
Documentation is given to the Sub-Servicer at least ten (10) Business Days in
advance; provided, however, that the Sub-Servicer shall promptly respond to all
reasonable (and emergency) requests for the photocopying and mailing of Loan
Documentation.
ARTICLE IV
SERVICING OF LOANS
4.1 Specific Loan Servicing Duties. The Sub-Servicer shall service the
Loans subject to this Agreement as follows:
(a) Maintain a complete file for the Loans of each Borrower, which
file shall include the information specified concerning, and
the Loan Documentation relating to, each of the Loans;
(b) Take all steps, excluding Cure activity unless otherwise
agreed, necessary to maintain the insurance or guarantee
coverage on each Loan in full force and effect at all times;
(c) Collect or cause to be collected and forthwith, upon receipt,
pay over to the Customer all payments of principal and
interest on all Loans;
(d) Retain summary records of all Contacts, follow-ups and
collection efforts, and records of all written correspondence
relating to the Loans of each Borrower;
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(e) Prepare and maintain all appropriate accounting records with
respect to all transactions related to the Loans of each
Borrower, including accounting for all payments of principal
and interest;
(f) Handle the processing of all adjustments including extensions,
reinstatements, and deferments;
(g) Handle the processing of all address changes and the updating
of the address records accordingly;
(h) In the case of Defaulted Loans, take all steps necessary to
file and prove a claim for loss with the Secretary or the
Guarantor, as the case may be and as required, and assume
responsibility for all necessary communication and contact
with the Secretary or the Guarantor, as the case may be and as
required, to accomplish recovery on such Defaulted Loans;
(i) Prepare and file with the Secretary or the Guarantor, as the
case may be and as required, Customer's manifest of Loans paid
in full and Loans converted to an installment basis;
(j) Maintain the original file pertaining to all Loans in
fireproof storage facilities with a one hour fire rating in
order to protect such original file concerning each Loan;
(k) Obtain and maintain in force a fidelity bond upon all
personnel of Sub-Servicer insuring against any loss or damage
which Customer or Sub-Servicer might suffer as a consequence
of any fraudulent or dishonest act of such personnel;
(l) Answer all inquiries received by Sub-Servicer from Borrowers
or Customer pertaining to Loans, school status or refunds, and
cooperate to the extent necessary to gather the information
needed to answer such inquiries, provided however, that such
inquiries may be referred to the institution which a Borrower
attended or is attending, if necessary, and Sub-Servicer shall
have no responsibility with respect to any disputes between a
Borrower and such institution regarding tuition, registration
or quality of education;
(m) Notify NationsBank, N. A., in writing and in the manner
directed by the Customer of any denial of any claim in whole
or in part by the Secretary within 90 days after the date of
the Secretary's denial of such claim;
(n) Submit Form 799s to the Secretary as required; and
(o) In discharging its obligations as set forth above, the
Sub-Servicer shall exercise reasonable care and due diligence
in the administration, servicing and collection of all Loans:
(i) As the term "due diligence" is used in the
Act;
(ii) Utilizing collection practices no less
extensive and forceful than those generally
practiced by financial institutions and in
accordance with the Act and applicable
Regulations, except litigation for
collection purposes is not required and
except that further due diligence is not
required once a claim
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is filed based on a Borrower's death,
permanent or total disability, or
adjudication as a bankrupt; and
(iii) In accordance with the requirements of the
Act and applicable Regulations, and each
applicable Certificate of Insurance, federal
Reimbursement Contract, Guarantee Agreement
and Guarantee Reserve Agreement.
4.2 Servicing and Collection Reports.
(a) Standard Reports. Servicing and collection reports shall be
provided to the Customer by using the United States Postal Service, first class
postage prepaid, or other means as mutually agreed. With respect to all Loans,
the Sub-Servicer shall, at a minimum, provide to the Customer by the tenth
(10th) day of each month one (1) copy of the following reports with respect to
activity concerning all of the Customer's Loans during the preceding month.
(i) an unaudited statement, in reasonable detail, of all
transactions during such preceding month;
(ii) a report showing the unpaid principal balance of each
Borrower's Account as of the last day of such
preceding month;
(iii) with respect to Loans in Repayment, a delinquency
report showing all Accounts past due as of the last
day of such preceding month;
(iv) a report of claims in process;
(v) a report of Loans paid in full during such preceding
month; and
(vi) a statistical report indicating the status all Loans
and identifying the Guarantor with respect to each
Loan.
(b) Special Reports. At the request of the Customer, the
Sub-Servicer shall furnish to the Customer such special reports, including
without limitation a report listing all Loans being subserviced by the
Sub-Servicer, as can be reasonably provided by the Sub-Servicer, provided that
the Customer shall compensate the Sub-Servicer for the provision by the
Sub-Servicer of such special reports to the Customer in accordance with Section
7.2 of this Agreement.
4.3 Audits. The Sub-Servicer agrees to permit the Customer or its
designated agent, at the Customer's expense, at a reasonable time during regular
business hours and upon at least ten (10) Business Days' prior written notice,
to examine and audit such information as is necessary for the purpose of
verifying the information submitted to the Customer and reviewing the
Sub-Servicer's operations with respect to the Loans. The Customer may not use a
competitor (as may reasonably be determined by the Sub-Servicer) of the
Sub-Servicer to perform the audit. Access to Sub-Servicer's confidential or
proprietary information is not allowed.
4.4 Acquisition of Loans. The Sub-Service may service other Loans (other
than the Loans acquired or to be acquired pursuant to the Loan Sale Agreement or
from a purchaser under the Loan Sale Agreement, or Loans originated by or on
behalf of Nova Southeastern University, Inc., which are the
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subject of this Agreement at the date of execution and delivery of this
Agreement) that an eligible lender trustee may acquire on behalf of the Customer
pursuant to the terms of this Agreement subject to prior review and approval by
Sub-Servicer and the Customer. The Customer shall notify the Sub-Servicer thirty
(30) days in advance of a purchase of any Loan Which the Customer desires to
have serviced under this Agreement, and shall furnish to the Sub-Servicer
information about such Loans including the approximate number of such Loans,
approximate outstanding principal balance, insurer, status, and anticipated
dates of purchase and delivery of Loans to the Sub-Servicer. The Sub-Servicer
shall provide the Customer with the proposed terms and conditions for such
servicing within five (5) Business Days of the receipt of such information. If
the Sub-Servicer and the Customer are unable to agree upon the terms and
conditions of servicing of such Loans within five (5) Business days after the
delivery of the terms and conditions of servicing by the Sub-Servicer to the
Customer, then the Sub-Servicer shall be under no obligation to provide
servicing with respect to such Loans. If the Sub-Servicer and the Customer agree
to proceed, both parties hereby agree to schedule delivery within a timely basis
to service the Loans. Conversion procedures for each Loan or group of Loans
shall be in accordance with mutually agreed provisions identified in Schedule
B, Loan Conversion Procedures. Such Loans upon delivery will, without further
action, become Loans subject to this Agreement. Loans purchased pursuant to the
Loan Sale Agreement are not subject to this Section 4.4 or any conversion fees
related thereto.
4.5 Loans Subject to this Agreement. Upon execution of this Agreement, each
Loan that is or will be within the Customer's portfolios to be purchased by the
Customer pursuant to the Loan Sale Agreement or from NHELP, Inc. or an assignee
thereof which acquired such Loans pursuant to the Loan Sale Agreement, that are
presently being serviced by the Sub-Servicer or by Sub-Servicer's subservicing
agent, USA Group Loan Services, Inc., and Loans originated by or on behalf of
Nova Southeastern University, Inc. and acquired in the future by the Customer,
together with any new Loans acquired in accordance with Section 4.4 hereof, if
any, shall be the Loans subject to this Agreement, and the respective duties and
obligations of the parties with respect to such Loans shall hereafter be
determined in accordance with this Agreement.
4.6 Maintenance and Transfer of Loans. The Sub-Servicer agrees to provide
for the maintenance of Loan Documentation and automated records. In the event
that this Agreement is terminated by the Customer as a result of a breach by the
Sub-Servicer, the Sub-Servicer shall in accordance with Section 8.2 provide
every reasonable and necessary assistance to transfer Loans and the servicing
thereof to the party identified by the Customer, including the reasonable and
timely deconversion of all automated records relating to the Loans, at the
expense of the Customer, as delineated in Section 7.7.
4.7 Write-off Guidelines. (a) Subject to the provisions of paragraph (b) of
this Section, the Sub-Servicer shall use the following guidelines in determining
whether to write off a Borrower's Account:
Account Balance* Process Requirements
--------------- -----------------------------------------------------
$0-$100.00 Write-off thirty (30) days after the last
payment was made, and if applicable, forward Notes to
Borrower.
$100.01 + Recover such amount by filing a
supplemental claim, if applicable, or service as
normal.
* Account balance includes both principal and interest.
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If the final payment results in an overpayment equal to or greater than ten
dollars ($10.00), the Sub-Servicer shall notify the Customer no later than
forty-five (45) days after receipt to refund the entire overpayment to the
Borrower. If the overpayment is less than ten dollars ($10.00), the Sub-Servicer
shall write off the amount, but in each case shall notify the Customer by
listing the dollar amount and Borrower Account within thirty (30) days.
(b) Notwithstanding the foregoing and the terms of Section
6.2(a)(v)(4), the $100.00 guideline for write offs shall be reduced to $50.00
for so long as this Agreement is between the Primary Servicer and the
Sub-Servicer. The terms of this paragraph (b) shall become null and void and the
write off guideline shall be the $100.00 amount set forth in paragraph (a)
above and in Section 6.2(a)(v)(4) hereof, without the need for any further
action, at such time as the Sub-Servicer is approved and this Agreement becomes
a direct agreement between the Customer and the Sub-Servicer as provided in
Section 9.16 hereof.
ARTICLE V
CUSTOMER'S OTHER OBLIGATIONS
In addition to other obligations specifically set forth herein, Customer shall
have the following obligations:
5.1 Funding of Loans. The Customer shall cause any and all Loans to be
disbursed in accordance with any supplemental loan origination/disbursement
agreement to be promptly funded in accordance with the terms and conditions of
that agreement.
5.2 Payment of Origination Fees to Government. In addition to the fees set
forth on SCHEDULE A, the Customer shall pay all fees or other charges required
now or hereafter by the Act with respect to originations of Loans.
5.3 Reviewing Output and Reporting Errors. The Sub-Servicer shall make
every effort to ensure that all output, including reports, is correct and
complete. The Customer shall, however, review each output, especially reports,
thoroughly upon receipt to verify completeness and accuracy. Problems identified
with the output and/or the underlying Loan data shall be reported to the
Sub-Servicer within forty-five (45) days of the date the output was generated.
Erroneous data and/or output programs so reported will be corrected, and
affected report(s) will be rerun at no additional charge. Problems reported to
the Sub-Servicer after forty-five (45) days may be subject to a time and
materials charge at Sub-Servicer's option to correct output retroactively.
Errors that could reasonably be expected to be identified by Customer personnel
familiar with the Loan program and the Customer's Loan portfolio, but not
reported within forty-five (45) days, shall not be subject to Sub-Servicer's
liability under Section 6.2 (a)(iv).
5.4 Customer Consolidation Loan Responsibilities. The Customer agrees that,
with respect to all Consolidation Loans disbursed by the Sub-Servicer pursuant
to this Agreement, it will (i) provide for the appropriate transmission of all
monies to be disbursed under this Agreement for a particular period of time at
least one (1) Business Day prior to the initial disbursement date for any
Consolidation Loan; and (ii) maintain adequate records to verify submission of
monies to the Sub-Servicer for. The Customer agrees to submit payment for the
interest payment rebate fee to the Secretary as specified in Section 428 C(f) of
the Act.
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ARTICLE VI
INDEMNIFICATION AND MITIGATION OF LIABILITY
6.1 Borrower's Failure to Repay. Except as expressly provided herein, the
Sub-Servicer shall have no liability for any loss or damage incurred by the
Customer as a result of the failure of a student or parent Borrower to repay a
Loan.
6.2 Indemnification Relating to Loans.
(a) By the Sub-Servicer.
(i) For any Loan, the Sub-Servicer shall have the right
to reperform or Cure a due diligence failure on its
part within twelve (12) months or a shorter period,
at the Sub-Servicer's sole option, after either the
receipt of the final notice of rejection of a claim
filed with the applicable Guarantor or a
determination that the Guarantee has been rendered
invalid or unenforceable due to the Sub-Servicer's
failure to perform.
(ii) If the Loan is not cured within twelve (12) months,
the Sub-Servicer shall, in accordance with this
Section, make arrangements to indemnify and hold
harmless the Customer for damages resulting from acts
or omissions by the Sub-Servicer which constitute a
breach of this Agreement and/or the negligence or
misconduct of the Sub-Servicer, in which event the
Sub-Servicer shall arrange for Customer to be funded
an amount equal to the outstanding principal balance
of the Loan plus all accrued interest and Special
Allowances due thereon, less any amount subject to
Lender Risk Sharing under the Act and Regulations,
through means of a transfer to an "eligible lender"
as defined in the Act.
(iii) For any such transferred Loan for which the Guarantee
is fully reinstated, an eligible lender acting on
behalf of the Customer shall repurchase said Loan
from the "eligible lender" designated by the
Sub-Servicer at an amount equal to the current
outstanding principal balance plus all accrued
interest and Special Allowances due thereon, less any
amount subject to Lender Risk Sharing under the Act
and Regulations.
(iv) In no event shall the Sub-Servicer be liable for any
damages caused by the Customer's failure to perform
its responsibilities under Section V of this
Agreement, or for any indirect or consequential
damages, including but not limited to loss of profits
or anticipated savings, or for any claim made against
the Customer by any other party, even if the
Sub-Servicer has been advised of the possibility of
such damages, loss or claim.
(v) With respect to Loans acquired by the Customer and
for which the Sub-Servicer provides Services pursuant
to Section 4.4 hereof, the Sub-Servicer shall be
specifically excused from liability for any damages
arising from prior servicing errors by the Customer
or other servicers, from missing or incorrect data at
conversion, or from missing or incorrect
documentation at conversion. In addition with respect
to Loans acquired by the Customer and for which the
Sub-Servicer
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provides Services pursuant to Section 4.4 hereof, the
Sub-Servicer shall be further specifically excused
from liability associated with:
(1) Any violations on Loans occurring prior to
completion of any contractually defined
Borrower file examination and/or due
diligence review and correction of noted
exceptions;
(2) Timely filing violations on Loans more than
120 days delinquent at the time of
conversion;
(3) Any late filing of claims if pertinent
information necessary to accomplish full
recovery has not been received by the
Sub-Servicer within seven (7) days of the
Sub-Servicer's request for the information
from the Customer; and
(4) Claim underpayments of less than one
hundred dollars ($100.00) resulting from
interest penalties imposed by any Guarantor.
(vi) The liability of the Sub-Servicer for its acts or
omissions with respect to any denied claim or
non-payment of a Loan shall be limited to a return of
the actual servicing fees paid by the Customer to the
Sub-Servicer on the Loan for which reimbursement is
requested in the following instances:
(1) The Loan is removed, transferred or
deconverted from the Sub-Servicer's
servicing system due to a breach of this
Agreement by the Primary Servicer or the
Customer; or
(2) The Loan is a Rehabilitated Loan or a
Previously Defaulted Consolidation Loan.
(vii) The Sub-Servicer shall not be responsible for
consequences of unreasonable acts by any Guarantor.
As used herein, unreasonable acts of the Guarantor
shall be defined as acts of the Guarantor including
but not limited to: Guarantor actions that are
outside the scope of industry custom; oral
commitments accepted in practice discontinued without
sufficient advance notice; retroactive implementation
of a Regulation without sufficient prior notification
or clarification; Guarantor servicing deficiencies
that preclude Sub-Servicer from performing
requirements correctly or timely; Guarantor
submission of data to the incorrect entity; Guarantor
submission of data in a format that in not usable,
legible or readable; refusal of a Guarantor to
acknowledge data or documentation; unscheduled
changes in normal business hours; enforcement of an
unwritten policy or standard; interpretation of a
policy standard or Regulation in a manner
inconsistent with the Common Manual, Guarantor's
manual or Department of Education clarification; or
any other acts of the Guarantor of a similar nature.
(b) By the Customer. To the extent the Sub-Servicer is required to
appear in, or is made a defendant in, any legal action or other proceeding
commenced by a person or entity other than the Customer with respect to any
Loan, the Customer shall indemnify and hold harmless the Sub-Servicer for all
loss, liability or expense, except for any loss, liability or expense arising
out of or relating to the Sub-
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Servicer's gross negligence or willful misconduct in the performance of its
duties arising under this Agreement.
6.3 Mitigation of Liability. Either party shall have the right to mitigate
its liability under this Agreement by taking such actions as may be appropriate
including, but not limited to, reperformance of Services by the Sub-Servicer in
order to avert any loss to the Customer.
6.4 Violation of Law. If Customer violates or fails to comply with any
applicable law or governmental regulation in respect of a Loan or participation
in any Loan program, then Customer shall assume all liability for, and does
hereby indemnify, protect and hold harmless Sub-Servicer from and against, any
and all liabilities, losses, costs and claims imposed on, incurred by or
asserted against Sub-Servicer relating to or otherwise arising out of such
violation or failure by Customer to comply.
6.6 Customer's Failure to Pay. In the event the Customer fails to pay
within the time allowed an amount assessed of the Customer by the Secretary, and
Sub-Servicer is required to pay such amount. Customer agrees to reimburse
Sub-Servicer the amount paid by Sub-Servicer to the Secretary, within thirty
(30) days of Sub-Servicer's notice to Customer of Sub-Servicer's payment.
ARTICLE VII
COMPENSATION
7.1 Compensation for Services. For rendering Services under this Agreement,
the Sub-Servicer shall be compensated for Services provided pursuant to this
Agreement, the amounts set forth in the attached SCHEDULE A.
7.2 Special Services. The Primary Servicer or the Customer shall compensate
the Sub-Servicer for the performance by the Sub-Servicer of special services
requested by the Customer as set forth in SCHEDULE A.
7.3 Changes in the Schedule of Fees.
(a) The fees specified in SCHEDULE A are binding on the parties
from the effective date of this Agreement and may not be modified or amended
during the term of this Agreement, except as provided in Sections 3.5, 4.4 and
7.3(b) hereof.
(b) During the term of this Agreement, Sub-Servicer may submit in
writing to the Customer any proposed modification to SCHEDULE A, revising such
Fee Schedule, which modification reasonably reflects increases in actual costs
resulting from material and substantial amendments to the Act or Regulations,
which are enacted or adopted and become effective or applicable after the date
hereof, which impose material and substantial cost increases upon the
Sub-Servicer in the performance of the Services. In the event that the Customer
objects to the revised Fee Schedule, then Sub-Servicer and Customer shall
attempt to resolve any differences regarding such revised fees. If Sub-Servicer
and Customer are unable to reach a mutual agreement within sixty (60) days after
the delivery of any proposed modifications to SCHEDULE A, then Customer shall
have the right to terminate this Agreement (effective 90 days after delivery of
notice) by delivering written notice to Sub-Servicer at any time after the
expiration of such 60-day period. If Customer fails to deliver its written
notice of termination within 180 (180) days after the expiration of such 60-day
period, the failure shall be deemed conclusively to constitute the binding
agreement of Customer to the revised fees. If Customer terminates the Agreement
as proved in this
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section, then the Sub-Servicer shall continue to provide the Services at the
rate of 125% of the then existing Fee Schedule or the proposed new Fee
Schedule, whichever is less, until all Loans are removed from the Sub-Servicer's
servicing system, provided, however, that such period after termination shall
not exceed six (6) months without the Sub-Servicer's prior written consent.
7.4 Billing; Time for Payment. The Sub-Servicer shall remit to the Customer
a billing statement of the fees due at the end of each month pursuant to this
Agreement. The Sub-Servicer will mail a statement to the Customer no later than
the fifteenth (15th) day of the following month, which statement shall be paid
by the Customer within thirty (30) days.
7.5 Interest. Statements for services rendered by the Sub-Servicer which
are not paid within sixty (60) days of the billing date shall be charged
interest each calendar day at the Stated Rate, as hereinafter defined. The
Stated Rate means a daily interest rate, the denominator of which is 360 and the
numerator of which is equal to eighteen percent (18.0%). Said interest shall
accrue from the date of the initial billing and shall continue to accrue until
all statements paid in full.
7.6 Fees Upon Termination of Agreement. If this Agreement is terminated by
Customer in accordance with Sections 7.3 or 8.3 of this Agreement, or by
Sub-Servicer in accordance with Sections 8.4 or 8.5 of this Agreement, then the
Customer shall be billed by the Sub-Servicer and shall be responsible for paying
fees at the then current rate in SCHEDULE A (or, if termination is pursuant to
Section 7.3, at the rate set forth in such section), including, but not limited
to, Loan deconversion fees, or the monthly minimum charge, whichever is greater,
from the effective date or such termination until all Loans are removed from the
Sub-Servicer's servicing system; provided, however, that such period after
termination shall not exceed six (6) months without the Sub-Servicer's prior
written consent.
7.7 Deconversion Fee. Deconversion is defined as the transfer of ownership
or servicing of any Loan record in accordance with the provisions of Section 7.3
or Article VIII, or as otherwise mutually agreed. Deconversion charges will be
payable in advance at the rate of $15.00 per Loan; provided, however, that
there shall not be any deconversion charges in the event that this Agreement is
terminated by the Customer pursuant to Sections 8.5 (provided that the Customer
is not in breach of this Agreement at the time of the exercise of such right of
termination) or 8.6 of this Agreement. Deconversion associated with termination
or expiration of the Agreement will be accomplished as a single activity unless
otherwise agreed (in which event Customer shall be liable for any additional
costs incurred by Sub-Servicer, all as determined by Sub-Servicer).
Sub-Servicer assumes no liability for Loan records remaining on Sub-Servicer's
system after deconversion associated with termination or expiration of the
Servicing Agreement. Transfers off of Sub-Servicer's system shall be in
Sub-Servicer's machine readable media and format, and will include packaging of
all documents for shipment. Deconversion includes one (1) Borrower system
transaction history per Account. Additional copies will be charged at $.50 each.
Non-standard reports will be charged at rates mutually agreed to and based on an
estimate of application programming hours required and production costs in
accordance with the Rate Schedule. All deconversion documents will be made
available FOB Jacksonville, Florida. Customer shall bear responsibility for any
documents while in transit or for any file recreation as a result of documents
lost in transit. Servicing fees for the month in which deconversion occurs will
be prorated based on the deconversion date. Post-deconversion assistance after
tapes and/or documents are shipped will be scheduled as mutually agreed, and
will be charged per the Rate Schedule in SCHEDULE A.
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ARTICLE VIII
TERMINATION
8.1 Termination of Agreement. This Agreement shall continue in full force
and effect unless and until terminated in accordance with the provisions hereof.
At any time after the effective date of this Agreement, the Customer may
terminate this Agreement only as provided in Sections 7.3, 8.3 or 8.5, of this
Agreement. The Sub-Servicer may terminate this Agreement only as provided in
Sections 7.3, 8.3, 8.4, 8.5 and 8.6 of this Agreement. Upon any termination of
this Agreement all outstanding fees shall become immediately payable and Loan
Documentation shall be returned to the Customer in the Sub-Servicer's format in
accordance with the requirements of Section 8.2 hereof. The termination of this
Agreement shall not affect the obligations of the parties with respect to
transactions and occurrences in connection with Services provided prior to the
termination date.
8.2 Return of Records and Documents. Upon the expiration or termination of
this Agreement, the Sub-Servicer shall, at the request of the Customer, return
to the Customer those automated records and the Loan Documentation (if in the
possession of the Sub-Servicer) maintained by the Sub-Servicer in connection
with the servicing of the Loans to which the Sub-Servicer asserts no proprietary
right and which are not a part of the records and reports maintained by the
Sub-Servicer in connection with the servicing of Loans generally. All documents
relating to the Loans shall be returned at the request of the Customer in a
medium selected by the Sub-Servicer or in a paper format and at the reasonable
expense of the Customer. The return of all Loan documents, Loan Documentation,
and records belonging to the Customer shall be done at Customer's sole,
reasonable cost and expense and in such manner as the Sub-Servicer can
reasonably provide as promptly as possible following the date of termination if
so requested.
8.3 Impossibility of Performance. If the Sub-Servicer is rendered unable,
wholly or in part, by a force outside the control of the parties (including but
not limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
fire, communication line or power failure, earthquakes or other disasters) to
carry out its obligations under this Agreement, the Sub-Servicer shall give to
the Customer prompt written notice to that effect. Thereupon, the affected
obligations of the Sub-Servicer shall be suspended so long as the Sub-Servicer
is unable to so perform any affected obligation; provided, however, that either
party may at its option immediately terminate this Agreement in the event that
Services cannot be fully restored within ninety-six (96) hours of said
notification by the Sub-Servicer.
8.4 Termination Upon Nonpayment of Fees. If full payment is not received by
the Sub-Servicer within sixty (60) days of receipt by the Customer of the
Sub-Servicer's billing statement rendered in accordance with Section 7.4 hereof,
and in the absence of written notification from the Customer of contested
charges, such nonpayment shall constitute a default hereunder and shall entitle
the Sub-Servicer, at any time thereafter, to notify the Customer of such default
and if such default is not cured within twenty (20) days from the date of such
notice, the Sub-Servicer may, at its option, at any time thereafter immediately
terminate this Agreement.
8.5 Termination Upon Breach. If there exists a material breach by either
party, the other party may terminate this Agreement by providing sixty (60) days
prior written notice to the breaching party of such intent to terminate, which
notice must specify the material breach; provided, however, that such
termination shall not be effective if the breaching party cures the material
breach identified within such sixty (60) day period.
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8.6 The Sub-Servicer's Insolvency. If the Sub-Servicer becomes insolvent,
or the insolvency of the Sub-Servicer is reasonably determined by the Customer
to be imminent, then the Customer may terminate this Agreement by providing ten
(10) Business Days' prior written notice to the Sub-Servicer.
ARTICLE IX
MISCELLANEOUS
9.1 Intellectual Property Protection. Notwithstanding anything in this
Agreement to the contrary, it is the express intention of the parties to this
Agreement that all right, title and interest of whatever nature in the
Sub-Servicer's user manuals, training materials, all computer programs,
routines, structures, layout, report formats, together with all subsequent
versions, enhancements and supplements to the foregoing, all copyright rights
(including both source and object code) and all written or oral information
relating to the Sub-Servicer's programs conveyed in confidence by the
Sub-Servicer to the Customer and which give the Sub-Servicer an advantage over
its competitors who do not know or use such information, and all other forms of
intellectual property of whatever nature is and shall remain the sole and
exclusive property of the Sub-Servicer.
9.2 Agent Authorization. The Customer hereby authorizes the Sub-Servicer
to act on behalf of and as the Customer's agent, pursuant to this Agreement, in
the application processing and servicing of the Customer's Loans. Such
authorization shall include, but not be limited to, all correspondence and
liaison necessary with a Guarantor regarding such Loans, assignment of claims to
a Guarantor and any and all other communications, correspondence, signatures or
other acts appropriate to originate and service Customer's Loans in accordance
with the Act, the Regulations and the terms and conditions of this Agreement.
9.3 Disclosure of Information. All data, information, records,
correspondence, reports or other documentation received by the Sub-Servicer
pursuant to this Agreement from the Customer or a Borrower, or prepared and
maintained by the Sub-Servicer in the course of its activities under this
Agreement shall be released or divulged only to the Customer, or with respect to
information or documentation relating to a particular Borrower, to that
Borrower, to such other parties as the Sub-Servicer may be directed in writing
by the Customer or such Borrower, or as otherwise required by applicable law or
court or administrative order.
9.4 Assignment. Neither the Primary Servicer nor the Customer may assign
its rights or obligations under this Agreement without the prior written consent
of the Sub-Servicer which shall not be unreasonably denied. The Sub-Servicer
hereby consents to the assignment of this Agreement to one or more entities
which are now or in the future affiliated with the Customer, including without
limitation, NEBHELP, INC., NHELP - I, Inc., NHELP-II, Inc., National Education
Loan Network, Inc. and NHELP, Inc. In the event that Customer is permitted to
assign its rights and obligations hereunder, or in the event that its eligible
lender trustee sells any Loans to a party other than Sub-Servicer, such assignee
or purchaser, as applicable, shall as a condition to such assignment or sale
execute an agreement effectively binding such assignee or purchaser to the terms
and conditions of this Agreement (in the case of a sale, only with respect to
such Loans sold) as if such assignee or purchaser were the Customer.
The Sub-Servicer further consents, in order to perfect a pledge or grant of a
security interest by the Customer, to the assignment by the Customer of its
rights under this Agreement to, and this Agreement shall inure to the benefit
of, the Customer's eligible lender trustee, Norwest Bank Minnesota, National
Association, as trustee, its successors and assigns and/or Delaware Funding
Corporation, Three Rivers
- 16 -
Funding Corporation, Xxxxxx Guaranty Trust Company of New York and Mellon Bank,
N.A.. Without limiting the generality of the foregoing, all representations,
covenants and agreements in this Agreement which confer rights upon the Customer
shall be for the benefit of the Customer's eligible lender trustee and such
eligible lender trustee shall be entitled to rely on and enforce (without
duplication by the Customer) such representations, covenants and agreements to
the same extent as if it were a party hereto.
9.5 Duties as Sub-Servicer.
(a) Employment of Third-Parties. In connection with the
performance of its duties under this Agreement, the Sub-Servicer may, in its
sole discretion and expense, employ such third parties, including, without
limitation, appraisers, consultants, attorneys, accountants and others as the
Sub-Servicer deems necessary or appropriate to carry out the purposes of, and to
fulfill its obligations and duties hereunder.
(b) Limitation of Duties.
(i) No Obligation to Use Own Funds. The Sub-Servicer
shall have no obligation to make any payment of any
type pursuant hereto or to incur any financial
liability on behalf of the Customer in the
performance of its duties unless sufficient funds
have been deposited with the Sub-Servicer hereunder
to pay in full all such amounts.
(ii) Not Responsible for Representations. The Sub-Servicer
shall be regarded as making no representations and
having no responsibilities with respect to the
accuracy or sufficiency of any representations made
by the Customer to any third party.
(iii) Reliance Upon Instructions. The Sub-Servicer may rely
on and shall be protected, indemnified and held
harmless by the Customer in acting upon the written
and oral instructions of the Customer or of counsel
to the Customer with respect to any matter relating
to its actions on behalf of the Customer, and the
Sub-Servicer shall be entitled to request further
instructions be given by such persons or to request
that instructions be given in writing.
(iv) Authorization to Act: Limitation of Liability. In
performing duties under this Agreement, the
Sub-Servicer is authorized to rely upon any
statement, consent, agreement or other instrument not
only as to its due execution, its validity, and the
effectiveness of its provisions, but also as to the
truth and accuracy of any information contained
therein, which the Sub-Servicer shall in good faith
believe to be genuine or to have been represented or
signed by a proper person or persons. The
Sub-Servicer shall not be liable for any error in
judgment made in good faith by an employee of the
Sub-Servicer unless it shall be proved that the
Sub-Servicer was grossly negligent. The Sub-Servicer
shall have no liability for any action or failure to
act with respect to its duties if undertaken in good
faith reliance upon the advice of its counsel.
(c) Limitation of Liability. In the event of any claim against the
Sub-Servicer arising out of the Sub-Servicer's negligence, gross negligence or
willful misconduct, the Sub-Servicer shall be liable only for actual damages
incurred by the Customer (which shall include, but not be limited to, principal
and
- 17 -
interest on Loans) and in no event shall the Sub-Servicer be liable to the
Customer for any lost profits, lost savings, or consequential, incidental, or
punitive damages.
9.6 Binding Effect. The terms and conditions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
9.7 Amendment. This Agreement may not be amended or modified in any respect
except by an instrument in writing signed by the party to be charged and
communicated in accordance with Section 9.13 regarding notices and as otherwise
provided in this Agreement.
9.8 Waiver of Rights. No failure by any party to exercise, or any delay in
exercising, and no course of dealing with respect to any right of such party or
any obligation of any other party under this Agreement shall operate as a waiver
thereof, unless, and only to the extent, agreed to in writing by all parties
hereto. Any single or partial exercise by any party of its rights shall not
preclude such party from any other or further exercise of such right or the
exercise of any other right. Any single or partial waiver by any party of any
obligation of any other party under this Agreement shall constitute a waiver of
such obligation only as specified in such waiver and shall not constitute a
waiver of any other obligation.
9.9 Cumulative Remedies. No remedy by the terms of this Agreement conferred
upon or reserved to the Sub-Servicer or the Customer 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 Agreement or existing at law or
in equity or by statute on or after the date of this Agreement including,
without limitation, the right to such equitable relief by way of injunction,
mandatory or prohibitory, to prevent the breach or threatened breach of any of
the provisions of this Agreement or to enforce the performance hereof.
9.10 Interpretation of Agreement. In the event of any dispute or
disagreement between the parties hereto, either with respect to the
interpretation of any provision of this Agreement or with respect to the
performance hereunder by the Sub-Servicer or the Customer, each of the parties
shall appoint a designated officer or agent to meet for the purpose of
endeavoring to resolve such dispute or to negotiate for an adjustment to such
provision. No formal proceedings for the judicial resolution of such dispute may
be commenced until the designated officers or agents have reasonably discussed
the provision or performance in question and have concluded in good faith that
amicable resolution through continued negotiation of the matter at issue does
not appear likely.
9.11 Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or nonauthorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
9.12 Governing Law: Entire Agreement. This Agreement shall be governed by
the laws of the State of Florida, and constitutes the entire Agreement between
the parties with respect to the subject matter. All prior agreements,
representations, statements, negotiations, and undertakings between the parties
are superseded hereby. In the event of any inconsistency between the terms and
conditions of any Schedule attached hereto and the provisions of this Agreement,
the Schedule shall prevail.
9.13 Notices. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed to have been given if sent by registered or
certified mail, return receipt requested, overnight carrier, or personal
delivery, addressed:
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(a) if to the Sub-Servicer:
InTuition Services, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: President
(b) if to the Primary Servicer:
UNIPAC Service Corporation
0000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx XX 00000
Attention: Xxxxxx Xxxxxxxx
with a copy to:
NHELP-III, Inc.
P. O. Xxx 00000
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx
(c) at such other address as the party to be notified has
designated upon reasonable notice.
Notices made pursuant to this paragraph by overnight carrier or personal
delivery shall be deemed to be effective on the next Business Day after such
notice is sent. Notices made pursuant to this paragraph by mail shall be deemed
to be effective on the fifth (5th) day following the mailing of such notice. A
return receipt, or evidence of refusal, obtained by that United States Postal
Service at the request of the sender or the expiration of ten (10) days after
mailing shall be conclusive as of the fact of receipt.
9.14 Confidentiality. This Agreement and all Schedules attached hereto are
considered confidential information and must not be copied or disclosed to
anyone other than the Customer's credit providers and employees of the Customer
directly concerned with this material without the express written consent of the
Sub-Servicer.
9.15 Corporate Obligation. No recourse under or upon this Agreement or any
claim based thereon or in respect thereof shall be had against any incorporator,
member, officer, employee, or trustee, as such, past, present, or future, of the
Sub-Servicer or the Customer or any successor organizations, either directly or
through the Sub-Servicer or the Customer or any successor organizations. This
Agreement is solely a corporate obligation and no personal liability against any
incorporator, member, officer, employee, or trustee, past, present, or future of
the parties shall attach through the Sub-Servicer or the Customer or any
successor corporations, because of the Agreement.
9.16 Loan Sale Agreement: Approval of Sub-Servicer as Direct Servicer. This
Agreement is made pursuant to Section 3.2 of the Loan Sale Agreement, to which
the Customer will be a party by virtue of assignment of rights therein by NHELP,
Inc. In addition, upon approval by the credit providers, this Agreement
shall, without further action on the part of any party, become an agreement by
and between the Sub-Servicer and the Customer and the Primary Servicer shall
cease to be a party hereto. Until such time as approved, this Agreement shall be
by and between the Primary Servicer and the Sub-Servicer, for the benefit of the
Customer. All references to the Customer, shall be until such time as approval
is
- 19 -
received and this Agreement becomes an agreement between the Sub-Servicer and
the Customer, shall be deemed to include the Primary Servicer and the duties and
obligations of the Sub-Servicer to the Customer are rendered on behalf of, and
for the benefit of, the Primary Servicer and the Primary Servicer shall be
entitled to any and all of the rights granted to the Customer hereunder;
however, to the greatest extent possible, the provision of the Services by the
Sub-Servicer shall be in favor of, and the exercise of the rights granted hereby
shall be exercised by, without duplication the Customer.
9.17 Third Party Beneficiaries. The parties hereto acknowledge and agree
that Norwest Bank Minnesota, National Association, as Trustee Delaware Funding
Corporation, Xxxxxx Guaranty Trust Company of New York, Mellon Bank, N.A. and
all Secured Creditors as defined in and pursuant to a Warehouse Note Purchase
and Security Agreement to which the Customer is a party, shall be third party
beneficiaries of this Agreement with the power and right to enforce the
provisions of this Agreement against the parties. In the event that any of said
third party beneficiaries become an assignee or successor to Customer and, as
such assignee or successor of Customer enforce this Agreement against Servicer,
then said third party beneficiary shall succeed to the duties and obligations of
Customer under this Agreement.
[SIGNATURE ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and all its
Schedules to be duly executed and to take effect as the day and year first above
written.
INTUTTION, INC. UNIPAC SERVICE CORPORATION
/s/ Xxxxx X. Xxx Xxxx /s/ Xxxxxx X. Xxxxxxxx
---------------------- --------------------------------
(Authorized Signature) (Authorized Signature)
Xxxxx X. Xxx Xxxx Xxxxxx X. Xxxxxxxx
---------------------- --------------------------------
(Print Name) (Print Name)
President Senior Vice President
---------------------- --------------------------------
(Title) (Title)
00-0000000
--------------------------------
(Federal Identification Number)
21
SCHEDULE A
FEE SCHEDULE
Servicing Fees.
Conversion Fees. For Loans acquired pursuant to Section 4.4 of the
Agreement, the Sub-Servicer and the Customer shall agree in writing upon the
terms and conditions, including the servicing and conversion fees, prior to any
such Loans being converted to Sub-Servicer's system.
Monthly Servicing Fees. The servicing fee for Loans shall be an
annualized amount equal to (i) 75 basis points (0.75%) of the average aggregate
outstanding principal balance of Loans subserviced directly by the Sub-Servicer
and (ii) 55 basis points (0.55%) of the average aggregate outstanding principal
balance of Loans subserviced by USA Group Loan Services, Inc., in each case as
of December 31, 1998 or, with respect to any such Loans acquired after December
31,1998, as of the applicable Scheduled Sale Date. In addition, a fee of $2.50
per account shall be paid by the Customer to the Sub-Servicer monthly on an
Account Group that becomes delinquent with respect to any payment of principal
or interest for thirty (30) days or more.
TBC (To Be Closed) Accounts. The monthly fees charged to the Customer
for TBC - Claim and TBC - Payoff Accounts is the Repayment fee. This fee will
only be assessed during the month that the Account is either claim paid or
paid-in-full.
Consolidation Loan Servicing Fees.
Consolidation Fee. The Sub-Servicer shall be paid a fee of $35.00 per
each Consolidation Loan originated and disbursed by the Sub-Servicer pursuant to
this Agreement.
Repayment Fee. The Sub-Servicer shall be paid a monthly fee per each
Consolidation Loan Account in accordance with the Repayment fees for all other
Accounts under this Agreement.
Other Charges and Special Services
Cures
Any "lender error" cure classification and performance by the
Sub-Servicer will be as mutually agreed.
Data Reconstruction
Time and materials necessary to recover missing historical data
necessary for correct servicing will be charged in accordance with the
Rate Schedule.
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Professional Services Rates
Should additions/modifications to the system or special services not covered by
other areas of the Agreement be requested, the time and resource required will
be charged in accordance with the Rate Schedule or other mutually agreed upon
arrangement.
Rate Schedule
Per unit charges for special services requested in addition to Services as
defined by the Agreement:
Professional Services
Data Entry $ 25.00 /Hour
Operations Support $ 30.00 /Hour
Technical Writing $ 40.00 /Hour
Accounting/Administrative Services $ 40.00 /Hour
Data Processing Services $ 75.00 /Hour
Other Services
Tape Load to Sub-Servicer $ 25.00 /per occurrence
Tape Load from Sub-Servicer $ 50.00 /per occurrence
Microfiche - Master $ 2.65 /per copy
- Copy $ .25 /per copy
Optional Miscellaneous Fees
Delivery of computer output; courier services; special forms; print form
overlay; communications costs including, but not limited to, telephone lines,
terminals, printers, and control units; and/or other miscellaneous services
outside of normal operations which may, from time to time, be reasonably
requested by written notice from the Customer, will be charged either at the
actual cost of the service billed to the Sub-Servicer by the third party
performing the service, plus an administrative fee of ten percent (10%), or in
accordance with the Rate Schedule.
Monthly Minimum
A minimum charge of $2,000 per lender number will be assessed for any month in
which monthly servicing fees fall below $2,000.
-23-
SCHEDULE B
LOAN CONVERSION PROCEDURES
Portfolios can be converted via two processes. OPTION 1 is systematically via
tape or on-system transfer between lender numbers. Tape data can be provided in
the Sub-Servicer's format or the Sub-Servicer can perform the programming to
convert the data to the Sub-Servicer's format at the Customer's expense. OPTION
2 is for the portfolio to be converted manually. Within each of the two options
are several degrees of file review. The Customer and the Sub-Servicer will agree
on one of the two main options, decide on the type of file review and execute a
Loan Conversion Procedure Form substantially in the form of Attachment 1 hereto.
Option 1 - Automated Conversion
No File Review - Data would be converted from tape furnished by the Customer or
prior Sub-Servicer or via on-system transfer between lender numbers. In this
case, the Sub-Servicer would be held harmless by the Customer for any errors in
the data provided on the tape. The files would be received and maintained by the
Sub-Servicer for on-going research of any possible conversion discrepancies and
normal servicing inquiries.
Document Check (Abbreviated Note Exam) - Confirms that all of the critical
documents were included in the file that was provided to the Sub-Servicer. The
critical documents are defined as Application(s), Promissory Note(s) & any
addenda thereto, Notice(s) of Guarantee, Proof of Disbursement(s) and, in the
case of PLUS/SLS, Disclosure of Repayment. Sub-Servicer would be held harmless
by the Customer for any errors in the data provided on the tape and for the
omission of any documents, other than those listed above, for which verification
was not done.
Full Note Examination - Includes everything listed in the Document Check plus
verification that documents have been properly executed and monetary figures
match, and that all required information is available, except references. If
Loans are in Repayment, the review would also include verification that the
following are present in the file:
- accurate conversion to Repayment and disclosure
- complete payment history
- collection history (if appropriate to cover any gaps in payment
history)
- supporting documentation for Deferments/Forbearances.
Due Diligence Review - Includes everything listed in the Full Note Examination,
plus verification that the due diligence done in the collection history is
correct and meets regulatory requirements.
Account Reconstruction - Includes all activities necessary to rebuild an Account
from the beginning. This would be required when the Account information is not
available or its integrity is not sufficient to allow the Accounts to be
converted to the servicing system. This would be billed as time and materials in
accordance with the Rate Schedule in Schedule A.
-24-
Review Done to Customer's Specifications - Specifics and associated cost to be
mutually determined prior to the conversion to the Sub-Servicer's system.
Option 2 - Manual Conversion
Document Check (Abbreviated Note Exam) - Confirms that all of the critical
documents were included in the file that was forwarded to the Sub-Servicer. The
critical documents are defined as Application(s), Promissory Note(s) & any
addenda thereto, Notice(s) of Guarantee, Proof of Disbursement(s) and, in the
case of PLUS/SLS, Disclosure of Repayment.
Full Note Examination - Includes everything listed in the Document Check plus
verification that documents have been properly executed and monetary figures
match, and that all required information is available, except references. If
Loans are in Repayment, the review would also include verification that the
following are present in the file:
- accurate conversion to Repayment and disclosure
- complete payment history
- collection history (if appropriate to cover any gaps in payment
history)
- supporting documentation for Deferments/Forbearances.
Due Diligence Review - Includes everything listed in the Full Note Examination,
plus verification that the due diligence done in the collection history is
correct and meets regulatory requirements.
Account Reconstruction - Includes all activities necessary to rebuild an Account
from the beginning. This would be required when the Account information is not
available or its integrity is not sufficient to allow the Accounts to be
converted to the servicing system. This would be billed as time and materials in
accordance with the Rate Schedule in Schedule A.
Review Done To Customer's Specifications - Specifics and associated cost to be
determined prior to the conversion to the Sub-Servicer's system.
-25-
ATTACHMENT 1
LOAN CONVERSION PROCEDURE FORM
Sub-Servicer and Customer agree that Loan conversion procedures as described
below shall be used in conjunction with conversion activities effective
_______________, 19____. General characteristics of the Loans to be converted
are also described below including, but not limited to, current principal and
interest amount, number and type of Loans, number and type of Borrowers,
physical location, prior owner and prior Sub-Servicer:
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
INTUITION, INC. FOR:_________________________
Typed Name: _______________________ Typed Name:__________________
Typed Title:_______________________ Typed Title:_________________
-26-
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT (the "Agreement") dated as of September
16, 1999, is by and among NHELP-III, INC. (the "Issuer"), NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, as Trustee (the "Trustee"), and UNIPAC SERVICE
CORPORATION, as custodian (the "Custodian").
WHEREAS, the Trustee and the Issuer have entered into a Warehouse Note
Purchase and Security Agreement dated as of September 16, 1999, (the "Warehouse
Agreement"), as it may be supplemented or amended, to which the Secured
Creditors (as defined in the Warehouse Agreement) are parties, and pursuant to
which the Trustee has agreed to purchase, upon request of and as an
accommodation to the Issuer, certain student loans (the "Student Loans") for the
benefit of the Issuer and to cause title to such loans to be vested in the
Trustee subject to the Issuer's beneficial interest; and
WHEREAS, pursuant to the Warehouse Agreement, the Issuer has granted to
the Trustee, and its successors and assigns, for the benefit of the Secured
Creditors (as defined in the Warehouse Agreement), a security interest in, among
other things, the promissory notes and certain other documents relating to
certain Student Loans as security, pursuant to the performance and observance by
the Issuer of all of the covenants, terms and condition expressed or implied in
the Warehouse Agreement; and
WHEREAS, the Trustee has requested, and the Issuer agreed, that all
Student Loans financed under the Warehouse Agreement (including all Student
Loans with respect to which the 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 Issuer has entered into that certain Servicing Agreement
(the "Servicing Agreement") dated as of September 16, 1999, with the Custodian,
to service Student Loans acquired by the Issuer pursuant to the Servicing
Agreement or beneficially owned by the Issuer utilizing the data processing
capabilities and systems of the Custodian; and
WHEREAS, the Issuer desires to contract for the Custodian to provide
the custodial services set forth herein; and
WHEREAS, the Issuer will from time to time in the future deliver or
cause the Trustee to deliver, to the Custodian Student Loans to be serviced by
the Custodian;
NOW, THEREFORE, the Trustee and the Issuer hereby authorize the
Custodian to so hold all Deposited Loans (as defined below) 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
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 Warehouse Agreement.
"Deposited Loans" means all Student Loans financed pursuant to the
Warehouse Agreement which now or at any time hereafter are serviced by the
Custodian or in the possession and control of the Custodian on behalf of the
Issuer as servicer.
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) The Custodian shall 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;
(ii) The Notification of Loan Approval by the
Guarantee Agency; and
(iii) Any further documentation required by the
Secretary or the Guarantor.
provided, however, that to the extent permitted in accordance with the
rules and regulations of the Secretary and/or the applicable Guarantee
Agency, 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 Issuer, the Trustee or
Secured Creditors and in circumstances authorized in the Warehouse
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, subject to the costs associated
therewith under the Servicing Agreement.
(c) The Custodian agrees to permit inspection at all
reasonable times and upon reasonable advance notice by the Issuer or
Trustee, the Guarantee Agencies, 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 documents relating to the Deposited Loans and to
interview personnel involved in the servicing of the Deposited Loans.
(d) The Custodian shall furnish to the Trustee the
reports required by the Servicing Agreement upon written request to the
Custodian.
2
(e) 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
Agreement. The Custodian hereby accepts such appointment and
acknowledges receipt of notice of the security interest held by the
Trustee in the Deposited Loans.
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 Warehouse Agreement.
4. RELEASE OF COLLATERAL. The Custodian may release Deposited
Loans and all related information and documentation held by the Custodian only
as permitted in the Warehouse Agreement. Except as described in this Paragraph 4
and except upon termination of this Agreement and notwithstanding any other
provision of the Servicing Agreement, the Custodian will not release any
Deposited Loans unless the Custodian is in receipt of written authorization from
the Trustee.
5. NO LIABILITY. The Trustee shall have no responsibility for
loss or damage suffered by the Issuer with respect to any Deposited Loans
delivered or released pursuant to this Agreement.
6. TERMINATION OF AGREEMENT. This 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 Issuer the payment of which is secured
under the Warehouse Agreement, including indebtedness of the Issuer the payment
of which is secured under the Warehouse Agreement, including indebtedness for
any penalties, costs of collection or other charges. Upon termination of this
Agreement for any reason other than full satisfaction of indebtedness of the
Issuer, the Deposited Loans then held by the Custodian shall be forthwith
delivered to the party designated by the Trustee, subject to the terms of the
Servicing Agreement. Upon termination of this Agreement following satisfaction
of indebtedness of the Issuer, Deposited Loans and materials relating thereto in
the possession of the Custodian shall be delivered to the Issuer or its
designee. This Agreement shall not be subject to termination other than as
specifically provided in this paragraph 6.
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 and the
Issuer (or their respective designees) upon request of the Trustee or the
Issuer, 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. AUTHORIZATIONS. The persons whose signatures appear
immediately below are the persons presently authorized to act for the Trustee or
the Issuer, as the case may be, whenever written directions or requests are
required under this Agreement (it being understood and agreed that different or
additional persons may be authorized to act for such Persons without further
notice to the Custodian or any other Persons and that the Custodian may rely on
directions or requests by such
3
different or additional persons so long as they purport to be authorized
officers of the Trustee or the Issuer, as the case may be).
TRUSTEE ISSUER
Norwest Bank Minnesota, National NHELP-III, Inc.
Association
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxx X. Xxxxxx
------------------------------- ---------------------------------------------
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxx, Vice President and Treasurer
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 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 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 time maintain records
indicating the borrower name and Social Security number, at a minimum,
of all Deposited Loans which are delivered to it to hold as Custodian
pursuant to this Agreement and indicating that such Deposited Loans
have been pledged to the Trustee.
10. MISCELLANEOUS.
(a) This 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 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.
4
(c) This 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 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 AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MINNESOTA.
(f) The parties hereto acknowledge and agree that the
Secured Creditors shall be third-party beneficiaries of this Agreement
with the power and right to enforce the provisions of this Agreement
against the parties hereto. In the event that the Secured Creditors
become the assignees or successors of the Trustee (under the
circumstances contemplated in the Warehouse Agreement) and, as such
assignees or successors of the Trustee, enforce this Agreement against
the Custodian, the Secured Creditors shall succeed to the duties and
obligations of the Trustee under this Agreement.
(g) All notices, requests, demands and other
communications under or in respect of this Agreement shall be in
writing or 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 Issuer:
NHELP-III, INC.
c/o National Higher Education Loan Program
000 X. 00 Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Trustee:
Norwest Bank Minnesota, National Association
Norwest Center
0xx Xx xxx Xxxxxxxxx Xxx
Xxxxxxxxxxx XX 00000-0000
Attention: Corporate Trust Department
Facsimile: (000) 000-0000
5
If to the Custodian:
UNIPAC Service Corporation
0000 Xx Xxxxxx Xx Xxx 000
Xxxxxx XX 00000
Attention: President
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
6
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first written above.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Title: CORPORATE TRUST OFFICER
NHELP-III, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Title: Vice President and Treasurer
UNIPAC SERVICE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Title: Senior Vice President.
7
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT (the "Agreement") dated as of September
16,1999, is by and among NHELP-III, INC. (the "Issuer"), NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee (the "Trustee"), and GREAT LAKES HIGHER
EDUCATION SERVICING CORPORATION, as custodian (the "Custodian").
WHEREAS, the Trustee and the Issuer have entered into a Warehouse Note
Purchase and Security Agreement dated as of September 16, 1999, (the "Warehouse
Agreement"), as it may be supplemented or amended, to which the Secured
Creditors (as defined therein) are parties, and pursuant to which the Trustee
has agreed to purchase, upon request of the Issuer, certain student loans (the
"Student Loans") for the benefit of the Issuer and to cause title to such loans
to be vested in the Trustee subject to the Issuer's beneficial interest; and
WHEREAS, pursuant to the Warehouse Agreement, the Issuer has granted to
the Trustee, and its successors and assigns, for the benefit of the Secured
Creditors (as defined in the Warehouse Agreement), a security interest in,
among, other things, the promissory notes and certain other instruments,
documents and Records (as defined in the Warehouse Agreement) relating to
certain Student Loans as security, pursuant to the performance and observance by
the Issuer of all of the covenants, terms and condition expressed or implied in
the Warehouse Agreement; and
WHEREAS, the Trustee has requested, and the Issuer agrees, that all
Student Loans financed under the Warehouse Agreement (including all Student
Loans with respect to which the 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 Issuer has entered into that certain Servicing Agreement
(the "Servicing Agreement") dated as of September 16, 1999, with Great Lakes
Higher Education Servicing Corporation (in such capacity, the "Servicer") to
service Student Loans.
NOW, THEREFORE, the Trustee and the Issuer hereby authorize the
Custodian to hold all Deposited Loans (as defined below) as custodian 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 as custodian and agent of the Trustee.
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 Warehouse Agreement.
"Deposited Loans" means all Student Loans financed pursuant to the
Warehouse Agreement which now or at any time hereafter are serviced by or in the
possession and control of the Servicer pursuant to the Servicing Agreement.
1
2. SAFEKEEPING OF THE DEPOSITED LOANS. The Custodian hereby
agrees to act as custodian and agent of the Trustee and 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 possession, dominion and control (subject only to the
direction of the Trustee) the following documents with respect to each
of the Deposited Loans and to use due care to preserve and protect the
same:
(i) a copy of the original combination student
application/promissory note (with all required
supplements) or the combination of separate documents
representing the same but in all cases, documents
shall include the original promissory note;
(ii) the Notification of Loan Approval by the
Guarantor or system documentation sufficient to
indicate the electronic notification of loan approval
by the Guarantor; and
(iii) any further documentation required by the
Secretary or the Guarantor.
provided, however, that to the extent (A) permitted in accordance with
the rules and regulations of the Secretary of Education and/or the
applicable Guarantor, and (B) not otherwise affecting the ability of
the Trustee or the Secured Creditors to enforce against the student
obligors under applicable law the Deposited Loans, the Custodian may
retain any of such documentation (other than original promissory notes)
on microfilm, imaging or other similar storage system;
(b) Upon the written demand of the Issuer, the Trustee or
Secured Creditors and in circumstances authorized in the Agreement, to
deliver and immediately release to the Trustee, or the agent or
representative of the Trustee, any and all of the Deposited Loans held
by Custodian at the time of such demand, as well as all related
information and documents required to be held under the Servicing
Agreement;
(c) To furnish the Trustee monthly and the Secured
Creditors at such time or times the Secured Creditors may reasonably
request, 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 or the Secured Creditors;
(d) To permit inspection at all reasonable times and upon
reasonable advance notice by the Trustee, the Secured Creditors or
their respective agents (including auditors and representatives) of the
Deposited Loans and the Records, such inspection to include the right
to examine and make copies of any Record, documents or other
instruments relating to the Deposited Loans and to interview personnel
involved in the servicing of the Deposited Loans;
2
(e) To furnish the Trustee and the Secured Creditors from
time to time upon written request of the Trustee or the Secured
Creditors a list of all Deposited Loans submitted for claim and the
date of submission and the amount claimed;
(f) To furnish to the Trustee and the Secured Creditors
the reports required by the Servicing Agreement upon written request to
the Custodian;
(g) To furnish the Trustee or the Secured Creditors, at
the request of the Trustee, the Secured Creditors or the Issuer, prior
to any withdrawal of moneys from the Collection Account under the
Agreement for the acquisition of Eligible Loans, a confirmation that
all Records, documents and other instruments described in clause (a)
above with respect to such Eligible Loans have been received by the
Custodian; and
(h) 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 Warehouse Agreement, reasonably request, after
compensation to the Custodian from the Issuer of any costs and expenses
associated therewith.
3. PAYMENTS IN RESPECT OF DEPOSITED LOANS. The Issuer and the
Custodian 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 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 any Person at any time
any Deposited Loans that has been paid in full;
(b) the Custodian may release to an applicable Guarantor
any Deposited Loans 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 paragraph 2(b)
of this Agreement, 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 4 and except upon termination of
this Agreement, the Custodian will not release any Deposited Loans unless the
Custodian is in receipt of written authorization from the Trustee (but only
under the circumstances set forth in the Warehouse Agreement for the exercise of
remedies by the Secured Creditors).
5. NO LIABILITY. Neither the Trustee nor the Secured Creditors
shall have any responsibility for loss or damage suffered by the Issuer with
respect to any Deposited Loans delivered or released pursuant to this Agreement.
3
6. TERMINATION OF AGREEMENT. This Agreement may be terminated by
the Trustee for cause and may be terminated at any time (with the consent of the
Secured Creditors) by the mutual agreement of the Trustee and the Custodian, but
no such termination shall be effective until alternative safekeeping
arrangements satisfactory to the Trustee have been effected. This Agreement
shall terminate forthwith upon the discharge of the Warehouse Agreement in
accordance with the terms of the Warehouse Agreement. Upon termination of this
Agreement for any reason other than the discharge of the Warehouse Agreement in
accordance with the terms of the Warehouse Agreement, the Deposited Loans then
held by the Custodian shall be forthwith delivered to the Trustee or other party
designated by the Trustee, but the Trustee shall not be the Servicer of such
Deposited Loans. Upon termination of this Agreement following discharge of the
Warehouse Agreement as described above, all Deposited Loans and materials
relating thereto in the possession of the Custodian shall be delivered to the
Issuer. Any actual costs incurred by the Custodian at the direction of the
Issuer in addition to the normal cost of servicing shall be borne by the Issuer.
7. INSPECTION RIGHTS. To the extent permitted by applicable law,
all Records with respect to the Deposited Loans shall be available for
inspection or audit from time to time by the Trustee, the Issuer and the Secured
Creditors (or their respective designees) upon the request of the Trustee, the
Issuer or the Secured Creditors made with reasonable advance notice to the
Custodian, such availability to include the right to examine and make copies of
any Records, documents or instruments relating to the Deposited Loans.
8. AUTHORIZATIONS. The persons whose signatures appear
immediately below are the persons presently authorized to act for the Trustee or
the Issuer, as the case may be, whenever written directions or requests are
required under this Agreement (it being understood and agreed that different or
additional persons may be authorized to act for such Persons without further
notice to the Custodian or any other Persons and that the Custodian may rely on
directions or requests by such different or additional persons so long as they
purport to be authorized officers of the Trustee or the Issuer, as the case may
be).
TRUSTEE ISSUER
Norwest Bank Minnesota, National NHELP-III, Inc.
Association
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxx X. Xxxxxx
-------------------------------- ---------------------------------------------
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxx, Vice President and Treasurer
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CUSTODIAN.
(a) The Custodian agrees to accept delivery of the
promissory notes and other Records, documents and instruments
pertaining to the Deposited Loans and to have and maintain continuous
and exclusive possession, dominion and control over all documents
evidencing the Deposited Loans,
4
(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 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 Records, documents and
instruments.
(d) The Custodian shall at all time maintain Records
indicating the obligor name and Social Security Number of all Deposited
Loans which are delivered to it to hold as Custodian pursuant to this
Agreement and maintain sufficient records to indicate that such
Deposited Loans have been pledged to the Trustee.
(e) The Custodian makes no representation, express or
implied, as to the effectiveness of the bailment hereunder for purposes
of perfection under the UCC in effect in Wisconsin or Nebraska.
10. MISCELLANEOUS.
(a) No amendment, modification, termination or waiver of
any provision of this Agreement shall be effective unless the same
shall be in writing and signed by the parties and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given. No amendment of any other agreement
or instrument shall affect the Custodian or its duties hereunder.
(b) This 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, provided that the
Custodian may not transfer, assign or terminate all or any part of this
Agreement without the prior written consent of the Issuer.
(c) The parties hereto acknowledge and agree that the
Secured Creditors shall be third-party beneficiaries of this Agreement
with the power and right to enforce the provisions of this Agreement
against the parties hereto. In the event that the Secured Creditors
become the assignees or successors of the Trustee (under the
circumstances contemplated in the Warehouse Agreement) and, as such
assignees or successors of the Trustee, enforce this Agreement against
the Custodian, the Secured Creditors shall succeed to the duties and
obligations of the Trustee under this Agreement.
(d) The Custodian acknowledges and agrees that its
services under this 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. The Custodian shall not be entitled
5
to, and hereby waives, any lien or charge on, or right of set-off
against, any Deposited Loans or proceeds thereof coming into its
possession or otherwise.
(e) This 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.
(f) Any provision of this 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.
(g) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF WISCONSIN, WITHOUT
REFERENCE TO ITS CONFLICTS-OF-LAWS PRINCIPLES.
(h) All notices, requests, demands and other
communications under or in respect of this Agreement shall be in
writing or 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 Issuer:
NHELP-III, INC.
c/o National Higher Education Loan Program
000 X. 00 Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Trustee:
Norwest Bank Minnesota, National Association
Norwest Center
6th St end Xxxxxxxxx Xxx
Xxxxxxxxxxx XX 00000-0000
Attention: Corporate Trust Department
Facsimile: (000) 000-0000
If to the Custodian:
Great Lakes Higher Education Servicing
Corporation
0000 Xxxxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: President
6
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first written above.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Title: CORPORATE TRUST OFFICER
NHELP-III, INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Title: Vice-president and Treasurer
GREAT LAKES HIGHER EDUCATION
SERVICING CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Title: Executive Vice President
7
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT (the "Agreement") dated as of September
16, 1999, is by and among NHELP-III, INC. (the "Issuer"), NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, as Trustee (the "Trustee"), and INTUITION, INC.
("InTuition"), as custodian (the "Custodian").
WHEREAS, the Trustee and the Issuer have entered into a Warehouse Note
Purchase and Security Agreement dated as of September 16, 1999, (the "Warehouse
Agreement"), as it may be supplemented or amended, to which the Secured
Creditors (as defined in the Warehouse Agreement) are parties, and pursuant to
which the Trustee has agreed to purchase, upon request of and as an
accommodation to the Issuer, certain student loans (the "Student Loans") for
the benefit of the Issuer and to cause title to such loans to be vested in the
Trustee subject to the Issuer's beneficial interest; and
WHEREAS, pursuant to the Warehouse Agreement, the Issuer has granted to
the Trustee, and its successors and assigns, for the benefit of the Secured
Creditors (as defined in the Warehouse Agreement), a security interest in, among
other things, the promissory notes and certain other documents relating to
certain Student Loans as security, pursuant to the performance and observance
by the Issuer of all of the covenants, terms and condition expressed or implied
in the Warehouse Agreement; and
WHEREAS, the Trustee has requested, and the Issuer agreed, that all
Student Loans financed under the Warehouse Agreement (including all Student
Loans with respect to which the 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 Issuer has entered into that certain Servicing Agreement
(the "Servicing Agreement") dated as of September 16, 1999 with UNIPAC Service
Corporation (the "Servicer") to service Student Loans acquired by the Issuer
pursuant to the Servicing Agreement or beneficially owned by the Issuer
utilizing the data processing capabilities and systems of InTuition as
subservicer; and
WHEREAS, the Issuer desires to contract for the Custodian to provide
the custodial services set forth herein; and
WHEREAS, the Issuer will from time to time in the future deliver or
cause the Trustee to deliver, to the Custodian Student Loans to be subserviced
by InTuition;
NOW, THEREFORE, the Trustee and the Issuer hereby authorize the
Custodian to so hold all Deposited Loans (as defined below) 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
1
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 Warehouse Agreement.
"Deposited Loans" means all Student Loans financed pursuant to the
Warehouse Agreement which now or at any time hereafter are serviced by InTuition
or in the possession and control of the Custodian on behalf of the Issuer as
servicer.
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) The Custodian shall 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;
(ii) The Notification of Loan Approval by the
Guarantee Agency; and
(iii) Any further documentation required by the
Secretary or the Guarantor.
provided, however, that to the extent permitted in accordance with the
rules and regulations of the Secretary and/or the applicable Guarantee
Agency, 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 Issuer, the Trustee or
Secured Creditors and in circumstances authorized in the Warehouse
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, subject to the costs associated
therewith under the Servicing Agreement.
(c) The Custodian agrees to permit inspection at all
reasonable times and upon reasonable advance notice by the Issuer or
Trustee, the Guarantee Agencies, 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 documents relating to the Deposited Loans and to
interview personnel involved in the servicing of the Deposited Loans.
2
(d) InTuition shall furnish to the Trustee the reports
required by the Servicing Agreement upon written request to InTuition.
(e) 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
Agreement. The Custodian hereby accepts such appointment and
acknowledges receipt of notice of the security interest held by the
Trustee in the Deposited Loans.
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 Warehouse Agreement.
4. RELEASE OF COLLATERAL. The Custodian may release Deposited
Loans and all related information and documentation held by the Custodian only
as permitted in the Warehouse Agreement. Except as described in this Paragraph 4
and except upon termination of this Agreement and notwithstanding any other
provision of the Servicing Agreement, the Custodian will not release any
Deposited Loans unless the Custodian is in receipt of written authorization from
the Trustee.
5. NO LIABILITY. The Trustee shall have no responsibility for
loss or damage suffered by the Issuer with respect to any Deposited Loans
delivered or released pursuant to this Agreement.
6. TERMINATION OF AGREEMENT. This 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 Issuer the payment of which is secured
under the Warehouse Agreement, including indebtedness of the Issuer the payment
of which is secured under the Warehouse Agreement, including indebtedness for
any penalties, costs of collection or other charges. Upon termination of this
Agreement for any reason other than full satisfaction of indebtedness of the
Issuer, the Deposited Loans then held by the Custodian shall be forthwith
delivered to the party designated by the Trustee, subject to the terms of the
Servicing Agreement. Upon termination of this Agreement following satisfaction
of indebtedness of the Issuer, Deposited Loans and materials relating thereto in
the possession of the Custodian shall be delivered to the Issuer or its
designee. This Agreement shall not be subject to termination other than as
specifically provided in this paragraph 6.
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 and the
Issuer (or their respective designees) upon request of the Trustee or the
Issuer, 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. AUTHORIZATIONS. The persons whose signatures appear
immediately below are the persons presently authorized to act for the Trustee
or the Issuer, as the case may be, whenever
3
written directions or requests are required under this Agreement (it being
understood and agreed that different or additional persons may be authorized to
act for such Persons without further notice to the Custodian or any other
Persons and that the Custodian may rely on directions or requests by such
different or additional persons so long as they purport to be authorized
officers of the Trustee or the Issuer, as the case may be).
TRUSTEE ISSUER
Norwest Bank Minnesota, National NHELP-III, Inc.
Association
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxx X. Xxxxxx
----------------------- -------------------------------
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxx, Vice President
and Treasurer
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 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 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 time maintain records
indicating the borrower name and Social Security number, at a minimum,
of all Deposited Loans which are delivered to it to hold as Custodian
pursuant to this Agreement and indicating that such Deposited Loans
have been pledged to the Trustee.
10. MISCELLANEOUS.
(a) This 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.
4
(b) The parties hereto acknowledge and agree that the
Secured Creditors shall be third-party beneficiaries of this Agreement
with the power and right to enforce the provisions of this Agreement
against the parties hereto. In the event that the Secured Creditors
become the assignees or successors of the Trustee (under the
circumstances contemplated in the Warehouse Agreement) and, as such
assignees or successors of the Trustee, enforce this Agreement against
the Custodian, the Secured Creditors shall succeed to the duties and
obligations of the Trustee under this Agreement.
(c) This 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 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 AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MINNESOTA.
(f) All notices, requests, demands and other
communications under or in respect of this Agreement shall be in
writing or 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 Issuer: NHELP-III, INC.
000 X. 00 Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
If to the Trustee: Norwest Bank Minnesota, National Association
Attention: Corporate Trust Dept
Norwest Center
6th St and Xxxxxxxxx Xxx
Xxxxxxxxxxx XX 00000-0000
Facsimile: (000) 000-0000
If to the Custodian: InTuition, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
5
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first written above.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Title: CORPORATE TRUST OFFICER
INTUITION, INC.
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: President
NHELP-III, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Title: Vice President and Treasurer
6
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT (the "Agreement") dated as of September
16, 1999, is by and among NHELP-III, INC. (the "Issuer"), NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, as Trustee (the "Trustee"), and USA GROUP LOAN
SERVICES, INC. ("USA Group"), as custodian (the "Custodian").
WHEREAS, the Trustee and the Issuer have entered into a Warehouse Note
Purchase and Security Agreement dated as of September 16, 1999, (the "Warehouse
Agreement"), as it may be supplemented or amended, to which the Secured
Creditors (as defined in the Warehouse Agreement) are parties, and pursuant to
which the Trustee has agreed to purchase, upon request of and as an
accommodation to the Issuer, certain student loans (the "Student Loans") for the
benefit of the Issuer and to cause title to such loans to be vested in the
Trustee subject to the Issuer's beneficial interest; and
WHEREAS, pursuant to the Warehouse Agreement, the Issuer has granted to
the Trustee, and its successors and assigns, for the benefit of the Secured
Creditors (as defined in the Warehouse Agreement), a security interest in,
among, other things, the promissory notes and certain other documents relating
to certain Student Loans as security, pursuant to the performance and observance
by the Issuer of all of the covenants, terms and condition expressed or implied
in the Warehouse Agreement; and
WHEREAS, the Trustee has requested, and the Issuer agreed, that all
Student Loans financed under the Warehouse Agreement (including all Student
Loans with respect to which the 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 Issuer has entered into that certain Servicing Agreement
(the "Servicing Agreement") dated as of September 16, 1999, with UNIPAC Service
Corporation (the "Servicer") to service Student Loans acquired by the Issuer
pursuant to the Servicing Agreement or beneficially owned by the Issuer and
whereas Servicer has engaged InTuition, Inc. to engage USA Group to subservice
certain of the Student Loans pursuant to a subservicing agreement (the
"Subservicing Agreement") utilizing the data processing capabilities and systems
of USA Group as subservicer; and
WHEREAS, the Issuer desires to contract for the Custodian to provide
the custodial services set forth herein; and
WHEREAS, the Issuer will from time to time in the future deliver or
cause the Trustee to deliver, to the Custodian Student Loans to be subserviced
by USA Group;
NOW, THEREFORE, the Trustee and the Issuer hereby authorize the
Custodian to so hold all Deposited Loans (as defined below) as bailee and agent
of the Trustee and authorize the
1
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 Warehouse Agreement.
"Deposited Loans" means all Student Loans financed pursuant to the
Warehouse Agreement which now or at any time hereafter are subserviced by USA
Group or in the possession and control of the Custodian on behalf of the Issuer
as subservicer.
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 custodian shall hold in its fire resistant 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;
(ii) The Notification of Loan Approval by the
Guarantee Agency; and
(iii) Any further documentation required by the
Secretary or the Guarantor.
provided, however, that to the extent permitted in accordance with the
rules and regulations of the Secretary and/or the applicable Guarantor
Agency, 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 Issuer or the Trustee
and in circumstances authorized in the Warehouse Agreement, within
twenty (20) business days of Trustee's written request or other
reasonable amount of time as agreed by Trustee and Custodian, 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, subjects to the costs associated therewith under
the Servicing Agreement and any costs to which the Custodian may be
entitled in its Subservicing Agreement with InTuition, Inc.
(c) The Custodian agrees to permit inspection at all
reasonable times and upon reasonable advance notice by the Issuer or
Trustee, (reasonable advance notice shall mean at least seventy-two
(72) hours before the event) the guarantee Agencies, the
2
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 documents relating to the
Deposited Loans and to interview personnel involved in the servicing of
the Deposited Loans.
(d) USA Group shall furnish to the Trustee the reports
required by the Subservicing Agreement upon written request to USA
Group.
(e) 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
Agreement. The Custodian hereby accepts such appointment and
acknowledges receipt of notice of the security interest held by the
Trustee in the Deposited Loans. For Deposited Loans guaranteed prior to
August 1, 1992, the Custodian will either maintain the original of the
note in the Custodian's vault or will store such original in a
designated, off-site storage facility pursuant to a contract which
gives Custodian full access and control of such notes. If the original
note is stored off-site, the Custodian will maintain a copy of the
notes, which copy can be certified as a true and exact copy. For Notes
guaranteed after August 1, 1992, the Custodian will maintain a copy of
the note, while the original note will be stored at a designated,
off-site storage facility pursuant to a contract which gives custodian
full access and control of such notes. In the case of image notes, USA
Group Guarantee Services, Inc., an affiliate corporation of the
Custodian, will act as limited bailee for the Custodian until such time
as the original notes are delivered to the designated, off-site storage
facility.
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 Warehouse Agreement.
4. RELEASE OF COLLATERAL. The Custodian may release Deposited
Loans and all related information and documentation held by the Custodian only
as permitted in the Warehouse Agreement.
Except as described in this Paragraph 4 and except upon termination of
this Agreement and notwithstanding any other provision of the Subservicing
Agreement, the Custodian will not release any Deposited Loans unless the
Custodian is in receipt of written authorization from the Trustee.
5. NO LIABILITY. The Trustee shall have no responsibility for
loss or damage suffered by the Issuer with respect to any Deposited Loans
delivered or released pursuant to this Agreement.
3
6. TERMINATION OF AGREEMENT. This Agreement shall remain in
effect until the date on which either of the following shall occur: (a) the
Subservicing Agreement shall have expired or otherwise been terminated; or (b)
upon satisfaction of all indebtedness of the Issuer the payment of which is
secured under the Warehouse Agreement, including indebtedness of the Issuer the
payment of which is secured under the Warehouse Agreement, including
indebtedness for any penalties, costs of collection or other charges. Upon
termination of this Agreement for any reason other than full satisfaction of
indebtedness of the Issuer, the Deposited Loans then held by the Custodian shall
be forthwith delivered to the party designated by the Trustee, subject to the
terms of the Subservicing Agreement. Upon termination of this Agreement
following satisfaction of indebtedness of the Issuer, Deposited Loans and
materials relating thereto in the possession of the Custodian shall be delivered
to the Issuer or its designee. This Agreement shall not be subject to
termination other than as specifically provided in this paragraph 6.
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 and the
Issuer (or their respective designees) upon request of the Trustee or the
Issuer, made with reasonable advance notice to the Custodian (reasonable advance
notice shall mean at least 72 hours before the event), 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. AUTHORIZATIONS. The persons whose signatures appear
immediately below are the persons presently authorized to act for the Trustee or
the Issuer, as the case may be, whenever written directions or requests are
required under this Agreement (it being understood and agreed that different or
additional persons may be authorized to act for such Persons without further
notice to the Custodian or any other Persons and that the Custodian may rely on
directions or requests by such different or additional persons so long as they
purport to be authorized officers of the Trustee or the Issuer, as the case may
be).
TRUSTEE ISSUER
Norwest Bank Minnesota, National NHELP-III, Inc.
Association
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxx X. Xxxxxx
--------------------------- -----------------------------------
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxx, Vice President and
Treasurer
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
4
exclusive possession and control over all documents evidencing the
Deposited Loans delivered to it under this 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 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. The
Custodian may obtain such insurance through one of its affiliates.
(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 delivered to it to hold as Custodian
pursuant to this Agreement and indicating that such Deposited Loans
have been pledged to the Trustee.
10. MISCELLANEOUS.
(a) This 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 parties hereto acknowledge and agree that the
Secured Creditors shall be third-party beneficiaries of this Agreement
with the power and right to enforce the provisions of this Agreement
against the parties hereto. In the event that the Secured Creditors
become the assignees or successors of the Trustee (under the
circumstances contemplated in the Warehouse Agreement) and, as such
assignees or successors of the Trustee, enforce this Agreement against
the Custodian, the Secured Creditors shall succeed to the duties and
obligations of the Trustee under this Agreement.
(c) This 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 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.
5
(e) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MINNESOTA.
(f) All notices, requests, demands and other
communications under or in respect of this Agreement shall be in
writing or 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):
6
If to the Issuer: NHELP-III, INC.
000 X. 00 Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
If to the Trustee: Norwest Bank Minnesota, National Association
Attention: Corporate Trust Dept
Norwest Center
6th St and Xxxxxxxxx Xxx
Xxxxxxxxxxx XX 00000-0000
Facsimile: (000) 000-0000
If to the Custodian: USA Group Loan Services, Inc.
00000 XXX Xxxxxxx
Xxxxxxx, XX 00000
Attention: Documentation Management Services
Facsimile: (000) 000-0000
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
7
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first written above.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Title: Corporate Trust Officer
USA GROUP LOAN SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Title: Vice President of USA Group
As Agent for USA Group Loan
Services, Inc.
NHELP-III, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Title: Vice President and Treasurer
8
EXHIBIT H
FORM OF NOTE
$_________________ September _, 1999
NHELP-III, Inc., a Nevada corporation (the "Issuer"), promises to pay to the
order of [Name of Agent], for the benefit of [Name of Conduit Note Purchaser]
and [Liquidity Note Purchaser] (the "Agent") the lesser of the principal sum
of____________________________________Dollars ($___________________) or the
aggregate unpaid principal amount of all Note Purchases made by the Agent, on
behalf of the applicable Note Purchasers, pursuant to the Warehouse Note
Purchase and Security Agreement (as hereinafter defined), in immediately
available funds at its office at______________________________________
in______________________, together with Yield on the unpaid principal amount
hereof at the rates and on the dates set forth in the Warehouse Security
Agreement. The Issuer shall pay the principal of and accrued and unpaid Yield on
this Note in the amounts and at the times required under the terms of the
Warehouse Note Purchase and Security Agreement.
The Agent shall, and is hereby authorized to, record in accordance with its
usual practice, the date and amount of each Note Purchase and the date and
amount of each principal payment hereunder on the schedule annexed hereto and
any such recordation shall constitute prima facia evidence of the accuracy of
the amount so recorded; provided, that the failure of the Agent to make such
recordation (or any error in such recordation) shall not affect the obligations
of the Issuer hereunder or under the Warehouse Note Purchase and Security
Agreement.
This Note is issued pursuant to, and is entitled to the benefits of, the
Warehouse Note Purchase and Security Agreement dated as of September 1, 1999
(which, as it may be amended or modified and in effect from time to time, is
herein called the "Warehouse Security Agreement"), among the Issuer, Norwest
Bank Minnesota, National Association, as trustee, Delaware Funding Corporation,
Three Rivers Funding Corporation, Xxxxxx Guaranty Trust Company of New York and
Mellon Bank, to which Warehouse Note Purchase and Security Agreement reference
is hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. This Note is secured by the Pledged Collateral as
more particularly described in the Warehouse Security Agreement. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
attributed to them in the Warehouse Note Purchase and Security Agreement.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN
OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF ACKNOWLEDGES THAT THESE
SECURITIES ARE "RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE ISSUER AND
ITS AFFILIATES THAT THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERMITTED ASSIGNEE WHOM THE
SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A OR (B) TO A PERMITTED ASSIGNEE PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (C) TO A PERMITTED ASSIGNEE PURSUANT
TO ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER
SECTION 5 OF THE SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER JURISDICTION.
NHELP-III, INC.
By___________________________________
Name_________________________________
Title________________________________
H-2
ANNEX
SCHEDULE OF NOTE ISSUANCES AND PRINCIPAL REPAYMENTS
DATE OF ISSUANCE OR REPAYMENT AMOUNT
$____________________________
$____________________________
$____________________________
$____________________________
$____________________________
$____________________________
$____________________________
EXHIBIT I
FORM OF SUMMARY OF SERVICER REPORT
NHELP-III, Inc.
Warehouse Note Purchase and Security Agreement
Dated as of as of _____________
XXXXXXXX PLUS/SLS CONSOLIDATIONS TOTAL
----------------------- ----------------------- ----------------------- -----------------------
Principal # of Accounts Principal # of Accounts Principal # of Accounts Principal # of Accounts
STATUS:
School
Grace
Deferred
Repayment
Claim
--------- ------------- --------- ------------- --------- ------------ --------- -------------
Total
========= ============= ========= ============= ========= ============ ========= =============
DELINQUENCY:
Delinquent Principal >30 days
(Repayment Status Loans)
SCHOOL TYPE:*
Four Year
Two Year
Proprietary
Consolidations
--------- ------------- --------- ------------- --------- ------------ --------- -------------
Total
========= ============= ========= ============= ========= ============ ========= =============
Guarantor:*
--------- ------------- --------- ------------- --------- ------------ --------- -------------
========= ============= ========= ============= ========= ============ ========= =============
-----------------------
* This information is provided based upon availability from the servicer.
EXHIBIT J
FORM OF ACCOUNT BALANCE REPORT
NHELP-III, Inc.
Warehouse Note Purchase and Security Agreement
Dated as of ___________________
COLLECTION ACCOUNT:
GOVERNMENT &
SERVICER SERVICER SPECIAL ALLOWANCE MISCELLANEOUS TOTAL
PRINCIPAL RECEIPTS INTEREST RECEIPTS INTEREST PAYMENT RECEIPTS RECEIPTS/PAYMENTS
------------------ ----------------- ----------------- ------------- -----------------
Receipts
Amounts held in Collection Account from
previous Settlement Date
Interest Received on Investments
------------------ ----------------- ----------------- ------------- -----------------
Total Collection Account Receipts
================== ================= ================= ============= =================
CASH RESERVE ACCOUNT:
Cash Reserve Account Balance
Interest Received on Investments
-----------------
Cash Reserve Account Balance
=================
EXHIBIT K
ADDITIONAL CLOSING ITEMS
1. Opinions of Counsel to Issuer and each Seller.
2. Opinion of Counsel to Trustee.
3. Evidence of establishment of Collection Account and Cash Reserve
Account.
4. UCC-1 Financing Statements (naming each seller as debtor and Issuer as
secured party, and naming Issuer as debtor and Trustee as secured party).
5. Officers' Certificate of Issuer and each Seller (including, in the case
of the Issuer, articles of incorporation, by-laws, board resolutions and
incumbency).
6. Delivery to each Agent a Note in the name of such Agent setting forth
(i) the maximum principal amount equal to such Agent's Pro Rata Share of the
Facility Limit and (ii) the actual amount of the Note Purchase of such Agent on
the Closing Date.
7. Schedule of all Financed Loans as of the Closing Date.
8. All fees due and payable to the Agents on the Closing Date.
9. Such other information, certificates, documents and actions as either
Agent may reasonably request.
