LOAN SALE AND COMMITMENT AGREEMENT
This LOAN SALE AND COMMITMENT AGREEMENT is made and entered into as of the
1st day of March, 1996, by and between UNION BANK AND TRUST COMPANY, a Nebraska
bank and trust company, acting in its own right and in its capacity as trustee,
as seller ("Seller"), and UNION FINANCIAL SERVICES-1, INC., a Nevada
corporation, as purchaser ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is engaged in a program of originating, purchasing, holding
and selling loans made to eligible borrowers in accordance with the provisions
of the Higher Education Act (as defined herein), the proceeds of which are used
to pay the costs incurred by students attending post-secondary educational
institutions;
WHEREAS, Purchaser intends to engage in a program of purchasing, holding
and financing Student Loans;
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain student loans, including Federal Xxxxxxxx Loans,
Federal PLUS Loans and Federal Supplemental Loans for Students, made and
guaranteed or insured pursuant to the Higher Education Act, in accordance with
the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties agree as follows:
ARTICLE I
DEFINITION
The capitalized words and terms used but not otherwise defined in this
Agreement shall have the respective meanings set forth in the Indenture. As
used in this Agreement, the following capitalized terms, unless the context or
use clearly indicates another or different meaning or intent, shall have the
following meanings:
"AGREEMENT" shall mean this Agreement, including all exhibits attached
hereto and any supplements or amendments hereto.
"COMMITMENT" shall mean Seller's commitment to sell Eligible Loans to
Purchaser pursuant to Section 2.01 hereof.
"COMMITMENT PERIOD" shall mean the period beginning on the date first above
written and ending on April 1, 1999.
"GUARANTEED LOAN" shall mean a Student Loan which is Guaranteed or Insured.
"HIGHER EDUCATION ACT" shall mean the Act.
"INSURED LOAN" shall mean a Student Loan which is Insured.
"INTEREST BENEFIT PAYMENTS" shall mean interest payments on Student Loans
received pursuant to an Interest Benefits Agreement.
"OBLIGATION" shall mean any bond, note or other evidence of indebtedness
issue by Purchaser to finance the purchase of Eligible Loans hereunder.
"PORTFOLIO" shall mean a group of Eligible Loans sold to Purchaser by
Seller pursuant to Section 2.01 hereof on a Scheduled Sale Date.
"PRINCIPAL BALANCE" shall mean the original principal amount of a Student
Loan, plus capitalized interest (if any) and items which may not be guaranteed
or insured (such as late charges), less payments of principal by or on behalf of
the Student Borrower.
"PURCHASE PRICE" shall mean (a) with respect to the Portfolio of Eligible
Loans to be purchased on the Scheduled Sale Date of on or about March 8, 1996,
101.5% of the aggregate Principal Balance of the Eligible Loans included in that
Portfolio, plus accrued and unpaid interest thereon, each as of March 1, 1996,
together with interest accruing thereon on March 1, 1996 through such Scheduled
Sale Date, at the rate of 6.5% per annum of the aggregate Principal Balance of
the Eligible Loans in that Portfolio as of March 1, 1996, and (b) with respect
to all other Portfolios of Eligible Loans, 101.5% of the aggregate Principal
Balance of the Eligible Loans included in the Portfolio, plus accrued and unpaid
interest thereon, each as of the Scheduled Sale Date.
"PURCHASER" shall mean Union Financial Services-1, Inc., or its successors
or assigns.
"SCHEDULED SALE DATE" shall mean the dates specified in Section 2.01 or
Section 2.02 for purchase of a Portfolio of Eligible Loans by Purchaser, unless
such date is changed by mutual agreement of the parties, in which case the
Scheduled Sale Date shall be the new date agreed to by the parties.
"SELLER" shall mean Union Bank and Trust Company, in its own right and as
trustee, or its successors or assigns.
"STUDENT BORROWER" shall mean the obligor on a Student Loan.
"STUDENT LOAN" shall mean a loan under the Higher Education Act to an
Eligible Borrower for education at an Eligible Institution (or a loan to
consolidate the same).
2
"UNIPAC" shall mean UNIPAC Servicing Corporation, or its successors or
assigns.
ARTICLE II
LOAN SALE COMMITMENT
Section 2.01. LOAN SALE COMMITMENT. Subject to the terms and conditions
of this Agreement, and in express reliance upon the representations, warranties
and covenants set forth herein, Seller agrees to sell, and Purchaser agrees to
purchase at the Purchase Price all right, title and interest of the Seller in
and to Eligible Loans having an aggregate Principal Balance of $100 million,
which sale and purchase is to be consummated on or before each Scheduled Sale
Date specified below with respect to a Portfolio of Eligible Loans having the
following Principal Balance:
Date of Sale Principal Balance
------------ -----------------
March 8, 1996 (On or about) $70 million
April 1, 1996 10 million
May 1, 1996 10 million
June 1, 1996 10 million
In addition to the foregoing sales, Seller agrees to use best efforts to
make available for sale, to Purchaser, up to a maximum aggregate principal
balance of $20 million of Seller's excess Eligible Loans from time to time
during the Commitment Period, to the extent that Seller has not committed such
Eligible Loans to other sale or disposition commitments or agreements at the
time, and such sales to Purchaser are consistent with the Seller's internal
funding needs and objectives. Such Eligible Loans sold in subsequent and
additional portfolios to Purchaser shall be Eligible Loans, shall satisfy the
representations and warranties in this agreement, and shall be sold at the
Purchase Price. Such additional purchase(s) of Eligible Loans, unlike the
purchases of Eligible Loans in the aggregate amount of $100 million on the
Scheduled Sales Date as required in Section 2.01 hereof, shall be at
Purchaser's option in its sole discretion.
Upon sale of the Eligible Loans to the Purchaser, the Seller shall
relinquish all power and control over the original promissory notes relating to
such Eligible Loans, and the Purchaser shall relinquish all power and control
over such original promissory notes upon delivery to UNIPAC as custodian
pursuant to the provisions of that certain Custodian Agreement among the
Purchaser, between UNIPAC and the Trustee dated as of March 1, 1996.
Section 2.02 DELIVERY PRIOR TO SCHEDULED SALE DATE. The parties agree
that consummation of the sale of a Portfolio of Eligible Loans may occur prior
to the dates set forth above at the discretion of the Seller; provided, however,
that the requirements of Section 4.01 shall be met in connection with such sale;
and provided further, that the sale of the Portfolios of Eligible Loans shall be
consummated no later than the dates set forth above. The aggregate Principal
Balance of any Eligible Loans sold by Seller to Purchaser pursuant to this
Agreement
3
or otherwise prior to any of the Scheduled Sale Dates shall correspondingly
reduce the Seller's commitment on successive Scheduled Sale Dates.
Section 2.03. REBATE OF PREMIUM. In the event the Seller originates or
purchases a Consolidation Loan under Section 428C of the Higher Education Act
and the proceeds of such Consolidation Loan are used to repay the principal and
interest due on an Eligible Loan sold by Seller to Purchaser under this
Agreement, then, upon demand by Purchaser (or without demand if Seller has
actual knowledge of such repayment), Seller shall rebate the premium paid by
Purchaser to Seller in connection with the purchase of said Eligible Loan by
paying to Purchaser an amount equal to 1.5% of the principal balance of said
Eligible Loan then outstanding; provided, that the rebate specified herein shall
not be payable to the extent paid pursuant to Section 5.02 hereof.
Section 2.04. CHARACTERIZATION OF TRANSFER. The Purchaser and each Seller
intend that each transfer under Section 2.01 be treated as a true and absolute
sale of all of the Seller's right, title and interest in and under the Eligible
Loans and not a transfer intended as a security interest.
ARTICLE III
PORTFOLIO CHARACTERISTICS AND SERVICING
Section 3.01. PORTFOLIO CHARACTERISTICS. The Portfolios of Eligible Loans
sold by Seller to Purchaser under this Agreement shall have the following
characteristics: (a) the Eligible Loans shall, in the aggregate, have an average
borrower indebtedness ("ABI") of at least $3,500.00; (b) no more than 30% of the
aggregate Principal Balance of all of the Eligible Loans as of the date of sale
may be attributable to Student Loans the proceeds of which funded tuition to
private Eligible Institutions offering only non-baccalaureate degrees; (c) at
least 70% of the aggregate Principal Balance of all of the Eligible Loans as of
the date of sale shall be attributable to Federal Xxxxxxxx Loans (as defined in
the Higher Education Act) which qualify for Interest Benefit Payments, PLUS
Loans or SLS Loans; (d) no more than 30% of the aggregate Principal Balance of
all of the Eligible Loans as of the date of sale may be attributable to
Unsubsidized Loans, and (e) no more than 10% of the aggregate Principal Balance
of all of the Eligible Loans as of the date of sale may be attributable to
Consolidation Loans, unless otherwise agreed by the Parties. An individual
Portfolio of Eligible Loans sold pursuant to this Agreement may not have the
characteristics described in the preceding sentence if, immediately after the
consummation of the purchase of such Portfolio of Eligible Loans, the aggregate
of all Eligible Loans sold to Purchaser pursuant to this Agreement shall have
such characteristics. If Purchaser does not object to the characteristics of
any Portfolio of Eligible Loans, sold pursuant to this Agreement, within 30 days
of such sale, Purchaser shall be deemed to have waived any objection to the
characteristics of such Portfolio.
Section 3.02. SERVICING. All of the Eligible Loans that may be sold by
Seller to Purchaser pursuant to this Agreement are currently serviced (or will
be serviced on the
4
Scheduled Sale Date) by UniPac pursuant to the Servicing Agreement. On the
effective date (determined under Section 4.04 hereof) for the sale of a
Portfolio of Eligible Loans, Purchaser shall cause UniPac to commence servicing
such Portfolio pursuant to the Servicing Agreement at Purchaser's expense and
under the identification number of Purchaser or its designee.
Section 3.03. CHANGE OF STUDENT LOAN SERVICER; RIGHT TO REPURCHASE. If
Purchaser elects to remove any Eligible Loans purchased by it from Seller
pursuant to this Agreement from the servicing system of UniPac for any reason
(other than the sale of an Eligible Loan for purposes of serialization),
Purchaser shall give Seller written notice of such election at least 60 days
prior to the date Purchaser intends to so remove such Eligible Loans. Seller
shall then have the option to repurchase from Purchaser all of the Eligible
Loans proposed to be removed from the UniPac servicing system (or a portion of
such Eligible Loans if the ABI and other characteristics of the portion selected
for repurchase are representative of all Eligible Loans then held by Purchaser)
on any date selected by it prior to such removal, at a purchase price equal to
the Principal Balance of such Eligible Loans then outstanding, plus accrued and
unpaid interest as of the date of repurchase, and under terms and conditions
that are substantially similar to those in Article IV hereof. Seller's option
to repurchase shall be exercised by sending written notice thereof to Purchaser
within 60 days after Seller's receipt of Purchaser's election to remove Eligible
Loans from the UniPac servicing system.
ARTICLE IV
SALE/PURCHASE OF PORTFOLIOS
Section 4.01. TENDER OF ELIGIBLE LOANS TO PURCHASER. With respect to a
Portfolio of Eligible Loans to be sold to Purchaser pursuant to Section 2.01
hereof prior to the Scheduled Sale Date (or at such other time as the parties
may agree), Seller shall furnish Purchaser or its designee with a list of the
Eligible Loans (each, a "Schedule of Student Loans") to be included in such
Portfolio, and shall authorize and direct UniPac to release such information and
documentation to Purchaser or its designee as Purchaser, in its reasonable
judgement, deems necessary and appropriate to undertake a review of such loans
to determine whether (a) such loans constitute Eligible Loans under this
Agreement, and (b) the Portfolio, aggregated with the other Eligible Loans that
have been sold to Purchaser by Seller if appropriate, comply with the
requirements set forth in Section 3.1 hereof.
Section 4.02. CONDITIONS OF PURCHASE. Purchaser's obligation to purchase
and pay for Eligible Loans in a Portfolio hereunder shall be subject to the
following conditions precedent:
(a) the Eligible Loans in the Portfolio, aggregated with the other
Eligible Loans that have been sold to Purchaser by Seller if appropriate,
shall meet the requirements described in Section 3.01 hereof;
(b) all representations, warranties and statements by or on behalf of
Seller contained in this Agreement are true on the Scheduled Sale Date;
5
(c) any notification to or approval by the Secretary or Guarantee
Agency required by the Higher Education Act or the Guarantee Agreement as a
condition to the assignment of Eligible Loans shall have been made or
received and evidence thereof delivered to both Purchaser and the Trustee;
(d) the entire interest of Seller in each Eligible Loan shall have
been duly assigned by endorsement, such endorsement to be without recourse
except as provided in Article V hereof;
(e) the Seller shall, at its own expense, indicate in its files that
the Student Loans sold on such date have been sold to the Purchaser
pursuant to this Agreement and pledged and assigned by the Purchaser to the
Trustee for the benefit of the Registered Owners, and the Seller shall
deliver to the Purchaser a Schedule of Student Loans certified by the
Chairman, the President, the Vice President or the Treasurer of the Seller
to be true, correct and complete as of the date thereof. Further, the
Seller hereby agrees that the computer files maintained by the Seller as
Servicer will bear an indication reflecting that the Student Loans sold to
the Purchaser pursuant to this Agreement are owned by the Purchaser; and
(f) prior to or on each Scheduled Sale Date, the Seller shall record
and file, at its own expense, appropriate UCC-3 termination statements with
respect to any previous liens on such Student Loans being sold and
purchased hereunder.
Section 4.03. REJECTION OF STUDENT LOANS BY PURCHASER PRIOR TO PURCHASE.
(a) If (i) Seller is unable to make or furnish the representations
and warranties required to be made or furnished by it pursuant to this
Agreement as to such Student Loan, or (ii) Seller is unable to fulfill one
or more covenants or conditions of this Agreement as to such Student Loan,
or (iii) Purchaser in its reasonable judgment deems that such Student Loan
does not comply with the terms and conditions of this Agreement or is not
being delivered in compliance with such terms and conditions; or (iv) the
conditions of Section 4.02 shall not have been complied with, then
Purchaser may, in its sole discretion, refuse to accept and purchase any
Student Loan.
(b) If Purchaser rejects a Student Loan, any such Student Loan shall
be excluded from the sale, and Seller shall be furnished with a letter
identifying each excluded Student Loan and stating the basis for its
exclusion. If Purchaser rejects a Student Loan, Seller may substitute a
different Eligible Loan for the rejected Student Loan, provided, however,
that the terms and conditions of such Eligible Loan are in compliance with
the terms and conditions of this Agreement.
6
Section 4.04. CONSUMMATION OF SALE AND PURCHASE OF PORTFOLIO.
(a) To consummate the sale and purchase of a Portfolio of Eligible
Loans, on or before the Scheduled Sale Date, Seller shall deliver to the
Trustee on behalf of Purchaser such instruments of transfer, including a
xxxx of sale and blanket endorsement, as Purchaser shall reasonably deem
necessary for conveyance of title of the Eligible Loans contained in the
Portfolio free and clear of all liens, encumbrances and security interests,
and, upon receipt by Trustee of such instruments of transfer (which may
occur by delivery of facsimile copies to be followed by delivery of the
original executed instruments), the Purchaser shall direct and cause the
Trustee, on behalf of Purchaser, to pay to Seller on said date the Purchase
Price for such Portfolio. The purchase and sale of the Portfolio shall be
effective as of the date of the xxxx of sale. Seller shall retain all
ownership rights with respect to Eligible Loans in a Portfolio at all times
prior to the effective date of the sale of such Portfolio. Notwithstanding
the foregoing, the xxxx of sale with respect to the sale of Eligible Loans
in the Portfolio with a Scheduled Sale Date of March 7, 1996 shall be dated
as of March 1, 1996, and the effective date of the transfer of that
Portfolio shall be March 1, 1996.
(b) Unless otherwise agreed by Seller, Purchaser and the Trustee,
payment of the Purchase Price for a Portfolio of Eligible Loans shall be
made by wire transfer of immediately available funds to Seller or its
designated agent, with no offset, deduction, reserve or other holdback by
Purchaser or the Trustee.
Section 4.05. OTHER INFORMATION AND DOCUMENTS. Seller shall furnish or
make available to Purchaser such additional information concerning Seller's
Student Loan portfolio as Purchaser may reasonably request. Seller shall
execute all other documents and take all other steps as may be reasonably
requested by Purchaser or the Trustee from time to time to effect the sale
hereunder of a Portfolio of Eligible Loans.
ARTICLE V
REPURCHASE OBLIGATION OF SELLER
Section 5.01. CONDITIONS PRECEDENT TO REPURCHASE OBLIGATION. At the
request of Purchaser or the Trustee, Seller shall repurchase any Student Loan
purchased by Purchaser pursuant to this Agreement if:
(a) any representation or warranty made or furnished by Seller in or
pursuant to this Agreement shall prove to have been materially incorrect as
to such Student Loan;
(b) the Secretary or a Guarantee Agency, as the case may be, refuses
to honor all or part of a claim filed with respect to a Student Loan
(including any claim for interest subsidy, Special Allowance Payments,
Insurance, reinsurance or Guarantee
7
payments) on account of any circumstance or event that occurred prior to
the sale of such Student Loan to Purchaser; or
(c) on account of any wrongful or negligent act or omission of Seller
or its servicing agent that occurred prior to the sale of a Student Loan to
Purchaser, a valid defense that makes the Student Loan unenforceable is
asserted by a maker (or endorser, if any) of the Student Loan with respect
to his or her obligation to pay all or any part of the Student Loan.
Section 5.02. REPURCHASE BY SELLER. Upon the occurrence of any of the
conditions set forth in Section 5.01 hereof and upon the request of Purchaser or
the Trustee, Seller shall pay to the Trustee, for the account of Purchaser, an
amount equal to 101.5% of the then-outstanding principal balance of such Student
Loan, plus interest and Special Allowance Payments accrued and unpaid with
respect to such Student Loan from the Scheduled Sale Date to and including the
date of repurchase, plus any attorneys' fees, legal expenses, court costs,
servicing fees or other expenses incurred by Purchaser, the Trustee or the
appropriate successors or assigns in connection with such Student Loans and
arising out of the reasons for the repurchase. The repurchase obligation of
Seller pursuant to this Section 5.02 shall constitute the sole remedy to the
Purchaser against the Seller with respect to any event described in Section
5.01. With respect to any Student Loan repurchased by Seller pursuant to this
Agreement, the Purchaser shall assign, without recourse, representation or
warranty, to the Seller all of Purchaser's right, title and interest in and to
such Student Loan, and all security and documents relating thereto.
ARTICLE VI
COVENANTS AND ONGOING OBLIGATIONS OF SELLER
Section 6.01. OBLIGATION OF SELLER TO FORWARD PAYMENTS. Seller shall
promptly remit, or cause to be remitted, to the Trustee or the Servicer as it or
they may direct, all funds received by Seller after the Scheduled Sale Date
which constitute payments of principal, or interest or Special Allowance
Payments accrued after the Scheduled Sale Date with respect to any Student Loan
sold pursuant to Section 2.01 hereof.
Section 6.02. OBLIGATION OF SELLER TO FORWARD COMMUNICATIONS. Seller
shall immediately transmit to Purchaser any communication received by Seller
after the Scheduled Sale Date with respect to a Student Loan or the borrower
under such a Student Loan. Such communication shall include, but not be limited
to, letters, notices of death or disability, adjudication of bankruptcy and
similar documents and forms requesting deferment of repayment or loan
cancellations.
Section 6.03. NOTIFICATION TO STUDENT BORROWERS. Seller and Purchaser
shall provide each borrower under the Eligible Loans purchased under this
Agreement with notice of the assignment and transfer to the Trustee for the
account and on behalf of Purchaser of Seller's interest in such Eligible Loans
as required by the Higher Education Act.
8
Section 6.04. NO MODIFICATION OF LENDER AGREEMENTS. Seller will consent
to no amendments to, or modifications of, the Contract of Insurance or Guarantee
Agreement that may affect Eligible Loans which are sold or to be sold pursuant
to this Agreement without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld. Amendments or modifications required by the
Higher Education Act are excluded from the requirement of this Section 6.04.
Section 6.05. The Seller shall cause all termination statements, or
partial releases, as the case may be, with respect to prior liens, financing
statements and continuation statements and any other necessary documents
covering the right, title and interest of the Purchaser in and to the Student
Loans to be promptly filed, and at all times (except with respect to termination
statements) to be kept recorded, registered and filed, all in such manner and in
such places as may be required by law fully to preserve and protect the right,
title and interest of the Purchaser hereunder to the Student Loans. The Seller
shall deliver to the Purchaser and the Trustee file-stamped copies of, or filing
receipts for, any document recorded, registered or filed as provided above, as
soon as available following such recordation, registration or filing. The
Purchaser shall cooperate fully with the Seller in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 6.05. The Seller shall be under
no obligation hereunder in the event no prior liens exist with respect to the
Student Loans.
Except for the conveyances hereunder or as specified herein, the Seller
will not purport to sell, pledge, assign or transfer to any other person, or
grant, create, incur, assume or suffer to exist any lien on the Student Loans
purchased and assigned hereunder or on any interest therein, and the Seller
shall defend the right, title, and interest of the Purchaser in, to and under
such Student Loans against all claims of third parties claiming through or under
the Seller.
Section 6.06. Seller shall take all reasonable actions to assure that no
maker of an Eligible Loan has or may acquire a defense to the payment thereof.
Section 6.07. Seller will not, with respect to any Eligible Loan subject
to this Agreement, agree to release the Guarantee Agency or the Secretary from
any of its contractual obligations to Guarantee or Insure such loan, or agree to
otherwise alter, amend or renegotiate any terms or conditions under which such
Eligible Loan is Guaranteed or Insured, without the express prior written
consent of Purchaser and the Trustee.
Section 6.08. In the event a Student Borrower withdraws within the period
specified as qualifying for a cancellation refund by the Guarantee Agency,
Seller agrees to pay the amount of the premium to be refunded to Purchaser.
9
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Purchaser that:
(a) ORGANIZATION AND AUTHORITY OF SELLER. Seller is duly organized,
validly existing and in good standing under the laws of the State of
Nebraska, and has all necessary statutory power and authority to own its
assets and carry on its business as now being conducted; Seller has, and
its officers acting on its behalf have, all necessary statutory power and
authority to make and perform this Agreement, including (without
limitation) the power and authority to sell, assign and transfer Student
Loans to the Trustee on behalf of Purchaser, and to repurchase Student
Loans as required under the terms hereof.
(b) ELIGIBLE LENDER STATUS. Seller has applied for and received the
Secretary's or Guarantee Agency's designation, as the case may be, as an
"eligible lender" under the Higher Education Act.
(c) LEGAL AND BINDING OBLIGATION. The execution, delivery and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action, and do not require any stockholder approval or
approval or consent of, or notice to, any trustee or holders of
indebtedness or obligations of Seller; upon due execution and delivery by
the parties hereto, this Agreement will constitute the legal, valid and
binding obligation of Seller, enforceable in accordance with its terms.
(d) NO CONFLICTS. Neither the execution, delivery or performance by
Seller of this Agreement, nor the consummation or performance by Seller of
the transactions contemplated hereby, will conflict with, result in a
violation of, or constitute a default (or an event which could constitute a
default with the passage of time or notice or both) under, (i) any of the
terms of Seller's charter or bylaws, or (ii) any indenture, mortgage,
contract or other agreement to which Seller is a party or by which it or
its properties are bound, or any law or regulation by which it or its
properties are bound, where, in the case of this clause (ii), such
conflict, violation or default could have a material adverse effect on
Seller's ability to perform its obligations hereunder. Seller is not a
party to or bound by any agreement or instrument or subject to any charter
or other corporate restrictions or judgment, order, writ, injunction,
decree, law, rule or regulation which may materially and adversely affect
the ability of Seller to perform its obligations under this Agreement.
(e) NO DEFAULTS OR VIOLATIONS. Seller is not in default under any
mortgage, deed of trust, indenture or other instrument or agreement to
which Seller is a party or by which it or its properties are bound, or in
violation of any law or regulation, which
10
default or violation could have a material adverse effect on Seller's
ability to perform its obligations hereunder.
(f) NO CONSENTS. No consent, approval or authorization of any
government or governmental body, including (without limitation) the Office
of Thrift Supervision, the Federal Deposit Insurance Corporation, the
Comptroller of the Currency, the Board of Governors of the Federal Reserve
System or any state bank regulatory agency, is required in connection with
the execution, delivery and performance of this Agreement, or the
consummation of the transactions contemplated hereby.
(g) NO LITIGATION. There are no pending or threatened actions or
proceedings by or before any court, administrative agency or arbitrator,
that could if adversely determined, materially and adversely affect the
ability of Seller to perform its obligations hereunder, and there are no
presently existing orders of any court, administrative agency or arbitrator
that could have a material and adverse effect on the ability of Seller to
perform its obligations hereunder.
(h) CONTINUING OBLIGATION OF SELLER. Seller agrees that during the
term of this Agreement, it will (i) remain in good standing and qualified
to do business under the laws of the United States of America and the
jurisdictions in which it operates, (ii) conduct its business in accordance
with all applicable state and federal laws, (iii) continue to be qualified
to carry out this Agreement, and (iv) be an "eligible lender" under the
Higher Education Act and continue to be approved by the Guarantee Agency.
(i) SOLVENCY. The fair salable value of the assets on a going
concern basis of the Seller and its subsidiaries, on a consolidated basis,
as of the time of each Scheduled Sale Date is in excess of the total amount
of their liabilities. With respect to each Scheduled Sale Date, at the
close of the immediately preceding fiscal quarter of the Seller, the Seller
had a positive net worth as determined in accordance with generally
accepted accounting principles.
Section 7.02. REPRESENTATIONS AND WARRANTIES OF SELLER WITH RESPECT TO
STUDENT LOANS. Seller hereby represents and warrants to Purchaser that as of
the date of sale of any Eligible Loan:
(a) ACCURACY OF INFORMATION. Any information furnished by Seller to
Purchaser or its agents with respect to any Eligible Loan is true, complete
and correct.
(b) VALIDITY OF LOAN. Each Eligible Loan has been duly executed and
delivered and constitutes the legal, valid and binding obligation of the
maker (and the endorser, if any) thereof, enforceable in accordance with
its terms.
(c) NO DEFENSES AGAINST REPAYMENT OF LOANS. The amount of the unpaid
principal balance of each Eligible Loan is true and owing, and no
counterclaim, offset,
11
defense or right to rescission exists with respect to any Eligible Loan
which can be asserted and maintained or which, with notice, lapse of time,
or the occurrence or failure to occur of any act or event, could be
asserted and maintained by the borrower against the Trustee as assignee
thereof. The rate of interest carried by each Eligible Loan is the maximum
which was allowable by law at the time the loan was made, and no such
Eligible Loan carries a rate of interest in excess of that permitted
by the provisions of the Higher Education Act.
(d) OWNERSHIP AND LOCATION OF LOANS; EXISTENCE OF LIENS. Seller is
the sole owner and holder of each Eligible Loan and has full right and
authority to sell and assign the same free and clear of all liens, pledges
or encumbrances, and upon the endorsement and delivery of promissory notes
evidencing such Eligible Loan to Purchaser pursuant to this Agreement,
Purchaser will acquire full right, title and interest in the Eligible Loan
free and clear of all liens, pledges or encumbrances whatsoever. All
documentation relating to the Eligible Loans, including the original
promissory note for each Eligible Loan, is in the possession of UniPac.
(e) GUARANTEE AND INSURANCE ON LOANS. Each Eligible Loan sold
hereunder is either Insured or Guaranteed. With respect to all Insured
Loans being acquired, a Contract of Insurance is in full force and effect
with respect thereto, the applicable Certificates of Insurance are valid
and binding upon the parties thereto in all respects, Seller is not in
default in the performance of any of its covenants and agreements made in
respect thereof, and such Insurance is freely transferable as an incident
to the sale of each Eligible Loan to be sold. With respect to all
Guaranteed Loans being acquired, a Guarantee Agreement is in full force and
effect with respect thereto and is valid and binding upon the parties
thereto in all material respects, Seller is not in default in the
performance of any of its covenants and agreements made in such Guarantee
Agreement, and such Guarantee is freely transferable as an incident to the
sale of each Eligible Loan to be sold. All amounts due and payable to the
Secretary or the Guarantee Agency, as the case may be have been paid in
full by Seller, and none of the Eligible Loans to be sold to Purchaser has
at any time been tendered to either the Secretary or the Guarantee Agency
for payment.
(f) COMPLIANCE WITH HIGHER EDUCATION ACT. Each Eligible Loan
complies in all respects with the requirements of the Higher Education Act
and is an Eligible Loan as those terms are defined in this Agreement.
(g) COMPLIANCE WITH FEDERAL LAWS. Each Eligible Loan was made in
compliance with all applicable local, state and federal laws, rules and
regulations, including without limitation all applicable nondiscrimination,
truth-in-lending, consumer credit and usury laws.
(h) NO DISCRIMINATION. In making each Eligible Loan to be purchased
by Purchaser pursuant to this Agreement, Seller has not discriminated based
upon the
12
educational institutions attended by, or the age, sex, race, national
origin, color, religion, handicapped status, income, attendance at a
particular eligible institution within the area served by Purchaser, length
of the Student Borrower's educational program, or the Student Borrower's
academic year in school.
(i) SERIAL LOANS. The Eligible Loans to be purchased pursuant to
this Agreement include all Eligible Loans of any one borrower held by
Seller.
(j) DUE DILIGENCE IN SERVICING LOANS. Seller and any independent
servicer have each exercised and shall continue until the Scheduled Sale
Date to exercise due diligence and reasonable care in making,
administering, Servicing and collecting the Eligible Loans and Seller has
conducted a reasonable investigation of sufficient scope and content to
enable it duly to make the representations and warranties contained in this
Agreement. Seller has paid the costs and expenses incident to origination
of the Eligible Loans, and has no right of reimbursement therefor from
Purchaser.
(k) ORIGINATION FEES. Seller has reported the amount of origination
fees (if any) authorized to be collected with respect to any Eligible Loan
pursuant to Section 438(c) of the Higher Education Act to the Secretary for
the period in which such fee was authorized to be collected; and Seller has
made any refund of an origination fee collected in connection with any
Eligible Loan which may be required pursuant to the Higher Education Act.
(l) INSURANCE PREMIUM. For each Eligible Loan Seller has reported
the amount of the insurance premium authorized to be collected, and has
paid said premium to the Guarantee Agency or the Secretary with all rights
therein inuring to Purchaser.
(m) SCHEDULE OF STUDENT LOANS. The information set forth in each
Schedule of Student Loans is true and correct in all material respects as
of the opening of business on the respective Scheduled Sale Date, and no
selection procedures believed to be adverse to the Purchaser have been
utilized in selecting the Student Loans for inclusion therein.
(n) TITLE. It is the intention of the Seller that the transfer and
assignment from the Seller to the Purchaser herein contemplated constitute
a true sale of the Student Loans to the Purchaser and that neither the
interest in nor title to the Student Loans shall become or be deemed
property of the Seller's estate in the event of the filing of a bankruptcy
or insolvency petition by or against the Seller under any bankruptcy or
insolvency law.
(o) DOCUMENTS. The Seller shall furnish and file, if appropriate,
any document reasonably requested by the Purchaser to perfect the
Purchaser's ownership interest in the Student Loans.
13
(p) NO FRAUDULENT CONVEYANCE. The transactions contemplated by this
Agreement are and will be in the ordinary course of the Seller's business
and the Seller has valid business reasons for transferring the Student
Loans rather than obtaining a secured loan with the Student Loans as
collateral. Both before and immediately after giving effect to any
transfer: (i) the Seller transferred or will transfer the Student Loans to
the Purchaser without any intent to hinder, delay or defraud any current or
future creditor of the Seller; (ii) the Seller was not or will not be
insolvent or did not or will not become insolvent as a result of any
transfer; (iii) the Seller was not engaged and was not about to engage, and
will not engage, in any business or transaction for which any property
remaining with the Seller was or will constitute unreasonably small capital
in relation to the business of the Seller or the transaction; and (iv) the
Seller did not intend or will not intend to incur, and did not believe or
reasonably should not have believed, or will not believe or reasonably
shall not have believed, that it would incur, debts beyond its ability to
pay as they become due.
(q) SALES NOT SUBJECT TO BULK TRANSFER. Each sale, transfer,
assignment and conveyance of the Student Loans by the Seller pursuant to
this Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
(r) NO TRANSFER TAXES DUE. Each sale, transfer, assignment and
conveyance of the Student Loans (including all payments due or to become
due thereunder) by the Seller pursuant to this Agreement is not subject to
and will not result in any tax, fee or governmental charge payable by the
Purchaser or the Seller to any federal, state or local government
("Transfer Taxes") except such Transfer Taxes as are paid by the Seller at
the time of transfer, assignment, and conveyance and except UCC filing
fees. In the event that the Purchaser receives actual notice of any unpaid
Transfer Taxes arising out of the transfer, assignment and conveyance of
the Student Loans, on written demand by the Purchaser, or upon the Seller
otherwise being given notice thereof, it shall pay, and otherwise indemnify
and hold the Purchaser and the Trustee harmless therefor. The Seller shall
not be responsible for the Purchaser's or the Trustee's income taxes.
Section 7.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
Purchaser hereby represents, covenants and warrants to Seller that:
(a) ORGANIZATION AND AUTHORITY OF PURCHASER. Purchaser is a duly
organized, validly existing corporation in good standing under the laws of
the State of Nevada; Purchaser has, and its officers acting on its behalf
have, all necessary statutory power and authority to make and perform this
Agreement, including (without limitation) the power and authority to
purchase Student Loans from Seller under the terms and conditions of this
Agreement.
(b) LEGAL AND BINDING OBLIGATION. The execution, delivery and
performance of this Agreement by Purchaser have been duly authorized by all
necessary corporate
14
action, and do not require any stockholder approval or approval or consent
of, or notice to, any trustee or holders of indebtedness or obligations
of Purchaser; upon due execution and delivery by the parties hereto, this
Agreement will constitute the legal, valid and binding obligation of
Purchaser, enforceable in accordance with its terms.
(c) NO CONFLICT. Neither the execution, delivery and performance by
Purchaser of this Agreement, nor the consummation or performance by
Purchaser of the transactions contemplated hereby, will conflict with,
result in a violation of, or constitute a default (or an event which could
constitute a default with the passage of time or notice or both) under, (i)
any of the terms of Purchaser's charter or bylaws, or (ii) any indenture,
mortgage, contract or other agreement to which Purchaser is a party or by
which it or its properties are bound, or any law or regulation by which it
or its properties are bound, where, in the case of this clause (ii), such
conflict, violation or default could have a material adverse effect on
Purchaser's ability to perform its obligations hereunder. Purchaser is not
a party to or bound by any agreement or instrument or subject to any
charter or other corporate restrictions or judgment, order, writ,
injunction, decree, law, rule or regulation which may materially and
adversely affect the ability of Purchaser to perform its obligations under
this Agreement.
(d) NO DEFAULTS OR VIOLATIONS. Purchaser is not in default under any
mortgage, deed of trust, indenture or other instrument or agreement to
which Purchaser is a party or by which it or its properties are bound, or
in violation of any law or regulation, which default or violation could
have a material adverse effect on Purchaser's ability to perform its
obligations hereunder.
(e) NO CONSENTS. No consent, approval or authorization of any
government or governmental body is required in connection with the
execution, delivery and performance of this Agreement, or the consummation
of the transactions contemplated hereby.
(f) NO LITIGATION. There are no pending or threatened actions or
proceedings by or before any court, administrative agency or arbitrator,
that could if adversely determined, materially and adversely affect the
ability of Purchaser to perform its obligations hereunder, and there are no
presently existing orders of any court, administrative agency or arbitrator
that could have a material and adverse affect on the ability of Purchaser
to perform its obligations hereunder.
(g) CONTINUING OBLIGATION OF PURCHASER. Purchaser agrees that during
the term of this Agreement, it will (i) remain in good standing and
qualified to do business under the laws of the State of Nevada, the United
States of America and any other jurisdictions in which it operates, (ii)
conduct its business in accordance with all applicable state and federal
laws, and (iii) continue to be qualified to carry out this Agreement.
15
ARTICLE VIII
MISCELLANEOUS
Section 8.01. COMMUNICATIONS AND NOTICES. Unless otherwise expressly
provided herein, all notices, requests, demands or other instruments which may
or are required to be given by either party to the other or to the Trustee,
shall be in writing, and each shall be deemed to have been properly given when
signed personally by an officer of the party to whom 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 to Seller:
Union Bank and Trust Company
0000 X. 00xx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxx Xxxxxxxxxx, Senior Vice President
(000) 000-0000
Fax: (000) 000-0000
If to Purchaser:
Union Financial Services-1, Inc.
0000 X. Xxxxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxxxx, President
(000) 000-0000
Fax: (000) 000-0000
If to the Trustee:
Norwest Bank Minnesota, National Association
0xx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Department, Student Loan Group
(000) 000-0000
Fax: (000) 000-0000
Any party may change the address and name of the addressee to which subsequent
notices are to be sent to it, by notice to the others given as aforesaid, but
any such notice of change, if sent by mail, shall not be effective until the 5th
day after it is mailed.
16
Section 8.02. FORMS OF INSTRUMENTS PROCEEDINGS. All instruments relating
to the sale and purchase of the Student Loans, and all proceedings to be taken
in connection with this Agreement and the transactions contemplated herein,
shall be in form and substance mutually satisfactory to Seller and Purchaser and
their respective counsel.
Section 8.03. PAYMENT OF EXPENSES. Each party to this Agreement shall pay
its own expenses incurred in connection with the preparation, execution and
delivery of this Agreement and the transactions herein contemplated, including,
but not limited to, the fees and disbursements of counsel.
Section 8.04. NON-BUSINESS DAYS. If the date for taking any action
required hereunder is not a Business Day, then such action can be taken, without
interest or penalty, on the next succeeding Business Day, with the same force
and effect as if such action was taken on the required date.
Section 8.05. AMENDMENTS, MODIFICATIONS AND WAIVERS. The provisions of
this Agreement cannot be amended, waived or modified unless such amendment,
waiver or modification be in writing and signed by the parties hereto and the
Trustee. Inaction or failure to demand strict performance shall not be deemed a
waiver.
Section 8.06. SEVERABILITY. If any provision of this Agreement shall be
held, or deemed to be or shall, in fact, be inoperative or unenforceable as
applied in any particular situation, such circumstance shall not have the effect
of rendering the provision in question inoperative or unenforceable in any other
situation or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatsoever. The invalidity
of any one or more phrases, sentences, clauses or paragraphs herein contained
shall not affect the remaining portions of this Agreement or any part hereof.
Section 8.07. REMEDIES. Unless otherwise expressly provided herein, no
remedy by the terms of this Agreement conferred upon or reserved to the Trustee
or Purchaser 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 (including, without
limitation, the right to such equitable relief by way of injunction), or statute
on or after the date of this Agreement.
Section 8.08. ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred, in whole or in part, by one party without the prior written consent
of the other parties, which consent shall not unreasonably be withheld;
provided, however, that Seller acknowledges that (a) Purchaser intends to assign
its rights (but none of its duties and obligations) under this Agreement, to the
Trustee, (b) Purchaser intends to pledge the Eligible Loans to the Trustee in
order to grant a security interest pursuant to the Indenture, and (c) in
connection with and in order to perfect such pledge. Purchaser intends to
deliver possession of the original promissory note evidencing the Eligible Loans
to the Custodian as custodial agent for the Trustee, pursuant to the Custodian
Agreement, and Seller hereby agrees and consents to
17
each of the matters described in clauses (a) through (c) hereof. This Agreement
may not be reassigned or otherwise transferred, in whole or in part, by the
Trustee (other than to a successor trustee) without the prior written consent
of Seller in its sole discretion.
Section 8.09. BINDING EFFECT. All covenants and agreements herein
contained shall extend to and be obligatory upon all successors of the
respective parties hereto.
Section 8.10. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of Nebraska.
Section 8.11. ENTIRE AGREEMENT. This Agreement embodies and constitutes
the entire understanding between the parties with respect to the transactions
contemplated by this Agreement, and all prior or contemporaneous agreements,
understandings, representations and statements between the parties, written or
oral, between the parties, are merged into and superseded by this Agreement.
Section 8.12. COUNTERPARTS. This Agreement may be simultaneously executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
Section 8.13. THIRD PARTY BENEFICIARY. This Agreement shall inure to the
benefit of the Trustee and its successors and assigns. Without limiting the
generality of the foregoing, all representations, covenants and agreements in
this Agreement which expressly confer rights upon the Trustee shall be for the
benefit of and run directly to, the Trustee, and the Trustee shall be entitled
to rely on and enforce such representations, covenants and agreements to the
same extent as if it were a party hereto. The foregoing creates a permissive
right on behalf of the Trustee, and the Trustee shall be under no duties or
obligations hereunder.
Section 8.14. CONSOLIDATION REIMBURSEMENT. If Purchaser acquires any
Eligible Loan from Seller through the consolidation procedures of Section 428C
of the Higher Education Act, Purchaser shall pay Seller an amount equal to
101.5% of the Principal Balance of such Eligible Loans so acquired, plus accrued
interest to the date of consolidation.
18
IN WITNESS WHEREOF, the parties hereto have caused this Loan Sale and
Commitment Agreement to be duly executed as of the day and year first written
above.
UNION BANK AND TRUST COMPANY, In its Own
Right and in its Capacity as Trustee
By
-----------------------------------
Title:
-------------------------------
UNION FINANCIAL SERVICES-1, INC.
By
-----------------------------------
Xxxxxxx X. Xxxxxxxxxxx, President
19
