Exhibit 10.14
================================================================================
WAREHOUSE LOAN AND SECURITY AGREEMENT
among
NELnet STUDENT LOAN WAREHOUSE CORPORATION-1,
as Borrower,
ZIONS FIRST NATIONAL BANK,
as Trustee
THUNDER BAY FUNDING INC.,
as Lender
and
ROYAL BANK OF CANADA,
as Facility Agent and Alternate Lender
U.S. $300,000,000
Dated as of February 1, 2002
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms............................................................. 2
Section 1.02. Other Terms....................................................................... 21
Section 1.03. Computation of Time Periods....................................................... 21
ARTICLE II
THE FACILITY
Section 2.01. Advances.......................................................................... 21
Section 2.02. The Initial Advance and Subsequent Advances....................................... 22
Section 2.03. Termination or Reduction of the Maximum Facility Amount........................... 23
Section 2.04. Collection Account................................................................ 23
Section 2.05. Transfers from Collection Account................................................. 24
Section 2.06. Cash Reserve Account.............................................................. 26
Section 2.07. Transfers from the Cash Reserve Account........................................... 26
Section 2.08. Management of Collection Account and Cash Reserve Account......................... 26
Section 2.09. Pledged Collateral Assignment of the Transaction Documents........................ 27
Section 2.10. Grant of a Security Interest...................................................... 27
Section 2.11. Evidence of Debt.................................................................. 28
Section 2.12. Special Provisions Governing Advances............................................. 28
Section 2.13. Payments by the Borrower.......................................................... 29
Section 2.14. Payment of Stamp Taxes, Etc....................................................... 29
Section 2.15. Yield Protection.................................................................. 29
Section 2.16. Extension of Termination Date..................................................... 31
ARTICLE III
CONDITIONS OF ADVANCES
Section 3.01. Conditions Precedent to Initial Advance........................................... 31
Section 3.02. Conditions Precedent to All Advances.............................................. 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. General Representations and Warranties of the Borrower............................ 32
Section 4.02. Representations of the Borrower Regarding the Trustee's Security Interest......... 34
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
Section 5.01. General Covenants................................................................. 35
Section 5.02. Acquisition, Collection and Assignment of Student Loans........................... 40
Section 5.03. Enforcement of Financed Loans..................................................... 40
Section 5.04. Enforcement of Servicing Agreements............................................... 40
Section 5.05. Enforcement of Student Loan Purchase Agreements................................... 41
Section 5.06. Enforcement of Indemnification Agreement.......................................... 41
Section 5.07. Financed Loans Serviced by Great Lake Servicing Corporation....................... 41
Section 5.08. Administration and Collection of Financed Loans................................... 42
Section 5.09. Amendment of Form of Student Loan Purchase Agreement.............................. 42
Section 5.10. Custodian......................................................................... 42
Section 5.11. Prepayments and Refinancing....................................................... 42
Section 5.12. Periodic Reporting................................................................ 43
Section 5.13. UCC Matters; Protection and Perfection of Pledged Collateral;
Delivery of Documents............................................................. 43
Section 5.14. Obligations of the Borrower With Respect to Pledged Collateral.................... 44
Section 5.15. Collateral Call................................................................... 44
Section 5.16. Guarantor Limitations............................................................. 45
Section 5.17. Covenants of the Borrower Regarding the Trustee's Security Interest............... 45
ARTICLE VI
EVENTS OF DEFAULT.................................................................................. 45
ARTICLE VII
TRUSTEE
Section 7.01. Acceptance of Trust............................................................... 48
Section 7.02. Trustee's Right to Reliance....................................................... 48
Section 7.03. Compensation of Trustee........................................................... 49
Section 7.04. Resignation of Trustee............................................................ 49
Section 7.05. Removal of Trustee................................................................ 50
Section 7.06. Successor Trustee................................................................. 50
Section 7.07. Manner of Vesting Title in Trustee................................................ 50
Section 7.08. Custodian Agreement............................................................... 51
Section 7.09. Trustee Covenants with Respect to "Eligible Lender" Status........................ 51
Section 7.10. Trustee's Status as an "Eligible Lender".......................................... 51
ARTICLE VIII
INDEMNIFICATION.................................................................................... 52
ii
ARTICLE IX
FACILITY AGENT
Section 9.01. Authorization and Action of Facility Agent........................................ 54
Section 9.02. Agency Termination................................................................ 54
Section 9.03. Facility Agent's Reliance, Etc.................................................... 54
Section 9.04. Facility Agent and Affiliates..................................................... 55
Section 9.05. Advance Decision.................................................................. 55
Section 9.06. Successor Facility Agent.......................................................... 55
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments and Waivers............................................................ 56
Section 10.02. Notices, Etc...................................................................... 56
Section 10.03. No Waiver; Remedies............................................................... 56
Section 10.04. Binding Effect; Assignability; Confidentiality.................................... 56
Section 10.05. Survival.......................................................................... 57
Section 10.06. Governing Law; Severability....................................................... 57
Section 10.07. Submission to Jurisdiction; Waiver of Jury and Bond............................... 57
Section 10.08. Costs, Expenses and Taxes......................................................... 58
Section 10.09. Recourse Against Certain Parties.................................................. 59
Section 10.10. Execution in Counterparts; Severability; Integration.............................. 59
Section 10.11. Confidentiality................................................................... 60
Section 10.12. Section Titles.................................................................... 60
Section 10.13. Entire Agreement.................................................................. 60
Section 10.14. No Petition....................................................................... 61
EXHIBIT A -- FORM OF STUDENT LOAN PURCHASE AGREEMENT
EXHIBIT B -- FORM OF VALUATION AGENT AGREEMENT
EXHIBIT C -- REGULAR ADVANCE NOTICE
EXHIBIT D -- SPECIAL ADVANCE NOTICE
EXHIBIT E -- MONTHLY REPORT
EXHIBIT F -- FORMS OF ASSET COVERAGE REPORT AND CASH RELEASE
CERTIFICATE
EXHIBIT G -- COPIES OF CUSTODIAN AGREEMENTS
EXHIBIT H -- FORM OF PARTICIPATION AGREEMENT
EXHIBIT I -- CONDITIONS TO INITIAL ADVANCE
iii
THIS WAREHOUSE LOAN AND SECURITY AGREEMENT (this "Agreement") is made
as of February 1, 2002, among NELnet STUDENT LOAN WAREHOUSE CORPORATION-1, a
corporation duly organized under the laws of the State of Nevada, as the
borrower hereunder (the "Borrower"); ZIONS FIRST NATIONAL BANK, a national
banking association, as the eligible lender and trustee hereunder (the
"Trustee"), THUNDER BAY FUNDING INC., a Delaware corporation, as the lender
hereunder (the "Lender"); and ROYAL BANK OF CANADA, a Canadian banking
corporation, as the alternate lender hereunder (in such capacity, the "Alternate
Lender") and as agent of the Lender, the Alternate Lender and the hereindefined
Liquidity Facility Providers and Credit Support Providers (in such capacity, the
"Facility Agent").
PRELIMINARY STATEMENTS
WHEREAS, the Lender is 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 between
each seller and the Lender, or to make loans to certain entities for the purpose
of financing financial assets of such entities; and
WHEREAS, the Borrower proposes to purchase from time to time certain
Eligible Loans (as hereinafter defined) in accordance with various Student Loan
Purchase Agreements (as hereinafter defined) (such purchases constituting the
"Transactions"); and
WHEREAS, the Borrower desires to fund the Transactions through loans
made by the Lender and the Alternate Lender up to the Maximum Facility Amount
(as hereinafter defined) on the terms and conditions set forth herein; and
WHEREAS, to provide liquidity support to the Lender in connection with
the loans made by it hereunder, the Lender and Royal Bank of Canada have entered
into the Liquidity Agreement (as hereinafter defined), pursuant to which the
Lender may, from time to time, assign all or a part of such loans to Royal Bank
of Canada and/or to certain other Liquidity Facility Providers (as hereinafter
defined) pursuant to the terms of the Liquidity Agreement, and as a result of
such assignment, such financial institutions would become Secured Creditors
hereunder; and
WHEREAS, to provide credit support to the Lender in connection with the
loans being made by it hereunder, the Lender and Royal Bank of Canada have
entered into a Credit Support Agreement (as hereinafter defined) pursuant to
which Royal Bank of Canada or certain other Credit Support Providers (as
hereinafter defined) have agreed to purchase undivided interests in loans not
purchased by the Liquidity Facility Providers, and as a result of such
assignment, such financial institutions would become Secured Creditors
hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. Certain capitalized terms used
throughout this Agreement are defined above or in this Section.
As used in this Agreement and its exhibits, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined).
"Advance" means any Regular Advance, any Special Advance, any Liquidity
Advance, any Credit Support Advance and any Rollover Advance.
"Advance Date" means, with respect to any Advance, the date on which
such Advance is funded.
"Advance Percentage Calculation Report" means the report prepared by
the Valuation Agent and delivered to the Facility Agent and the Borrower not
later than four Business Days prior to each Advance, other than a Special
Advance or a Rollover Advance, setting forth the Maximum Advance Percentage for
the Eligible Loans to be financed with such Advance, in the form attached as
Exhibit A to the Valuation Agent Agreement. The Maximum Advance Percentage
determined pursuant to any Advance Percentage Calculation Report with respect to
any Financed Loans shall remain in effect with respect to such Financed Loans
until the Advance Date immediately following the delivery of the next Valuation
Report delivered pursuant to Section 5.12 hereof.
"Adverse Claim" means a lien, security interest, charge, encumbrance or
other right or claim or restriction in favor of any Person (other than, with
respect to the Pledged Collateral, any lien, security interest, charge,
encumbrance or other right or claim or restriction in favor of the Trustee for
the benefit of the Secured Creditors).
"Affected Party" means the Lender, the Alternate Lender, each Liquidity
Facility Provider, each Credit Support Provider and any assignee or participant
of the Lender, the Alternate Lender, any Liquidity Facility Provider or any
Credit Support Provider.
"Affiliate" when used with respect to a Person means any other Person
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, membership interests or otherwise.
"Aggregate Market Value" means, as of any date of determination, the
sum of (a) with respect to assets in the Pledged Collateral which are Financed
Loans as of such date, (i) the outstanding Principal Balance of such Financed
Loans, as set forth in the most recently delivered Valuation Report, multiplied
by the Loan Valuation Percentage, plus, without duplication, (ii) 100% of any
accrued interest thereon, and all accrued and unpaid Special Allowance Payments
and interest subsidies, if any, thereon to such date; (b) with respect to assets
in the
2
Pledged Collateral which are Permitted Investments and other cash balances, if
any, on deposit in the Collection Account and the Cash Reserve Account, the
principal balance thereof together with all interest accrued thereon; and (c)
payments on Financed Loans or other assets received by a Servicer or the
Borrower and not yet transferred to the Trustee; provided, however, if
subsequent to any repayment or refinancing pursuant to Section 5.11 hereof the
Principal Balance of Defaulted Student Loans exceeds 10% of the Principal
Balance of all Financed Loans in "repayment status", the Aggregate Market
Value of all Defaulted Student Loans shall be valued separately as Defaulted
Student Loans on the related Valuation Date with a Loan Valuation Percentage of
97% for the purposes of clause (a)(i) above.
"Agreement" means this Warehouse Loan and Security Agreement, as the
same may be amended, restated, supplemented or otherwise modified from time to
time hereafter.
"Alternate Advance Rate" means the interest rate to be paid on Regular
Bank Advances, Liquidity Advances and Credit Support Advances. The Alternate
Advance Rate is the annual interest rate equal to either: (a) the sum of the
Base Rate and 2.0% if such Regular Bank Advance, Liquidity Advance or Credit
Support Advance is the result of the occurrence of an Event of Default
hereunder; (b) the sum of the applicable LIBOR and 1.00% if such Regular Bank
Advance, Liquidity Advance or Credit Support Advance is not the result of the
occurrence of an Event of Default hereunder; (c) the sum of the Base Rate and
1.00% if (i) such Regular Bank Advance, Liquidity Advance or Credit Support
Advance is funded on less than two (2) Business Days notice, or (ii) LIBOR
cannot be determined, or (iii) it shall be unlawful for the Liquidity Facility
Provider or the Credit Support Provider to obtain funds in the London interbank
market to fund Advances; or (d) the Base Rate, if the Facility Agent advised the
Borrower that an Alternate Interest Amount or a Liquidity Interest Amount based
on LIBOR will not fully reflect the cost to the Alternate Lender, the Liquidity
Facility Provider or the Credit Facility Provider, as applicable, of funding
Advances based on LIBOR. The Alternate Advance Rate shall be computed on the
basis of the actual number days in such interest period assuming a 360 day
year, or if determined using the Base Rate, on the basis of the actual number
days in such interest period using a 365 or, when applicable, 366-day year.
"Alternate Interest Amount" means with respect to any Calculation
Period, an amount calculated by multiplying the average outstanding Regular Bank
Advances for such Calculation Period by the weighted average Alternate Advance
Rate for all Regular Bank Advances during such Calculation Period.
"Alternate Lender" means Royal Bank of Canada, a Canadian banking
corporation, and its successors and assigns.
"Alternate Lender Termination Date" means February 13, 2003 (unless
such date is extended by the written agreement of the Alternate Lender and the
Borrower).
"Asset Coverage Ratio" means, as of the date of any Valuation Report,
the ratio of (a) the Aggregate Market Value of assets in the Pledged Collateral
as of such date to (b) the Liabilities as of such date and rounding to the
nearest second decimal place.
3
"Asset Coverage Report" means, means a report furnished by the
Portfolio Administrator to the Valuation Agent, the Facility Agent and the
Borrower pursuant to Section 5.12(b) hereof, the form of which is attached as
Exhibit F hereto.
"Authorized Officer of the Borrower" means the Borrower's president,
chief financial officer 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.
"Base Rate" means the rate of interest most recently announced by the
Facility Agent as its prime rate. The Base Rate is not necessarily intended to
be the lowest per annum rate of interest determined by the Facility Agent in
connection with extensions of credit. The Base Rate shall change from time to
time as the Facility Agent's prime rate changes.
"Benefit Plan" means any employee benefit plan as defined in Section
3(3) of ERISA in respect of which the Borrower or any ERISA Affiliate of the
Borrower is, or at any time during the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA.
"Borrower" means NELnet Student Loan Warehouse Corporation-1, a Nevada
corporation, and its successors and assigns.
"Business Day" means a day of the year other than a Saturday or a
Sunday on which banks are not authorized or required to close in New York City
or the city where the principal office of the Trustee is located (presently
Denver, Colorado); provided, however, if the term "Business Day" is used in
connection with LIBOR, means any day of the year on which dealings in dollar
deposits are carried on in the London interbank market.
"Calculation Date" means the fourth Business Day preceding each
Settlement Date.
"Calculation Period" means the calendar month preceding each Settlement
Date.
"Cash Reserve Account" means the special account created pursuant to
Section 2.06 hereof.
"Cash Reserve Requirement" means, as of any date of determination,
one-half of one percent (0.50%) of the Outstanding Facility Amount as of such
date.
"Closing Date" means February 14, 2002.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute and the regulations promulgated and rulings issued thereunder.
"Collection Account" means the special account created pursuant to
Section 2.04 hereof.
"Collection Advance Subaccount" means a subaccount established within
the Collection Account pursuant to Section 2.04 hereof.
4
"Collections" means, (a) all revenue and recoveries of principal and
interest and other payments and reimbursements of principal and accrued interest
received with respect to any Financed Loan and any other collection of cash with
respect to such Financed Loan (including, but not limited to, Interest Subsidy
Payments, Special Allowance Payments, Indemnity Payments, finance charges and
payments representing the repurchase of any Financed Loan or rebate of premium
thereon pursuant to a Student Loan Purchase Agreement) received or deemed to
have been received pursuant to Section 2.04 hereof; and (b) all other cash
collections, tax refunds and other cash proceeds of the Pledged Collateral.
"Commitment" means the obligation of each Liquidity Facility Provider
to fund Liquidity Advances pursuant to the terms of the Liquidity Agreement.
"Consolidation Loan" means a loan made to an Eligible Borrower pursuant
to which the Eligible Borrower consolidates two or more of its PLUS/SLS Loans,
direct loans made by the Department of Education or ▇▇▇▇▇▇▇▇ Loans in accordance
with the Higher Education Act.
"CP" means the Commercial Paper Notes issued by the Lender from time to
time in the United States commercial paper market.
"CP Rate" means, with respect to each Regular CP Advance, the per annum
rate (or if such rate is quoted on a discount basis, the yield equivalent of
such amount expressed as a per annum rate), including dealer fees and issuing
and paying agency fees, borne by CP issued by the Lender with respect to such
Regular CP Advance. The Lender or the Facility Agent shall provide the Borrower
with notice of the CP Rate applicable to each Regular CP Advance.
"Credit Support Advance" means a loan to the Borrower assigned to the
Credit Support Providers by the Lender pursuant to the Credit Support Agreement,
including any Rollover Advances funded by the Credit Support Providers pursuant
to the Credit Support Agreement.
"Credit Support Agreement" means the Credit Support Asset Purchase
Agreement, dated as of September 25, 1997, between the Lender and Royal Bank of
Canada, as the same has been and may be amended, restated, supplemented or
otherwise modified from time to time.
"Credit Support Providers" means initially, Royal Bank of Canada, as
the provider of the commitment under the Credit Support Agreement, and its
successors and assigns, and any other financial institutions having a short-term
unsecured debt rating of at least "A-l", "P-l" and "F-l" by S&P, ▇▇▇▇▇'▇, and
Fitch, respectively, as assignees of the commitment of Royal Bank of Canada
pursuant to the terms of the Credit Support Agreement, or otherwise providing
all or a portion of a Credit Support Advance.
"Custodian" means, individually or collectively, NELnet Loan Services,
Inc., EFS Services, Inc., ▇▇▇▇▇▇ ▇▇▇ Servicing L.P., Great Lakes Educational
Loan Services, Inc., Pennsylvania Higher Education Assistance Agency and each
additional Servicer or bailee with which the Borrower and the Trustee have
entered into a Custodian Agreement.
"Custodian Agreement" means, individually or collectively, (a) the
Custodian Agreement, dated as of February 1, 2002, among the Borrower, the
Trustee and NELnet Loan Services, Inc.; (b) the Custodian Agreement, dated as of
February 1, 2002, among the Borrower,
5
the Trustee and EPS Services, Inc.; (c) a Custodian Agreement among the
Borrower, the Trustee and ▇▇▇▇▇▇ Mae Servicing L.P. and approved by the Facility
Agent; (d) a Custodian Agreement among the Borrower, the Trustee and Great Lakes
Educational Loan Services, Inc. and approved by the Facility Agent; (e) a
Custodian Agreement among the Borrower, the Trustee and Pennsylvania Higher
Education Assistance Agency and approved by the Facility Agent; and (f) each
additional or successor custodian agreement entered into among the Borrower, the
Trustee and a Custodian and approved by the Facility Agent.
"Custodian Fees" means the fees, expenses and charges of the Custodian
pursuant to a Custodian Agreement, except to the extent included in Servicing
Fees.
"Debt" of any Person means (a) indebtedness of such Person for borrowed
money; (b) obligations of such Person evidenced by bonds, debentures, notes,
letters of credit, interest rate and currency swaps or other similar
instruments; (c) obligations of such Person to pay the deferred purchase price
of property or services; (d) obligations of such Person as lessee under leases
which shall have been or should be, in accordance with GAAP, recorded as capital
leases; (e) obligations secured by an Adverse Claim upon property or assets
owned by such Person, even though such Person has not assumed or become liable
for the payment of such obligations; and (f) obligations of such Person under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of other Persons of the
kinds referred to in clauses (a) through (e) above.
"Defaulted Student Loan" means any Student Loan (a) as to which any
payment, or portion thereof, is more than 270 days past due from the original
due date thereof, unless such Student Loan is a Higher Education Act Student
Loan and such Student Loan is in Deferment, (b) the Obligor of which is the
subject of an Event of Bankruptcy or is deceased or disabled, or (c) as to which
a continuing condition that with notice or the lapse of time or both would
constitute a default, breach, violation or event permitting acceleration under
the terms of such Student Loan (other than payment defaults continuing for a
period of not more than 270 days).
"Deferment" means the period permitted by the Higher Education Act and
the policies of the applicable Guarantor as being a period during which a
borrower under a Student Loan may postpone making payments of principal and/or
interest.
"Department of Education" means the United States Department of
Education, or any other officer, board, body, commission or agency succeeding to
the functions thereof under the Higher Education Act.
"Early Amortization Event" means the occurrence of any one of the
following events which has not been remedied to the satisfaction of the Facility
Agent within five Business Days (a) the outstanding Principal Balance of
Financed Loans constituting Proprietary Loans, computed as a percentage of the
Principal Balance of all Financed Loans, exceeds 20%; (b) the outstanding
Principal Balance of unsubsidized ▇▇▇▇▇▇▇▇ Loans in either "enrolled" or "grace"
status, computed as a percentage of the Principal Balance of all Financed Loans,
exceeds 60%; (c) the outstanding Principal Balance of Financed Loans that are
thirty (30) or more days delinquent, computed as a percentage of the Principal
Balance of all Financed Loans in
6
"repayment status", exceeds 23%; (d) the outstanding Principal Balance of
Financed Loans in "claim" status, computed as a percentage of the Principal
Balance of all Financed Loans in "repayment status", exceeds 20%; or (e) the
outstanding Principal Balance of Financed Loans in "claim" status, computed as a
percentage of the Principal Balance of Financed Loans in "repayment" status,
exceeds 15% on any two consecutive Settlement Dates. The Trustee shall not be
deemed to have actual knowledge of an Early Amortization Event unless and until
a Corporate Trust Officer of the Trustee has received written notification from
the Facility Agent or the Borrower.
"Eligible Borrower" means a borrower who is eligible under the Higher
Education Act to be the obligor of a loan for financing a program of education
at an Eligible Institution, including a borrower who is eligible under the
Higher Education Act to be an obligor of a loan made pursuant to Section 428A,
428B and 428C of the Higher Education Act.
"Eligible Institution" means (a) an institution of higher education,
(b) a vocational school or (c) any other institution which, in all of the above
cases, has been approved by the Department of Education and the applicable
Guarantor.
"Eligible Lender" means any "eligible lender," as defined in the Higher
Education Act, which has received an eligible lender designation from the
Guarantor with respect to Guaranteed Loans.
"Eligible Loan" means a Student Loan (or a beneficial interest
therein):
(a) which was originated or acquired by the Borrower
(either directly or through a Participation Agreement) in the ordinary
course of its business and was originated in the United States, its
territories or possessions;
(b) that constitutes an account or payment intangible as
defined in the UCC as in effect in the jurisdiction that governs the
perfection of the interests of the Borrower therein and the perfection
of the Trustee's interest therein under this Agreement;
(c) the borrower for which is an Eligible Borrower;
(d) if such Student Loan is a subsidized ▇▇▇▇▇▇▇▇ Loan,
such Student Loan qualifies the holder thereof to receive Interest
Subsidy Payments and Special Allowance Payments from the Department of
Education; if such Student Loan is a Consolidation Loan, such Student
Loan qualifies the holder thereof to receive Interest Subsidy Payments
and Special Allowance Payments from the Department of Education to the
extent applicable; and if such Student Loan is a PLUS/SLS or an
unsubsidized ▇▇▇▇▇▇▇▇ Loan, such Student Loan qualifies the holder
thereof to receive Special Allowance Payments from the Department of
Education to the extent applicable;
(e) at the time of purchase with proceeds from an
Advance, is not a Defaulted Student Loan and has not been tendered at
any time to any Guarantor for payment;
(f) that provides or, when the payment schedule with
respect thereto is determined, will provide for payments on a periodic
basis that will fully amortize the
7
Principal Balance thereof by its maturity, as such maturity may be
modified in accordance with applicable deferral and forbearance periods
granted in accordance with applicable laws, including the Higher
Education Act and any Guarantee Agreements, as applicable;
(g) that is denominated and payable only in United States
dollars;
(h) that together with the related Student Loan Note
therefor represents the genuine, legal, valid and binding payment
obligation of the related borrower, enforceable by or on behalf of the
holder thereof against such borrower in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance and similar laws relating to creditors' rights
generally and subject to general principles of equity; and that has not
been satisfied, subordinated or rescinded and no right of rescission,
setoff, counterclaim or defense has been asserted or, to the knowledge
of the Borrower, overtly threatened in writing with respect to such
Student Loan;
(i) that (i) is the subject of a valid Guarantee
Agreement with an eligible Guarantor; (ii) with respect to which the
Borrower is not in default in any material respect in the performance
of any covenants and agreements made in the applicable Guarantee
Agreement; and (iii) with respect to which all amounts due and payable
to the Department of Education or a Guarantor, as the case may be, have
been paid in full;
(j) that (i) is the subject of a valid Servicing
Agreement with a Servicer which, together with the Borrower and the
Trustee, has executed and delivered a Custodian Agreement; (ii) with
respect to which the Borrower is not in default in any material respect
in the performance of any covenants and agreements made in the
applicable Servicing Agreement; and (iii) with respect to which all
amounts due and payable to the Servicer have been paid in full;
(k) the payment terms of which have not been altered or
amended except in accordance with the Higher Education Act; and
(l) if such Student Loan is serviced by Great Lakes
Educational Loan Services, Inc., the outstanding Principal Balance of
which when added to the aggregate outstanding Principal Balance of all
other Financed Loans serviced by Great Lakes Educational Loan Services,
Inc. shall not exceed 10% of the aggregate outstanding Principal
Balance of all Financed Loans.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means (a) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as the Borrower; (b) a trade or business (whether or not incorporated)
under common control (within the meaning of Section 414(c) of the Code) with the
Borrower or (c) a member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as the Borrower, any corporation
described in clause (a) above or any trade or business described in clause (b)
above.
8
"Event of Bankruptcy" shall be deemed to have occurred with respect to
a Person if either:
(a) a case or other proceeding shall be commenced
without the application or consent of such Person, in any court,
seeking the liquidation, reorganization, debt arrangement, dissolution,
winding up, or composition or readjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or substantially all of
its assets, or any similar action with respect to such Person under any
law relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person
shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for, such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the
foregoing.
"Event of Default" has the meaning assigned to that term in Article VI
hereof.
"Excess Coverage" means any amounts on deposit in the Collection
Account which, if paid to the Borrower pursuant to Section 2.05(c)(xi) hereof,
would not result in (a) an Asset Coverage Ratio of less than 103% or (b) cause
the Net Revenue to be less than zero, as determined by the Valuation Agent.
"Facility Agent" means Royal Bank of Canada, a Canadian banking
corporation, and its successors and assigns, in its capacity as agent of the
Lender and the Alternate Lender hereunder, as agent of the Liquidity Facility
Providers pursuant to the Liquidity Agreement and as agent of the Credit Support
Providers pursuant to the Credit Support Agreement.
"Federal Reimbursement Contracts" means any agreement between any
Guarantor and the Department of Education providing for the payment by the
Department of Education of amounts authorized to be paid pursuant to the Higher
Education Act, including but not necessarily limited to reimbursement of amounts
paid or payable upon defaulted Financed Loans and other student loans Guaranteed
by any Guarantor and federal Interest Subsidy Payments and Special Allowance
Payments, if applicable, to holders of qualifying student loans guaranteed by
any Guarantor.
"FFEL Program" means the Federal Family Education Loan Program
authorized under the Higher Education Act, including Federal ▇▇▇▇▇▇▇▇ Loans
authorized under Sections 427 and 428 thereof, Federal Supplemental Loans for
Students authorized under Section 428A thereof,
9
Federal PLUS Loans authorized under Section 428B thereof, Federal Consolidation
Loans authorized under Section 428C thereof and Unsubsidized ▇▇▇▇▇▇▇▇ Loans
authorized under Section 428H thereof.
"Financed Loans" means any Student Loans financed with Advances under
this Agreement that were purchased by the Borrower from a Seller pursuant to a
Student Loan Purchase Agreement with the proceeds of Advances.
"Fitch" means Fitch, Inc. (or its predecessor or successors in
interest) if and so long as it has rated and is continuing to rate the CP of the
Lender, and otherwise means such other nationally recognized statistical rating
organization as may be designated by the Lender.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"Governmental Authority" means the United States of America, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Grant" or "Granted" means to pledge, create and grant a first priority
security interest in and with regard to property free and clear of all Adverse
Claims. A Grant of Financed Loans, other assets or of any other agreement
includes all rights, powers and options (but none of the obligations) of the
granting party thereunder.
"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
"Indemnification Agreement" means the Indemnification Agreement, dated
as of February 1, 2002, between NELnet and the Borrower for the benefit of the
Borrower and the Secured Creditors, as amended and supplemented pursuant to the
terms thereof.
"Indemnified Amounts" has the meaning assigned to that term in Article
VIII hereof.
"Indemnity Payments" means any payment received by the Borrower
pursuant to the Indemnification Agreement.
"Independent Director" means a Person who (a) is not a stockholder or
other securityholder (whether direct, indirect or beneficial), customer or
supplier of the Borrower or any of its Affiliates; (b) is not a director,
officer, employee, former employee, Affiliate, member, manager or associate of
the Borrower or any of its Affiliates (other than in its capacity as the
Independent Director for the Borrower or any of its Affiliates); (c) is not
related to any Person referred to in clauses (a) or (b); and (d) is not a
trustee, conservator or receiver for the Borrower or any of its Affiliates
(other than in its capacity as Independent Director for the Borrower or any of
its Affiliates).
"Interest Period" means, for each Advance, the period commencing on the
Advance Date of such Advance and ending on (but excluding) the Maturity Date of
such Advance.
"Interest Subsidy Payments" means the interest subsidy payments on
Student Loans received from the Department of Education pursuant to Section 428
of the Higher Education Act or similar payments authorized by federal law or
regulations.
"Investment" means, with respect to any Person, any direct or indirect
loan, advance or investment by such Person in any other Person, whether by means
of share purchase, capital contribution, loan or otherwise, excluding
commission, travel and similar advances to officers, employees and directors
made in the ordinary course of business.
"Lender" means Thunder Bay Funding Inc., a Delaware corporation, and
its successors and assigns.
"Liabilities" means the sum of (a) the Outstanding Facility Amount, (b)
all accrued Program Availability Fees, Program Usage Fees, the Alternate
Interest Amounts and Liquidity Interest Amounts applicable thereto and (c) any
accrued and unpaid fees, including Custodian Fees, Liquidity Fees, Servicing
Fees, Portfolio Administration Fees, Trustee Fees and any other fees payable by
the Borrower pursuant to the Transaction Documents, the Liquidity Agreement or
the Credit Support Agreement.
"LIBOR" means for any Interest Period, the rate determined as of the
second Business Day before the first day of such Interest Period for Eurodollar
deposits of 30, 60 or 90 days as determined by the Facility Agent in
consultation with the Borrower which appears on Telerate Page 3750 (as defined
in the International Swaps and Derivatives Associations, Inc. 1991 Interest Rate
and Currency Definitions) or such other page as may replace Telerate Page 3750.
11
"Liquidity Advances" means a loan to the Borrower assigned by the
Lender to the Liquidity Facility Provider(s) pursuant to the Liquidity
Agreement, including any Rollover Advances funded by the Liquidity Facility
Provider(s) pursuant to the Liquidity Agreement.
"Liquidity Agreement" means the Liquidity Asset Purchase Agreement,
dated as of February 14, 2002, between the Lender and Royal Bank of Canada, as
the same may be amended, restated, supplemented or otherwise modified from time
to time hereafter.
"Liquidity Facility" means, individually or collectively, (a) the
Liquidity Agreement and (b) any other such agreement entered into between the
Lender and any Person providing liquidity support for the CP issued to finance
the Financed Loans.
"Liquidity Facility Provider" means initially, Royal Bank of Canada, as
the provider of the Commitment under the Liquidity Agreement, and its successors
and assigns, and any other financial institutions having a short-term unsecured
debt rating of at least "A-l", "P-l" and "F-l" by S&P, ▇▇▇▇▇'▇, and Fitch,
respectively, as assignees of the Commitment of Royal Bank of Canada pursuant to
the terms of the Liquidity Agreement, or otherwise providing all or a portion of
the Liquidity Facility.
"Liquidity Fee" means fees payable to a Liquidity Facility Provider
pursuant to the terms of its Liquidity Facility and any other fees or expenses
of the Facility Agent or the Liquidity Facility Providers that the Borrower may
from time to time agree to pay.
"Liquidity Interest Amount" means an amount, with respect to any
Calculation Period, calculated by multiplying the average outstanding Liquidity
Advances and Credit Support Advances for such Calculation Period by the weighted
average Alternate Advance Rate for all Liquidity Advances and Credit Support
Advances for such Calculation Period.
"Liquidity Termination Event" means the earliest to occur of the
following: (a) any Liquidity Facility Provider then providing liquidity to the
Lender has its rating lowered below "A-l" by S&P, "P-l" by Moody's or "F-l" by
Fitch, unless a replacement Liquidity Facility Provider having ratings of at
least "A-l" from S&P, "P-l" by Moody's and "F-l" by Fitch is substituted within
30 days of such downgrade; (b) any Liquidity Facility Provider shall fail to
honor any of its payment obligations under the Liquidity Agreement; (c) the
Liquidity Agreement shall cease for any reason to be in full force and effect or
be declared null and void or (d) February 13, 2003 (unless such date is extended
pursuant to the Liquidity Agreement).
"Loan Valuation Percentage" as determined by the Valuation Agent means
(a) (i) the present value of the Net Revenue (using the Portfolio
Characteristics and the Valuation Report Assumptions or the Advance Percentage
Calculation Assumptions, as appropriate) divided by (ii) the outstanding
Principal Balance of the Student Loans to be financed and/or the Financed Loans,
as the case may be; plus (b) 100%.
"Material Adverse Effect" means a material adverse effect on:
(a) the financial condition of the Borrower;
12
(b) the ability of the Borrower to perform its
obligations under this Agreement or any other Transaction Document; or
(c) the status, existence, perfection, priority or
enforceability of the interest in the Pledged Collateral.
"Maturity Date" means the specified maturity of each Advance, which,
unless otherwise extended by mutual agreement between the Facility Agent and the
Borrower, shall be the first Business Day of the calendar month following the
calendar month in which such Advance was made.
"Maximum Advance Percentage" means the rate, stated as a percentage,
of the aggregate outstanding principal amount of the Eligible Loans financed or
to be financed, as determined by the Valuation Agent, all as calculated by the
Valuation Agent pursuant to Article III of the Valuation Agent Agreement. The
Maximum Advance Percentage determined pursuant to any Advance Percentage
Calculation Report or set forth in any Valuation Report shall remain in effect
with respect to the applicable Financed Loans until the Advance Date immediately
following the delivery of the next Valuation Report delivered pursuant to
Section 5.12 hereof.
"Maximum Advance Amount" means an amount equal to the sum of (a) the
Loan Valuation Percentage, multiplied by the aggregate outstanding Principal
Balance of Eligible Loans proposed to be financed, and (b) accrued and unpaid
interest and Special Allowance Payments on such Eligible Loans.
"Maximum Facility Amount" means, at any time, $300,000,000 as such
amount may be adjusted from time to time pursuant to Section 2.03 hereof;
provided, however, that at all times on or after the termination of the
Revolving Period, the "Maximum Facility Amount" shall mean the Outstanding
Facility Amount.
"Minimum Asset Coverage Requirement" means an Asset Coverage Ratio of
100.25%.
"Monthly Report" means a report, in substantially the form of Exhibit E
hereto prepared by the Portfolio Administrator and approved and furnished by the
Borrower to the Trustee, the Valuation Agent and the Facility Agent.
"▇▇▇▇▇'▇" means ▇▇▇▇▇'▇ Investors Service, Inc. (or its predecessor or
successors in interest) if and so long as it has rated and is continuing to rate
the CP of the Lender, and otherwise means such other nationally recognized
statistical rating organization as may be designated by the Lender.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding five years contributed to by the Borrower or any ERISA
Affiliate on behalf of its employees.
"NELnet" means NELnet, Inc., a Nevada corporation, and its successors
and assigns.
"Net Revenue" means the projected net income to be received from the
Eligible Loans to be financed and/or the Financed Loans, as the case may be,
after taking into account financing
13
costs, loan defaults and delinquencies, fees and other charges, all as set forth
in the Valuation Report Assumptions.
"Obligations" means all present and future indebtedness and other
liabilities and obligations (howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, or due or to become due) of the
Borrower to the Lender, the Alternate Lender, the Liquidity Facility Providers,
the Credit Support Providers, the Trustee and/or any other Person, arising under
or in connection with this Agreement or any other Transaction Document or the
transactions contemplated hereby or thereby and shall include, without
limitation, all liability for principal of and interest on the Advances, closing
fees, unused line fees, audit fees, expense reimbursements, indemnifications,
and other amounts due or to become due under the Transaction Documents,
including, without limitation, interest, fees and other obligations that accrue
after the commencement of an insolvency proceeding (in each case whether or not
allowed as a claim in such insolvency proceeding).
"Obligor" means a Person obligated to make payments with respect to a
Student Loan including the student, the Guarantors and the Department of
Education.
"Outstanding Facility Amount" means at any time the aggregate principal
amount of outstanding Advances made to the Borrower under this Agreement.
"Participation Agreement" means a participation agreement between the
Borrower and a Seller, substantially in the form attached as Exhibit H hereto,
for the purchase of participation interests in Eligible Loans.
"Payment Account" means the following:
Bank Name: Bankers Trust Company
ABA Number: #▇▇▇-▇▇▇-▇▇▇
Account Name: Thunder Bay Funding Inc.
Account Number: ▇▇▇-▇▇-▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇.
"Permitted Investments" means (a) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of no more than 90 days from the date
of acquisition; (b) time deposits and certificates of deposit having maturities
of no more than 90 days from the date of acquisition, maintained with or issued
by any commercial bank having capital and surplus in excess of $500,000,000 and
having a short-term rating not less than "A-l" or the equivalent thereof from
S&P, not less than "P-l" or the equivalent thereof from Moody's and, if rated by
Fitch, not less than "F-l" or the equivalent thereof from Fitch; (c) repurchase
obligations for underlying securities of the types described in clauses (a) or
(b) above with a term of not more than ten days and maturing no later than 90
days after the date of acquisition; (d) commercial paper (other than CP)
maturing within 90 days after the date of acquisition and having a rating of not
less than "A-l" or the equivalent thereof from S&P, not less than "P-l" or the
equivalent thereof from Moody's and if rated by Fitch, not less than "F-l" or
the equivalent thereof from Fitch; (e) freely redeemable shares in money market
funds having a rating of "AAA-m" or "AAAM-G" from S&P, "Aaa" from
14
Moody's and, if rated by Fitch, "AAA" from Fitch; and (f) any other investment
approved in writing by the Facility Agent.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, government (or any agency or political subdivision thereof) or other
entity.
"Pledged Collateral" has the meaning specified in Section 2.10 hereof.
"PLUS/SLS" means a Student Loan originated under the authority set
forth in Section 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.
"Portfolio Administration Fee" means, for each Calculation Period, a
per annum fee payable monthly in arrears equal to 0.45% on the average
outstanding Principal Balance of the Financed Loans during such Calculation
Period and paid to the Portfolio Administrator.
"Portfolio Administrator" means NELnet or its successors and assigns.
"Principal Balance" means, with respect to any Student Loan or any
Financed Loan and any specified date, the original principal amount of such
Student Loan or Financed Loan, plus capitalized interest thereon, if any, minus
prior payments of principal by or on behalf of the Obligor of such Student Loan
or Financed Loan as of such date.
"Program Availability Fees" means, for any Calculation Period, an
amount calculated by multiplying the unused portion of this Agreement (being the
Maximum Facility Amount less the average outstanding Advances for such
Calculation Period) by an annual rate equal to 0.165% per annum. The Program
Availability Fees shall be computed on the basis of the actual number days in
such Calculation Period and assuming a 360 day year.
"Program Usage Fees" means, for any Calculation Period, an amount
calculated by multiplying the average outstanding Regular CP Advances for such
Calculation Period by an annual rate equal to the sum of (a) the weighted
average CP Rate for all Regular CP Advances during such Calculation Period and
(b) 0.28%. The Program Usage Fees shall be computed on the basis of the actual
number days in such Calculation Period and assuming a 360 day year.
"Proprietary Institution" means a for-profit vocational school,
including a proprietary institution.
"Proprietary Loan" means a loan made to or for the benefit of a student
attending a Proprietary Institution.
"Quarterly Valuation Date" means the fourth Business Day preceding each
Settlement Date occurring in the months of March, June, September and December.
"Records" means all documents, books, records, Student Loan Notes and
other information (including without limitation, computer programs, tapes,
disks, punch cards, data
15
processing software and related property and rights) maintained with respect to
Financed Loans or otherwise in respect of the Pledged Collateral.
"Regular Advance" means a Regular Bank Advance or a Regular CP Advance.
"Regular Bank Advance" means a loan made to the Borrower funded by the
Alternate Lender, including any Special Advances or Rollover Advances funded by
the Alternate Lender.
"Regular CP Advance" means a loan made to the Borrower funded by the
Lender with CP, including any Special Advances or Rollover Advances funded by
the Lender with CP.
"Regulatory Change" means, relative to any Affected Party:
(a) 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) above
or (B) any fiscal, monetary or other authority having
jurisdiction over such Affected Party; or
(iii) generally accepted accounting principles or
regulatory accounting principles applicable to such Affected
Party and affecting the application to such Affected Party of
any law, regulation, interpretation, directive, requirement or
request referred to in clause (a)(i) or (a)(ii) above; or
(b) any change after the date of this Agreement in the
application to such Affected Party of any existing law, regulation,
interpretation, directive, requirement, request or accounting
principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above.
"Requested Advance Amount" means the amount of the Advance that is
requested by the Borrower, not to exceed the Maximum Advance Amount.
"Requested Advance Percentage" means the rate, stated as a percentage,
of the aggregate Principal Balance of the Eligible Loans to be financed by an
Advance that is requested by the Borrower, not to exceed the Maximum Advance
Percentage.
"Revolving Period" means the period commencing on the Closing Date and
terminating on the earlier of (a) the Termination Date and (b) the date of any
Liquidity Advance or any Credit Support Advance; provided, however, that so long
as no Event of Default or an event which with the lapse of time or the giving of
notice, or both, would constitute an Event of Default, shall have occurred and
be continuing, the Revolving Period may be reinstated at any time prior to the
occurrence of the Termination Date with the consent of the Facility Agent.
16
"Rollover Advance" means a Regular Advance, a Credit Support Advance or
a Liquidity Advance, the funding of which would not and does not have the effect
of increasing the Outstanding Facility Amount.
"S&P" means Standard & Poor's Ratings Service, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. (or its predecessor or successors in interest) if
and so long as it has rated and is continuing to rate the CP of the Lender, and
otherwise means such other nationally recognized statistical rating organization
as may be designated by the Lender.
"Schedule of Purchased Student Loans" means a listing of certain
Financed Loans of the Borrower delivered to and held by the Trustee pursuant to
Section 5.01(c)(vii) hereof (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 comprising a part of the Pledged Collateral pursuant
to this Agreement.
"Secured Creditors" means, (a) to the extent there are Regular CP
Advances outstanding hereunder, the Lender, (b) to the extent there are Regular
Bank Advances outstanding, the Alternate Lender, (c) to the extent there are
Liquidity Advances outstanding, the Liquidity Facility Providers which have
funded the Liquidity Advances and (d) to the extent there are Credit Support
Advances outstanding, the Credit Support Providers which have funded the Credit
Support Advances.
"Sellers" means any entity which sells Eligible Loans or participation
interests in Eligible Loans to the Borrower pursuant to the terms of a Student
Loan Purchase Agreement.
"Servicer" means, individually or collectively, (a) NELnet Loan
Services, Inc., (b) ▇▇▇▇▇▇ Mae Servicing L.P., (c) Great Lakes Educational Loan
Services, Inc., (d) Pennsylvania Higher Education Assistance Agency and (e) any
other organization with which the Borrower has entered into a Servicing
Agreement with respect to Eligible Loans, with the prior written approval of the
Facility Agent; provided, however, ▇▇▇▇▇▇ ▇▇▇ Servicing L.P., Great Lakes
Educational Loan Services, Inc. and Pennsylvania Higher Education Assistance
Agency shall not service any Financed Loans until the Facility Agent has
approved in writing its respective Servicing Agreement.
"Servicer Event of Default" means (a) any Servicer shall fail in any
material respect to perform or observe any term, covenant or agreement that is
an obligation of such Servicer under its Servicing Agreement (other than as
referred to in clause (b) below) and such failure continues unremedied for 10
days after (i) written notice thereof shall have been given by the Borrower or
the Trustee to the Borrower or the Servicer or (ii) the Servicer has actual
knowledge thereof; (b) any Servicer shall fail to make any payment or deposit to
be made by it under its Servicing Agreement when due and such failure shall
remain unremedied for three Business Days; (c) any representation or warranty
made or deemed to be made by any Servicer (or any of its officers) under or in
connection with its Servicing Agreement or any information or report delivered
pursuant to its Servicing Agreement shall prove to have been false or incorrect
in any material respect when made; (d) an Event of Bankruptcy shall have
occurred with respect to a Servicer; (e) (i) any litigation (including, without
limitation, derivative actions), arbitration proceedings or
17
governmental proceedings (whether or not existing at the time of the execution
hereof) not disclosed in writing by the Borrower to the Facility Agent prior to
the execution and delivery of this Agreement is pending against a Servicer or
any of its Affiliates at the time execution hereof; or (ii) any material
development not so disclosed has occurred in any such litigation or proceedings
so disclosed, which in the case of clause (i) or (ii) above, in the opinion of
the Facility Agent, has a material adverse effect on the ability of such
Servicer to perform its obligations under its Servicing Agreement.
"Servicing Agreement" means, individually or collectively, (a) the
Servicing Agreement, dated as of February 1, 2002, between the Borrower and
NELnet Loan Services, Inc.; (b) a Servicing Agreement between the Borrower and
▇▇▇▇▇▇ ▇▇▇ Servicing L.P. and approved in writing by the Facility Agent; (c) a
Servicing Agreement between Great Lakes Educational Loan Services, Inc. and the
Borrower and approved in writing by the Facility Agent; (d) a Servicing
Agreement between Pennsylvania Higher Education Assistance Agency and the
Borrower and approved in writing by the Facility Agent; and (e) with the prior
written consent of the Facility Agent, any other servicing agreement between the
Borrower and any Servicer, as any such agreement may be amended or supplemented
from time to time with the prior written consent of the Facility Agent, under
which the respective Servicer agrees to administer and collect the Financed
Loans.
"Servicing Fees" means any fees payable by the Borrower to a Servicer
with respect of servicing Financed Loans pursuant to the provisions of its
Servicing Agreement, including legal fees and expenses.
"Settlement Date" means the first Business Day of each month.
"Solvent" means, at any time, a condition under which:
(a) the fair value and present fair saleable value of
such Person's total assets is, on the date of determination, greater
than such Person's total liabilities (including contingent and
unliquidated liabilities) at such time;
(b) the fair value and present fair saleable value of
such Person's assets is greater than the amount that will be required
to pay such Person's probable liability on its existing debts as they
become absolute and matured ("debts," for this purpose, includes all
legal liabilities, whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent);
(c) such Person is and shall continue to be able to pay
all of its liabilities as such liabilities mature; and
(d) such Person does not have unreasonably small capital
with which to engage in its current and in its anticipated business.
For purposes of this definition:
(i) the amount of a Person's contingent or
unliquidated liabilities at any time shall be that amount
which, in light of all the facts and circumstances
18
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 arm's-length transaction
in an existing and not theoretical market.
"Special Advance" means an Advance for the purpose of acquiring
Eligible Loans on an Advance Date other than a Settlement Date, the principal
amount of which Advance shall not exceed (i) the aggregate principal amount of
the Eligible Loans being purchased with such Advance, plus (ii) accrued and
unpaid interest and Special Allowance Payments on such Eligible Loans.
"Special Allowance Payments" means special allowance payments
authorized to be made by the Department of Education by Section 438 of the
Higher Education Act, or similar allowances authorized from time to time by
federal law or regulation.
"Special Valuation Date" means any date within 7 days after the receipt
of a written request for a Valuation Report or an Asset Coverage Report from the
Portfolio Administrator or the Facility Agent.
"▇▇▇▇▇▇▇▇ Loan" means a loan made to an Eligible Borrower designated as
such that is made under the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 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), participations 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 ▇▇▇▇▇▇▇▇
Loan or a Proprietary Loan.
"Student Loan Notes" means the promissory notes or other writings
evidencing the Student Loans.
19
"Student Loan Purchase Agreement" means either (a) a student loan
purchase agreement between the Borrower and a Seller, substantially in the form
attached as Exhibit A hereto, for the purchase of Eligible Loans or (b) a
Participation Agreement.
"Termination Date" means the earliest to occur of (a) February 1, 2005
(unless such date is extended pursuant to Section 2.16 hereof); (b) such other
date as may be agreed in writing by the Facility Agent and the Borrower; (c) the
date of termination of the Maximum Facility Amount pursuant to Section 2.03
hereof; (d) the date of the declaration or automatic occurrence of the
Termination Date pursuant to Article VI hereof; (e) the occurrence of the
Alternate Lender Termination Date or any Liquidity Termination Event; and (f)
the occurrence of an Early Amortization Event.
"Transaction Documents" means, collectively, this Agreement, the
Valuation Agent Agreement, the Indemnification Agreement, all Servicing
Agreements, all Custodian Agreements, all Student Loan Purchase Agreements, all
Guarantee Agreements and all other instruments, documents and agreements
executed in connection with any of the foregoing.
"Treasury Regulations" means any regulations promulgated by the
Internal Revenue Service interpreting the provisions of the Code.
"Trigger Rate" means, as to any Guarantor, such Guarantor's default
rate as defined in Section 428(c)(l)(B) of the Higher Education Act.
"Trustee" means Zions First National Bank, Denver, Colorado, a national
banking association, and its successor or successors and any other corporation
which may at any time be substituted in its place pursuant to this Agreement.
"Trustee Fees" means the fees, expenses and charges of the Trustee,
including legal fees and expenses.
"Trustee Guarantee Agreement" means, collectively, 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 Certificate for Comprehensive Insurance 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 Insurance 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 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, and other guarantee or agreement issued by any
20
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.
"Valuation Agent" means RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., or any other entity
appointed as Valuation Agent by the Borrower and approved by the Facility Agent,
which approval shall not be unreasonably withheld.
"Valuation Agent Agreement" means the Valuation Agent Agreement, dated
as of February 1, 2002, among the Borrower, the Lender, the Alternate Lender,
the Facility Agent and the Valuation Agent and any other valuation agent
agreement in the form attached as Exhibit B hereto among the Borrower, the
Lender, the Alternate Lender, the Facility Agent and the Valuation Agent, as any
such agreement may be amended or supplemented from time to time with the prior
written consent of the Facility Agent.
"Valuation Date" means (a) each Quarterly Valuation Date and (b) each
Special Valuation Date.
"Valuation Report" means a report furnished by the Valuation Agent to
the Portfolio Administrator, the Facility Agent and the Borrower pursuant to
Section 5.12(a) hereof, the form of which is attached as Exhibit B to the
Valuation Agent Agreement. The Maximum Advance Percentage shall remain in effect
until the Advance Date immediately following the delivery of the next Valuation
Report delivered pursuant to Section 5.12 hereof.
"Valuation Report Assumptions" means the cash flow and related
assumptions set forth in Exhibit E to the Valuation Agent Agreement.
SECTION 1.02. OTHER TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York and not specifically defined
herein are used herein as defined in such Article 9.
SECTION 1.03. COMPUTATION OF TIME PERIODS. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding."
ARTICLE II
THE FACILITY
SECTION 2.01. ADVANCES. On the terms and conditions hereinafter set
forth, the Alternate Lender agrees to make, and the Lender may, in its sole
discretion make, Advances to the Borrower from time to time up to an aggregate
principal amount outstanding at any one time not to exceed the Maximum Facility
Amount in effect at the time of such Advance. In addition to
21
the other terms and conditions hereinafter set forth, the Lender will not be
obligated or committed to make any Regular CP Advance and shall not make any
such Advance (a) unless the amount available for drawing by the Lender under the
Liquidity Facilities from Liquidity Facility Providers shall equal or exceed
102% of the aggregate amount of the principal due on the Outstanding Facility
Amount (including any requested Advance) to the Lender; (b) if the Lender is
unable for any reason to raise funds in the United States commercial paper
market to make such Advances; (c) if the Lender, in good faith, determines there
is a general disruption in the United States commercial paper market or the
Lender's ability to access the commercial paper market; or (d) if any Liquidity
Facility Provider fails to honor its payment obligations under its Liquidity
Facility. Within the limits set forth in this Section and the other terms and
conditions of this Agreement, during the Revolving Period, the Borrower may
borrow, prepay and reborrow under this Section. In addition, the aggregate
principal amount of any Advance, which is not a Rollover Advance, during the
Revolving Period shall not exceed the Maximum Advance Amount. All Advances
hereunder shall be denominated in and be payable in United States dollars. All
then outstanding Advances and other Obligations hereunder shall be due and
payable on February 1, 2005 (unless such date is extended pursuant to Section
2.16 hereof) or such earlier date as provided in Article VI hereof. The
obligation of the Alternate Lender to make Advances hereunder shall expire on
the Alternate Lender Termination Date.
SECTION 2.02. THE INITIAL ADVANCE AND SUBSEQUENT ADVANCES.
(a) Any Advances made by the Lender or the Alternate
Lender during the Revolving Period will be made on a Settlement Date
(unless otherwise agreed by the Borrower and the Facility Agent or such
Advance is a Special Advance) at the request of the Borrower, subject
to and in accordance with the terms and conditions of Section 2.01
hereof and this Section. In addition, during the Revolving Period, the
Borrower may request up to eight (8) Special Advances in each calendar
month for the purpose of acquiring additional Student Loans; provided,
however, that no Special Advances may be requested to be made on the
four Business Days preceding any Settlement Date. After the Revolving
Period, the Lender and the Alternate Lender shall make only Rollover
Advances on a Settlement Date (unless otherwise agreed by the Borrower
and the Facility Agent) at the request of the Borrower, subject to and
in accordance with the terms and conditions of Section 2.01 hereof and
this Section, solely to the extent necessary to refund any maturing
Advances.
(b) Subject to satisfaction of the conditions precedent
set forth in this Agreement, the Borrower may request an Advance
hereunder by giving written notice to the Lender, with a copy to the
Trustee, in the form of Exhibit C hereto not later than 12:00 noon,
Eastern time, at least three Business Days prior to the proposed
Advance Date; provided; however, that in the case of a Special Advance,
such written notice to the Lender, with a copy to the Trustee, in the
form of Exhibit D hereto need only be given not later than 12:00 noon,
Eastern time, on the Business Day prior to the proposed Advance Date.
Each such notice shall specify (i) the aggregate amount of such
Advance, which shall be in an amount equal to or greater than
$1,000,000, (ii) the Advance Date (which may only be a Settlement Date
unless otherwise agreed by the Borrower and the Facility Agent or
unless such Advance is a Special Advance), (iii) if the Advance to be
made is a Regular Bank Advance, a Liquidity Advance or a Credit Support
Advance, the
22
applicable Alternate Advance Rate for such Advance and (iv) the
Requested Advance Percentage, if applicable to the Advance, and the
Requested Advance Amount (which shall not be greater than the aggregate
principal amount of the Eligible Loans to be financed plus accrued and
unpaid interest and Special Allowance Payments on such Eligible Loans
if such Advance constitutes a Special Advance). On the Advance Date,
the Alternate Lender shall and the Lender, in its sole discretion, may
upon satisfaction of the applicable conditions set forth in this
Agreement, make available to the Borrower in same day funds, the amount
of such Advance by payment to the account which the Borrower has
designated in writing.
(c) Except as otherwise provided in Article VIII hereof
or elsewhere herein, principal and accrued Program Availability Fees,
Program Usage Fees, Alternate Interest Amounts and Liquidity Interest
Amounts on the Advances shall be payable solely from the Pledged
Collateral and from payments made or owing pursuant to the "Collateral
Calls" made in accordance with Section 5.15 hereof. The Advances plus
accrued Program Availability Fees, Program Usage Fees, Alternate
Interest Amounts and Liquidity Interest Amounts shall be paid at the
times specified in Section 2.13 hereof and may not be prepaid in whole
or in part on any day other than the applicable Maturity Date without
the consent of the Facility Agent.
(d) If as a result of a draw under the Liquidity
Agreement or the Credit Support Agreement a Regular CP Advance shall
become a Liquidity Advance or a Credit Support Advance on any day other
than the first day of an Interest Period, the Alternate Advance Rate
applicable to such Advance for the remainder of such Interest Period
shall be the Alternate Advance Rate.
(e) Upon the occurrence and continuation of an Early
Amortization Event, no Advances will be made to the Borrower for the
purpose of purchasing additional Student Loans unless the Facility
Agent, in its sole discretion, determines to have such Early
Amortization Event not cause the Termination Date.
SECTION 2.03. TERMINATION OR REDUCTION OF THE MAXIMUM FACILITY AMOUNT.
The Borrower may, upon at least 60 days' written notice to the Facility Agent
(i) at any time, but only after the first anniversary of the Closing Date or
(ii) at any time prior to the first anniversary of the Closing Date if the
Facility Agent shall fail to respond (whether affirmatively or negatively) to
any written request for a waiver, amendment or modification to any of the
prohibitions set forth in any of Section 5.01(j), 5.04, 5.05, 5.06, 5.09 or 5.11
hereof within 30 days after the Facility Agent's receipt of such request,
terminate in whole or reduce in part the portion of the Maximum Facility Amount
that exceeds the Outstanding Facility Amount; provided, however, that each
partial reduction of the Maximum Facility Amount shall be in an aggregate amount
equal to $5,000,000 or an integral multiple thereof.
SECTION 2.04. COLLECTION ACCOUNT. On or prior to the date hereof, the
Borrower shall establish and maintain, or cause to be established and
maintained, the Collection Account. The Collection Account shall be maintained
as a segregated trust account in the trust department of the Trustee, and shall
be under the sole dominion and control of, and in the name of, the Trustee. Any
Collections received by the Borrower, the Trustee, the student loan depositaries
or
23
co-depositaries, the Custodians, the Sellers or the Servicers, or any agent
thereof, as the case may be, are to be transmitted to the Collection Account
within two Business Days of receipt. The Borrower shall direct 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. Any Advances
deposited to the Collection Account shall be deposited into a separate account
established within the Collection Account (the "Collection Advance Subaccount").
Funds on deposit in the Collection Account may be invested from time to time in
Permitted Investments in accordance with Section 2.08 hereof. The Trustee shall
apply funds on deposit in the Collection Account as described in Section 2.05
hereof.
SECTION 2.05. TRANSFERS FROM COLLECTION ACCOUNT.
(a) On each date on which any principal or interest is
due with respect to any Advance, the Trustee shall promptly apply
moneys held in the Collection Account to pay to the Facility Agent the
accrued and unpaid Program Availability Fees, Program Usage Fees,
Alternate Interest Amounts, Liquidity Interest Amounts and principal
amounts then due and owing as directed in writing by the Borrower.
(b) On each Calculation Date, the Borrower shall cause
the Portfolio Administrator to prepare the Monthly Report and shall
provide or cause to be provided to the Portfolio Administrator all
information necessary or appropriate to accurately prepare such Monthly
Report, all calculations, unless otherwise specified, to be made as of
the end of the current Calculation Period, and cause the Portfolio
Administrator to forward such Monthly Report to the Trustee, the
Facility Agent and the Valuation Agent.
(c) The Trustee, on each Settlement Date, shall apply the
moneys held by the Trustee in the Collection Account as directed by the
Borrower pursuant to the Monthly Report received by the Trustee, on
which the Trustee may conclusively rely, on such Settlement Date, in
the following priority:
(i) pay to each Servicer and Custodian an amount
equal to the Servicing Fee and Custodian Fee which is accrued
and unpaid as of the close of business on the last day of the
immediately preceding Calculation Period; provided; however,
the Borrower hereby certifies that no Servicer which is an
Affiliate of NELnet shall be paid from any moneys on deposit
in the Collection Account which were derived from a payment
made pursuant to the Indemnification Agreement on behalf of
such Servicer and the Borrower agrees not to direct the
Trustee to make any such payment;
(ii) pay to the Facility Agent an amount equal to
the accrued and unpaid Program Availability Fees, Program
Usage Fees, Alternate Interest Amounts and Liquidity Interest
Amounts which are accrued and unpaid as of the close of
business on the last day of the immediately preceding
Calculation Period;
24
(iii) pay to the Facility Agent an amount equal to
the principal of all Advances, net of any new Rollover
Advances, in each case, due and owing as of such Settlement
Date;
(iv) pay to the Facility Agent an amount equal to
all Liquidity Fees and other Obligations due and owing to the
Lender, the Alternate Lender, the Liquidity Facility Providers
or the Credit Support Providers as of such Settlement Date;
(v) pay to the Trustee an amount equal to the
Trustee Fee which is accrued and unpaid as of the close of
business on the last day of the immediately preceding
Calculation Period;
(vi) transfer to the Cash Reserve Account the
amount, if any, necessary to restore the Cash Reserve Account
to the Cash Reserve Requirement;
(vii) pay to the Portfolio Administrator the
Portfolio Administration Fee which is accrued and unpaid as of
the close of business on the last day of the immediately
preceding Calculation Period;
(viii) pay to the Facility Agent, amounts
designated by the Borrower to reduce the amount of outstanding
Advances;
(ix) pay any other Obligations which are accrued
and unpaid as of the close of business on the last day of the
immediately preceding Calculation Period with respect to the
Financed Loans to the Person owed such Obligation;
(x) pay as directed by the Borrower, an amount
equal to the estimated taxes owed by the Borrower that are
payable prior to the next Settlement Date and not previously
paid, which relate to the net income of the Borrower realized
on the Financed Loans and other assets in the Pledged
Collateral; and
(xi) transfer to the Borrower (at the request of
the Portfolio Administrator pursuant to a Cash Release
Certificate in the form attached as Exhibit F hereto), on any
Settlement Date following a Quarterly Valuation Date, any
amounts representing Excess Coverage; provided, however, that
upon the occurrence and continuation of an Early Amortization
Event or an Event of Default, no Excess Coverage shall be
released to the Borrower without the written consent of the
Facility Agent. The Trustee shall not be deemed to have actual
knowledge of an Early Amortization Event or an Event of
Default unless and until a Corporate Trust Officer of the
Trustee has received written notification from the Facility
Agent or the Borrower.
(d) Any moneys allocated to the payment of Trustee Fees,
Liquidity Fees, Portfolio Administration Fees, Servicing Fees,
Custodian Fees, Advances, Program Availability Fees and Program Usage
Fees on Regular Advances, Alternate Interest Amounts, Liquidity
Interest Amounts and other Obligations pursuant to this Section shall
25
be transferred to the applicable payee, to the extent such Obligations
are then due and payable as directed by a written direction of the
Borrower to the Trustee.
(e) Any Advances deposited to the Collection Advance
Subaccount shall be disbursed pursuant to a written direction of the
Borrower to the Trustee for the purpose of purchasing Eligible Loans or
repaying Advances. The Trustee shall make the foregoing transfers in
accordance with this Section and may conclusively rely upon the written
instructions received from the Borrower without any duty to determine
or examine the same.
SECTION 2.06. CASH RESERVE ACCOUNT. On or prior to the date hereof, the
Borrower shall establish and maintain, or cause to be established and
maintained, the Cash Reserve Account. The Cash Reserve Account shall be
maintained in a segregated trust account in the trust department of the Trustee
or another commercial bank designated by the Trustee, and shall be under the
sole dominion and control of, and in the name of, the Trustee. The Cash Reserve
Requirement shall be deposited to the Cash Reserve Account from proceeds of the
initial Advance and additional amounts shall be deposited to the Cash Reserve
Account pursuant to Section 2.05(c)(vi) hereof. Funds on deposit in the Cash
Reserve Account may be invested from time to time in Permitted Investments in
accordance with Section 2.08 hereof. The Trustee shall apply funds on deposit in
the Cash Reserve Account as described in Section 2.07 hereof. If amounts
available in the Collection Account are insufficient to restore the Cash Reserve
Account to the Cash Reserve Requirement on the immediately succeeding Settlement
Date, the Borrower shall satisfy such deficiency from other sources. If the
Borrower is either unable or unwilling to deposit such funds, the Facility Agent
may declare a Termination Date to have occurred.
SECTION 2.07. TRANSFERS FROM THE CASH RESERVE ACCOUNT. To the extent
there are insufficient moneys in the Collection Account to pay the following
amounts in accordance with the provisions of Section 2.05 hereof, the Trustee
shall transfer moneys held by the Trustee in the Cash Reserve Account, to the
extent available for distribution on the specified day, in the following amounts
and priority:
(a) on each date on which any principal, Program
Availability Fees, Program Usage Fees, Alternate Interest Amounts or
Liquidity Interest Amounts is due with respect to any Advance, the
Trustee shall promptly apply moneys held in the Cash Reserve Account to
pay to the Facility Agent the accrued and unpaid principal amounts,
Program Availability Fees, Program Usage Fees, Alternate Interest
Amounts and Liquidity Interest Amounts then due and owing as directed
in writing by the Borrower; and
(b) on any Settlement Date, to the Collection Account for
the payment of accrued and unpaid fees and expenses described in
Section 2.05(c)(i) through (v) hereof in the priority set forth in
Section 2.05(c) hereof.
SECTION 2.08. 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 Portfolio
Administrator in Permitted Investments having a maturity
26
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 Facility Agent shall have the sole right to
restrict the maturities of any investments held in the Collection
Account and/or the Cash Reserve Account and to direct the withdrawal of
any such investments for the purposes of paying the Obligations,
including principal on the Advances and any unpaid Program Availability
Fees, Program Usage Fees, Alternate Interest Amounts and Liquidity
Interest Amounts. All investment earnings (net of losses) on such
Permitted Investments shall be credited to and retained in the
Collection Account or the Cash Reserve Account, as the case may be.
(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 Zions First
National Bank, 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 the 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)
hereof, 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) the agreement herein
between the Securities Intermediary and the Trustee shall be governed
by the laws of the State of Colorado. Each term used in this Section
2.08(b) and in Section 2.08(c) hereof and defined in the Colorado
Uniform Commercial Code (the "Colorado UCC") shall have the meaning set
forth in the Colorado UCC.
(c) No Permitted Investment in the form of an instrument
or certificated security as defined in the Colorado UCC in the
possession of the Trustee (i) shall be subject to a third party's
security interest that could be perfected without possession pursuant
to Sections 9-312(e) & (g) of the Colorado UCC, or (ii) shall
constitute proceeds of any property subject to such third party's
security interest.
SECTION 2.09. PLEDGED COLLATERAL ASSIGNMENT OF THE TRANSACTION
DOCUMENTS. To secure the prompt and complete payment when due of the Obligations
and the performance by the Borrower of all of the covenants and obligations to
be performed by it pursuant to this Agreement and each other Transaction
Document, the Borrower hereby assigns to the Trustee, and Grants to the Trustee
a security interest, in each case, for the benefit of the Secured Creditors in
accordance with their interests, in all of the Borrower's right and title to and
interest in (but not the obligations of) the Transaction Documents. The Borrower
confirms and agrees that the Trustee shall have, following an Event of Default,
the sole right to enforce the Borrower's rights
27
and remedies under the Transaction Documents with respect to the Pledged
Collateral for the benefit of the Secured Creditors, but without any obligation
on the part of the Trustee or any other Secured Creditor or any of their
respective Affiliates, to perform any of the obligations of the Borrower under
the Transaction Documents.
SECTION 2.10. GRANT OF A SECURITY INTEREST. To secure the prompt and
complete payment when due of the Obligations and the performance by the Borrower
of all of the covenants and obligations to be performed by it pursuant to this
Agreement and each other Transaction Document, the Borrower hereby Grants to the
Trustee on behalf of the Secured Creditors (and their respective successors and
assigns), a security interest in all of the Borrower's right, title and interest
in accounts, general intangibles, payment intangibles, instruments, documents,
chattel paper, goods, moneys, letters of credit, letter of credit rights,
certificates of deposit, deposit accounts and all of the property and interests
in property, whether tangible or intangible and whether now owned or existing or
hereafter arising or acquired and wheresoever located arising from, consisting
of, or related to any of the following (collectively, the "Pledged Collateral"):
(a) all Financed Loans (including any beneficial
interests in Financed Loans);
(b) all revenues and recoveries of principal from
Financed Loans, including all borrower payments and reimbursements of
principal and accrued interest on default claims received from any
Guarantor;
(c) any other Collections, Permitted Investments, funds
and accrued earnings thereon held in the various funds and accounts
created under this Agreement, including the Collection Account and the
Cash Reserve Account;
(d) all rights and remedies (but none of the obligations)
under each of the Transaction Documents;
(e) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment
of such Financed Loans, whether pursuant to the contract related to
such Financed Loan or otherwise;
(f) all Records relating to such Financed Loans; and
(g) all proceeds of any of the foregoing.
SECTION 2.11. EVIDENCE OF DEBT. The Facility Agent shall maintain a
loan account (the "Loan Account") on its books in which shall be recorded (a)
all Advances owed to the Facility Agent (for the benefit of the Lender, the
Alternate Lender, the Liquidity Facility Providers or the Credit Support
Providers, as the case may be) by the Borrower pursuant to this Agreement; (b)
all payments made by the Borrower on all such Advances; and (c) all appropriate
debits and credits as provided in this Agreement including, without limitation,
all fees, charges, expenses and interest. All entries in the Loan Account shall
be made in accordance with the Facility Agent's customary accounting practices
as in effect from time to time. The entries in the Loan Account shall be
conclusive and binding for all purposes, absent manifest error. Any failure to
so record or any errors in doing so shall not, however, limit or otherwise
affect the obligation of
28
the Borrower to pay any amount owing with respect to the Advances or any of the
other Obligations.
SECTION 2.12. SPECIAL PROVISIONS GOVERNING ADVANCES. The Borrower shall
indemnify the Lender, the Alternate Lender, the Facility Agent, the Liquidity
Facility Providers and the Credit Support Providers, upon written request (which
request shall set forth in reasonable detail the basis for requesting such
amounts and which shall, absent manifest error, be presumed correct and binding
upon all parties hereto), for losses, expenses and liabilities (including,
without limitation, any loss (including interest paid) sustained by it in
connection with the liquidation or re-employment of funds acquired to fund or
maintain the Advances), that such Person may sustain: (a) if for any reason
other than the gross negligence or misconduct of the Lender, the Alternate
Lender, the Facility Agent, the Liquidity Facility Providers or the Credit
Support Providers (or any of them) a borrowing of any Advance does not occur on
a date specified therefor; (b) if the Borrower elects, or is required by reason
of a breach by the Borrower of this Agreement, to prepay any Advance on a date
other than the Maturity Date applicable to that Advance; (c) as a consequence of
any other default by the Borrower to repay its Advances when required by the
terms of this Agreement; or (d) if the Lender assigns all or any part of its
Advance(s) to a Liquidity Facility Provider or a Credit Support Provider on a
date that is not a Settlement Date. Unless otherwise provided herein, the amount
specified in the written statement of the Lender, the Alternate Lender, the
Facility Agent, the Liquidity Facility Providers or the Credit Support Providers
shall be payable on demand after receipt by the Borrower thereof.
SECTION 2.13. PAYMENTS BY THE BORROWER. All payments to be made by the
Borrower shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by, or on behalf of, the
Borrower for the account of the Lender, the Alternate Lender, the Liquidity
Facility Providers or the Credit Support Providers, as the case may be, shall be
made to the Facility Agent, directly to the Payment Account, in United States
dollars. Such payments shall be made in immediately available funds so as to be
received by the Facility Agent no later than 1:00 p.m., Eastern time, on the
date specified herein. Payments shall be applied in the order of priority
specified in Section 2.05(c) hereof. Any payment which is received by the
Facility Agent later than 1:00 p.m., Eastern time, shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue.
SECTION 2.14. PAYMENT OF STAMP TAXES, ETC. The Borrower agrees to pay
any present or future stamp, mortgage, value-added, court or documentary taxes
or any other excise or property taxes, charges or similar levies imposed by any
federal, state or local governmental body, agency or instrumentality
(hereinafter referred to as "Other Applicable Taxes") relating to this
Agreement, any of the other Transaction Documents or any recordings or filings
made pursuant hereto and thereto and shall hold each of the Trustee, the
Facility Agent, the Lender, the Alternate Lender, the Liquidity Facility
Providers and the Credit Support Providers harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
Other Applicable Taxes.
29
SECTION 2.15. YIELD PROTECTION.
(a) If any Regulatory Change (including a change to
Regulation D under the Securities Exchange Act of 1933, as amended)
occurring after the date hereof:
(i) shall subject any Affected Party to any tax,
duty or other charge with respect to any portion of the
Obligations owned or funded by it or with respect to its
unused "Purchase Commitment" under the Liquidity Agreement or
the Credit Support Agreement, as applicable (the "Unused
Commitment") (other than taxes, duties or charges based on
income or gross receipts), or shall change the basis of
taxation (other than taxes based on income or gross receipts)
of payments to the Affected Party of any yield on or
reductions to the Obligations owed to or with respect to the
Obligations funded in whole or in part by it or any other
amounts due under this Agreement in respect of any portion of
the Obligations owned by or funded by it or its obligations or
rights, if any to fund Advances or in respect of its Unused
Commitment (except for changes in the rate of tax on the
overall net income or gross receipts of such Affected Party
imposed by the United States of America, by the jurisdiction
in which such Affected Party's principal executive office is
located and, if such Affected Party's principal executive
office is not in the United States of America, by the
jurisdiction where such Affected Party's principal office in
the United States is located);
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed by
the Federal Reserve Board), special deposit or similar
requirement against assets of any Affected Party, deposits or
obligations with or for the account of any Affected Party or
with or for the account of any Affiliate (or entity deemed by
the Federal Reserve Board to be an affiliate) of an Affected
Party, or credit extended to any Affected Party;
(iii) shall change the amount of capital
maintained or required or requested or directed to be
maintained by any Affected Party;
(iv) shall impose any other condition affecting
any portion of the Obligations owned or funded in whole or in
part by any Affected Party, or its obligations or rights, if
any, to pay any portion of the Unused Commitment or to provide
funding therefor; or
(v) shall change the rate for, or the manner in
which the Federal Deposit Insurance Corporation (or any
successor thereto) assesses deposit insurance premiums or
similar charges;
and the result of any of the foregoing is or would be:
(A) to increase the cost to or to
impose a cost on an Affected Party funding or making
or maintaining any portion of the Obligations, or any
purchases, reinvestments or loans or other extensions
of credit under the Liquidity Agreement, the Credit
Support Agreement or any
30
Transaction Document or any commitment of such
Affected Party with respect to the foregoing;
(B) to reduce the amount of any sum
received or receivable by an Affected Party under
this Agreement, or under the Liquidity Agreement, the
Credit Support Agreement or any Transaction Document
with respect thereto; or
(C) in the sole determination of such
Affected Party, to reduce the rate of return on the
capital of an Affected Party as a consequence of its
obligations hereunder, under the Liquidity Agreement
or under the Credit Support Agreement or arising in
connection herewith to a level below that which the
Affected Party could otherwise have achieved;
then within 30 days after demand by such Affected Party (which demand
shall be accompanied by a statement setting forth in reasonable detail
the basis of such demand), the Borrower shall pay directly to such
Affected Party such additional amount or amounts as will compensate
such Affected Party for such additional or increased cost or such
reduction; provided such additional amount or amounts shall not be
payable with respect to any period in excess of 180 days prior to the
date of demand by the Affected Party unless (1) the effect of the
Regulatory Change is retroactive by its terms to a period prior to the
date of the Regulatory Change, in which case any additional amount or
amounts shall be payable for the retroactive period but only if the
Affected Party provides its written demand not later than 180 days
after the Regulatory Change; or (2) the Affected Party reasonably and
in good faith did not believe the Regulatory Change resulted in such an
additional or increased cost or such a reduction.
(b) Each Affected Party will promptly notify the
Borrower, the Trustee and the Facility Agent of any event of which it
has actual knowledge which will entitle such Affected Party to any
compensation pursuant to this Section; provided, however, no failure or
delay in giving such notification shall adversely affect the rights of
any Affected Party to such compensation unless such failure or delay
results in a Material Adverse Effect.
(c) In determining any amount provided for or referred to
in this Section, an Affected Party may use any reasonable averaging or
attribution methods that it (in its sole discretion exercised in good
faith) shall deem applicable and which it applies on a consistent
basis. Any Affected Party when making a claim under this Section shall
submit to the Borrower and the Facility Agent a statement as to such
increased cost or reduced return (including calculation thereof in
reasonable detail), which statement shall, in the absence of manifest
error, be conclusive and binding upon the Borrower and the Facility
Agent.
SECTION 2.16. EXTENSION OF TERMINATION DATE. The Termination Date may
be extended beyond February 1, 2005 by a written agreement among the Borrower,
the Lender, the Alternate Lender and the Facility Agent, with notice to the
Trustee.
31
ARTICLE III
CONDITIONS OF ADVANCES
SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL ADVANCE. The initial
Advance hereunder is subject to the condition precedent that the Facility Agent
shall have received on or before the Advance Date the documents and opinions
listed in Exhibit I hereto, in form and substance satisfactory to the Facility
Agent.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL ADVANCES. Each Advance
(including the initial Advance) shall be subject to the further conditions
precedent that:
(a) The Eligible Loans are purchased pursuant to a
Student Loan Purchase Agreement in the form of Exhibit A or Exhibit I
hereto and a schedule of the Eligible Loans to be financed and copies
of all schedules, opinions, financing statements and other documents
required to be delivered by the applicable Seller are delivered to the
Trustee;
(b) at least four Business Days prior to the Advance Date
(other than with respect to a Rollover Advance or a Special Advance),
the Borrower shall have delivered to the Facility Agent and the Trustee
(i) an Advance Percentage Calculation Report from the Valuation Agent
and (ii) copies of the relevant Student Loan Purchase Agreement,
together with a schedule of the Eligible Loans to be financed and
copies of all schedules, opinions, financing statements and other
documents required to be delivered by the applicable Seller as a
condition of purchase thereunder (provided, however, that the schedule
of Eligible Loans to be financed shall be provided to the Facility
Agent only if requested by the Facility Agent); and
(c) on the Advance Date, the following statements shall
be true, and the Borrower by accepting the amount of such Advance shall
be deemed to have certified that:
(i) the representations and warranties contained
in Article IV hereof are correct on and as of such day as
though made on and as of such date;
(ii) no event has occurred and is continuing, or
would result from such Advance, which constitutes an Event of
Default or which, with the giving of notice or the passage of
time, or both, would constitute an Event of Default;
(iii) on and as of such day, after giving effect
to such Advance, the Outstanding Facility Amount would not
exceed the Maximum Facility Amount;
(iv) no law or regulation shall prohibit, and no
order, judgment or decree of any Governmental Authority shall
prohibit or enjoin, the making of such Advances in accordance
with the provisions hereof; and
(v) the Cash Reserve Requirement shall be
satisfied.
32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. GENERAL REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of 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
Borrower of this Agreement and all Transaction Documents to be
delivered by it in connection herewith or therewith, including the
Borrower's use of the proceeds of Advances, are within the Borrower's
organizational powers, have been duly authorized by all necessary
organizational action, do not contravene (i) the Borrower's articles of
incorporation or bylaws; (ii) any law, rule or regulation applicable to
the Borrower; (iii) any contractual restriction binding on or affecting
the Borrower or its property; or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting the Borrower 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 delivered by the Borrower.
(c) No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority is required for
the due execution, delivery and performance by the Borrower of this
Agreement or any other Transaction Document to which it is a party,
except for the filing of certain UCC financing statements, all of which
financing statements have been duly filed and are in full force and
effect.
(d) This Agreement and each other Transaction Document to
which the Borrower is a party constitute the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms, subject to (i) applicable
bankruptcy, insolvency, moratorium, or other similar laws affecting the
rights of creditors; and (ii) general principals of equity, whether
such enforceability is considered in a proceeding in equity or at law.
(e) There is no pending or, to the knowledge of the
Borrower, threatened, action or proceeding affecting the Borrower
before any Governmental Authority that may have a Material Adverse
Effect. The Borrower is not in default with respect to any order of any
court, arbitrator or any other Governmental Authority.
33
(f) No proceeds of any Advances will be used by the
Borrower to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended,
(g) The Pledged Collateral shall, at all times, be owned
by the Borrower 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
Outstanding Facility Amount shall not exceed the Maximum Facility
Amount on such Business Day.
(i) No Valuation Report (to the extent that information
contained therein is supplied by the Borrower), information, exhibit,
financial statement, document, book, record or report furnished or to
be furnished by the Borrower to the Facility Agent in connection with
this Agreement is or will be inaccurate in any material respect as of
the date it is or shall be dated or (except as otherwise disclosed to
the Facility Agent in writing) as of the date so furnished, and no such
document contains or will contain any material misstatement of fact or
omits or shall omit to state a material fact necessary to make the
statements contained therein not misleading.
(j) The principal place of business and chief executive
office of the Borrower and the office where the Borrower keeps all the
Records are located at the address of the Borrower referred to in
Section 10.02 hereof or such other location as the Borrower shall have
given notice of to the Facility Agent pursuant to Section 5.13 hereof.
(k) The Borrower has no trade names, fictitious names,
assumed names or "doing business as" names or other names under which
it has done or is doing business.
(l) The Borrower is Solvent at the time of (and
immediately after) each "Advance" and each purchase of Eligible Loans
made by the Borrower.
(m) The Borrower is not an "investment company" or a
company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
(n) The Borrower has directed (or caused to be directed)
all Servicers to transmit Collections on the Financed Loans and the
other Pledged Collateral to the Trustee for deposit to the Collection
Account.
(o) All representations and warranties of the Borrower
set forth in the Transaction Documents to which it is a party are true
and correct in all material respects.
(p) Each Student Loan to be financed with the proceeds of
any Advance constitutes an Eligible Loan as of the date of such Advance
purchased from a Seller pursuant to a Student Loan Purchase Agreement.
34
SECTION 4.02. REPRESENTATIONS OF THE BORROWER REGARDING THE TRUSTEE'S
SECURITY INTEREST. The Borrower hereby represents and warrants for the benefit
of the Trustee and the Secured Creditors as follows:
(a) This Agreement creates a valid and continuing
security interest (as defined in the applicable Uniform Commercial Code
in effect in the State of Nevada) in the Pledged Collateral in favor of
the Trustee, which security interest is prior to all other liens,
charges, security interests, mortgages or other encumbrances, and is
enforceable as such as against creditors of and purchasers from the
Borrower.
(b) The Higher Education Act deems the Financed Loans to
constitute "accounts" within the meaning of the applicable UCC for
purposes of perfecting a security interest in the Financed Loans.
(c) The Borrower, by and through the Trustee as its
Eligible Lender, owns and has good and marketable title to the Financed
Loans free and clear of any Adverse Claim.
(d) The Borrower has caused the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security
interest in the Financed Loans granted to the Trustee hereunder.
(e) All executed copies of each Student Loan Note that
constitute or evidence the Financed Loans have been delivered to the
Trustee (or its agent or bailee pursuant to a Servicing Agreement or a
Custodian Agreement).
(f) Other than the security interest granted to the
Trustee pursuant to this Agreement, the Borrower has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed
any of the Financed Loans. The Borrower has not authorized the filing
of and is not aware of any financing statements against the Borrower
that include a description of collateral covering the Financed Loans
other than any financing statement relating to the security interest
granted to the Trustee hereunder or that has been terminated. The
Borrower is not aware of any judgment or tax lien filings against the
Borrower.
(g) The Borrower is a "registered organization" (as
defined in Section 9-102(a)(70) of the UCC) formed in the State of
Nevada and, for purposed of Article 9 of the UCC, the Borrower is
located in the State of Nevada.
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
SECTION 5.01. GENERAL COVENANTS.
(a) COMPLIANCE WITH LAWS; PRESERVATION OF CORPORATE
EXISTENCE. THE Borrower will comply in all material respects with all
applicable laws, rules, regulations and orders and preserve and
maintain its legal existence, and will preserve and maintain its
rights, franchises, qualifications and privileges in all material
respects.
35
(b) SALES, LIENS, ETC. Except as otherwise provided
herein, the Borrower will not (i) 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)
create or suffer to exist any Adverse Claim upon or with respect to any
of the Borrower's assets.
(C) GENERAL REPORTING REQUIREMENTS. The Borrower will
provide to the Facility Agent the following:
(i) as soon as available and in any event within
120 days after the end of each fiscal year of the Borrower, a
copy of the balance sheet of the Borrower and the related
statements of income, beneficial interest holders' (or
securityholders') equity and cash flows for such year, each
prepared in accordance with GAAP consistently applied and duly
certified by nationally recognized independent certified
public accountants selected by the Borrower;
(ii) as soon as possible and in any event within
three days after the occurrence of each Event of Default and
each event which, with the giving of notice or lapse of time
or both, would constitute an Event of Default, a statement of
the Borrower setting forth details of such Event of Default or
event and the action which the Borrower has taken and proposes
to take with respect thereto;
(iii) promptly following receipt thereof, to the
extent requested by the Facility Agent, copies of all
financial statements, settlement statements, portfolio and
other material reports, notices, disclosures, certificates and
other written material delivered or made available to the
Borrower by any Person pursuant to the terms of any
Transaction Document;
(iv) promptly following the Facility Agent's
request therefor, such other information respecting the
Financed Loans and the other Pledged Collateral or the
conditions or operations, financial or otherwise, of the
Borrower as the Facility Agent may from time to time
reasonably request;
(v) with respect to each Guarantor, promptly
after receipt thereof as made available to the Borrower after
request therefor, copies of any audited financial statements
of such Guarantor certified by an independent certified public
accounting firm and a written statement setting forth the
Trigger Rate of such Guarantor and the source of the
Borrower's representation thereof;
(vi) with respect to each Servicer and promptly
after receipt thereof after a good faith effort to obtain such
material is made by the Borrower, (A) copies of any annual
audited financial statements of such Servicer, certified by an
independent certified public accounting firm; (B) on an annual
basis within 10 days after receipt thereof, copies of SAS 70
reports for such Servicer, or, if not available, the annual
compliance audit for each Servicer required by Section
428(b)(l)(4) of the Higher Education Act; and (C) to the
extent not
36
included in the financial information provided pursuant to
clauses (A) and (B) above, such Servicer's net dollar loss for
the year due to servicing errors;
(vii) upon request, a Schedule of Purchased Loans;
(viii) as soon as available and in any event within
120 days after the end of each fiscal year of NELnet, Inc.,
copies of consolidated financial statements for it and its
consolidated subsidiaries 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
Borrower or any of its ERISA Affiliates files under ERISA with
the Internal Revenue Service, the Pension Benefit Guarantee
Corporation or the U.S. Department of Labor or which the
Borrower or any of its ERISA Affiliates receives from the
Pension Benefit Guarantee Corporation;
(x) immediately upon becoming aware of a
Servicer Event of Default, written notice thereof;
(xi) as soon as possible and in any event within
three Business Days of the Borrower's actual knowledge
thereof, written notice of (A) any litigation, investigation
or proceeding which may exist at any time which could have a
Material Adverse Effect; and (B) any material adverse
development in previously disclosed litigation, including in
each case, if known to the Borrower, any of the same against a
Servicer; and
(xii) promptly after the occurrence thereof,
written notice of changes in the Higher Education Act or any
other law of the United States that could have a Material
Adverse Effect or could materially and adversely affect (A)
the ability of a Servicer to perform its obligations under its
Servicing Agreement, or (B) the collectibility or
enforceability of a material amount of the Financed Loans, or
any Guarantee Agreement or Federal Reimbursement Contract with
respect to a material amount of Financed Loans.
(d) MERGER, ETC. The Borrower will not merge or
consolidate with, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter
acquired), or acquire all or substantially all of the assets or capital
stock or other ownership interest of any Person, other than, with
respect to asset dispositions, in connection herewith.
(e) NATURE OF BUSINESS. The Borrower will engage in no
business other than (i) purchases 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 Facility Agent.
37
(f) TRANSACTION DOCUMENTS. The Borrower (i) will take all
action necessary to perfect, protect and more fully evidence the
ownership interest of the Borrower and the security interest of the
Trustee in favor of the Secured Creditors in the Financed Loans and
Collections with respect thereto and in the other Pledged Collateral
and the Transaction Documents including, without limitation. (A) filing
and maintaining effective financing statements (Form UCC-1) in all
necessary or appropriate filing offices; (B) filing continuation
statements, amendments or assignments with respect thereto in such
filing offices; 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 Borrower will
do all things necessary to maintain its existence as a Nevada
corporation separate and apart from all Affiliates of the Borrower,
including, without limitation, (i) practicing and adhering to corporate
formalities, such as maintaining appropriate books and records; (ii)
maintaining two Persons who are Independent Directors; (iii) owning or
leasing pursuant to written leases all office furniture and equipment
necessary to operate its business; (iv) refraining from (A)
guaranteeing or otherwise becoming liable for any obligations of any of
its Affiliates, (B) having obligations guaranteed by its Affiliates,
(C) holding itself out as responsible for debts of any of its
Affiliates or for decisions or actions with respect to the affairs of
any of its Affiliates, and (D) being directly or indirectly named as a
direct or contingent beneficiary or loss payee on any insurance policy
of any Affiliate; (v) maintaining all of its deposit and other bank
accounts and all of its assets separate from those of any other Person;
(vi) maintaining all of its financial records separate and apart from
those of any other Person; (vii) compensating all its employees,
officers, directors, consultants and agents for services provided to it
by such Persons, or reimbursing any of its Affiliates in respect of
services provided to it by employees, officers, directors, consultants
and agents of such Affiliate, out of its own funds; (viii) accounting
for and managing all of its liabilities separately from those of any of
its Affiliates, including, without limitation, payment directly by the
Borrower of all payroll, accounting and other administrative expenses
and taxes; (ix) allocating, on an arm's-length basis, all shared
operating services, leases and expenses, including, without limitation,
those associated with the services of shared consultants and agents and
shared computer equipment and software; (x) refraining from paying
dividends or making distributions, loans or other advances to any of
its Affiliates more frequently than once during any calendar month and,
in each case, as duly authorized by its Directors and in accordance
with applicable law; (xi) refraining from filing or otherwise
initiating or supporting the filing of a motion in any bankruptcy or
other insolvency proceeding involving the Borrower or any other
Affiliate of the Borrower to substantively consolidate the assets and
liabilities of the Borrower with the assets and liabilities of any such
Person or any other Affiliate of the Borrower; (xii) maintaining
adequate capitalization in light of its business and purpose; and
(xiii) conducting all of its business (whether written or oral) solely
in its own name.
38
(h) TRANSACTIONS WITH AFFILIATES. The Borrower will not
enter into, or be a party to, any transaction with any of its
Affiliates, except (i) the transactions permitted or contemplated by
this Agreement (including the sale and purchase of Eligible Loans to or
from Affiliates); and (ii) other transactions (including, without
limitation, the lease of office space or computer equipment or software
by the Borrower to or from an Affiliate) (A) in the ordinary course of
business, (B) pursuant to the reasonable requirements of the Borrower's
business, (C) upon fair and reasonable terms that are no less favorable
to the Borrower than could be obtained in a comparable arm's-length
transaction with a Person not an Affiliate of the Borrower, and (D) not
inconsistent with the factual assumptions set forth in the opinion
letter issued as of the Closing Date by ▇▇▇▇▇ ▇▇▇▇ LLP to the Secured
Creditors relating to the issues of substantive consolidation.
(i) DEBT. Except as provided in the Borrower's articles
of incorporation, the Borrower will not incur any Debt other than Debt
arising hereunder. The Borrower 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 Facility Agent, the Borrower 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 the Indemnification Agreement, any Student Loan
Purchase Agreement, any Servicing Agreement, any Custodian
Agreement, any Financed Loan or any other instrument, document
or agreement included in the Pledged Collateral in any manner
that (A) may reduce the amount owing by the Obligor under a
Financed Loan, by a Servicer, or defer or extend the date
scheduled for the final payment thereof, except for extensions
of past-due Financed Loans entered into by a Servicer in
accordance with the Higher Education Act in order to maximize
Collections thereof; or (B) may permit or result in the
release of any portion of the Pledged Collateral;
(iii) take or consent to any other action that may
impair the rights of any Secured Creditor to any Pledged
Collateral or modify, in a manner adverse to any Secured
Creditor, the right of such Secured Creditor to demand or
receive payment under any of the Transaction Documents; or
(iv) take or consent to any other action that may
impair the interests of the Borrower or its assignees to any
Pledged Collateral or modify, in a manner adverse to the
Borrower or its assignees, the right of the Borrower and its
assignees to demand or receive payment under any of the
Transaction Documents.
(k) ERISA. The Borrower will not adopt, maintain,
contribute to or incur or assume any legal obligation with respect to
any Benefit Plan or Multiemployer Plan or permit any of its ERISA
Affiliates to do any of the foregoing.
39
(1) SERVICERS. The Borrower will not permit any Person
other than a Servicer to collect, service or administer the Financed
Loans.
(m) ELIGIBLE LOANS NOT ORIGINATED BY SELLERS. The
Borrower shall not purchase from a Seller pursuant to a Student Loan
Purchase Agreement any Eligible Loan that was originated by a Person
other than the applicable Seller unless the Borrower shall have taken
(or caused to be taken) all steps reasonably necessary to ensure that
(i) after giving effect to such purchase, the Borrower shall have
acquired all legal and beneficial ownership in such Financed Loan, free
and clear of any Adverse Claim; and (ii) that the Person that
originated such Eligible Loan (and any transferee thereof other than
the Seller) shall have received reasonable equivalent value for the
transfer of such Eligible Loan made by it.
SECTION 5.02. ACQUISITION, COLLECTION AND ASSIGNMENT OF STUDENT LOANS.
The Borrower shall acquire only Eligible Loans (or beneficial interests therein)
with proceeds of the Advances and shall diligently cause to be collected all
principal and interest payments on all the Financed Loans and all sums to which
the Borrower or Trustee is entitled pursuant to any Student Loan Purchase
Agreement, and all grants, subsidies, donations, Special Allowance Payments and
all defaulted payments Guaranteed by any Guarantor which relate to such Financed
Loans. The Borrower shall also make, or cause to be made by each Seller,
Servicer and Trustee, every effort to collect the Borrower's or such Seller's or
Servicer's or Trustee's claims for payment from the Department of Education or
any Guarantor as soon as possible, of all payments related to such Financed
Loans. The Borrower will assign or direct the assignment of such Financed Loans
for payment of guarantee benefits as required by applicable law and regulations.
The Borrower will comply with all United States and state statutes, rules and
regulations and any Guarantor's rules and regulations which apply to such
Financed Loans. The Borrower will not, and will not direct the Trustee to,
acquire any Eligible Loan (including a Participation Interest) for which it has
notice or knowledge (a) of any adverse claims, liens or encumbrances, (b) except
to the extent that a Financed Loan may be not more than 60 days delinquent, that
any Financed Loan is overdue or has been dishonored, (c) that any Student Loan
Note contains an unauthorized signature or has been altered, or (d) of any
defense against or claim to the Financed Loans on the part of any entity.
SECTION 5.03. ENFORCEMENT OF FINANCED LOANS. The Borrower shall cause
to be diligently enforced and taken all steps, actions and proceedings
reasonably necessary for the enforcement of all terms, covenants and conditions
of all Financed Loans and agreements in connection therewith, including the
prompt payment of all principal and interest payments and all other amounts due
the Borrower and Trustee, as applicable thereunder. The Borrower shall not
permit the release of the obligations of any Eligible Borrower under any
Financed Loan and shall at all times, to the extent permitted by law, cause to
be defended, enforced, preserved and protected the rights and privileges of the
Borrower, the Trustee and the Secured Creditors under or with respect to each
Financed Loan and agreement in connection therewith. The Borrower shall not
consent or agree to or permit any amendment or modification of any Financed Loan
or agreement in connection therewith which will in any manner materially
adversely affect the rights or security of the Trustee or the Secured Creditors
(with respect to the rights of the Secured Creditors, without the approval of
the Facility Agent, which approval shall not be unreasonably withheld). Nothing
in this Agreement shall be construed to prevent the Borrower
40
and Trustee, as applicable, from settling a default or curing a delinquency on
any Financed Loan on such terms as shall be permitted by law.
SECTION 5.04. ENFORCEMENT OF SERVICING AGREEMENTS. The Borrower shall
cause to be diligently enforced and taken all reasonable steps, actions and
proceedings necessary for the enforcement of all terms, covenants and conditions
of all Servicing Agreements, including the prompt payment of all principal and
interest payments and all other amounts due the Borrower or Trustee, as
applicable, thereunder, including all grants, subsidies, donations, Special
Allowance Payments and all defaulted payments Guaranteed by any Guarantor and/or
by the Department of Education which relate to any Financed Loans. The Borrower
shall not permit the release of the obligations of any Servicer under any
Servicing Agreement and shall at all times, to the extent permitted by law,
cause to be defended, enforced, preserved and protected the rights and
privileges of the Borrower and of the Trustee under or with respect to each
Servicing Agreement. The Borrower shall not consent or agree to or permit any
amendment or modification of any Servicing Agreement which will in any manner
materially adversely affect the rights or security of the Trustee and the
Secured Creditors (with respect to the rights of the Secured Creditors, without
the approval of the Facility Agent, which approval shall not be unreasonably
withheld), except (a) as required by the Higher Education Act; (b) solely for
the purpose of extending the term thereof or adding to the Financed Loans
serviced thereunder Eligible Loans financed under an indenture or similar
agreement other than this Agreement; and/or (c) in any other manner, if such
modification, amendment or supplement so made without the prior written consent
of the Facility Agent shall not be effective with respect to the servicing of
Financed Loans; provided, however, that the Facility Agent shall respond as
promptly as may be practicable after receipt by the Facility Agent of a request
of the Borrower for the Facility Agent's consent to any modification, amendment
or supplement of, or any waiver with respect to, any provision of any Servicing
Agreement.
SECTION 5.05. ENFORCEMENT OF STUDENT LOAN PURCHASE AGREEMENTS. The
Borrower shall cause to be diligently enforced and taken all reasonable steps,
actions and proceedings necessary for the enforcement of all terms, covenants
and conditions of all Student Loan Purchase Agreements. The Borrower shall not
permit the release of the obligations of any Seller under any Student Loan
Purchase Agreement and shall at all times, to the extent permitted by law, cause
to be defended, enforced, preserved and protected the rights and privileges of
the Borrower and of the Trustee under or with respect to each Student Loan
Purchase Agreement. The Borrower shall not consent or agree to or permit any
amendment or modification of any Student Loan Purchase Agreement which will in
any manner materially adversely affect the rights or security of the Trustee and
the Secured Creditors (with respect to the rights of the Secured Creditors,
without the approval of the Facility Agent, which approval shall not be
unreasonably withheld); provided, however, that the Facility Agent shall respond
as promptly as may be practicable after receipt by the Facility Agent of a
request of the Borrower for the Facility Agent's consent to any modification,
amendment or supplement of, or any waiver with respect to, any provision of any
Student Loan Purchase Agreement.
SECTION 5.06. ENFORCEMENT OF INDEMNIFICATION AGREEMENT. The Borrower
shall cause to be diligently enforced and taken all reasonable steps, actions
and proceedings necessary for the enforcement of all terms, covenants and
conditions of the Indemnification Agreement. The Borrower shall not permit the
release of the obligations of NELnet under the Indemnification
41
Agreement and shall at all times, to the extent permitted by law, cause to be
defended, enforced, preserved and protected the rights and privileges of the
Borrower and of the Trustee under or with respect to the Indemnification
Agreement. The Borrower shall not consent or agree to or permit any amendment or
modification of the Indemnification Agreement which will in any manner
materially adversely affect the rights or security of the Trustee and the
Secured Creditors (with respect to the rights of the Secured Creditors, without
the approval of the Facility Agent, which approval shall not be unreasonably
withheld); provided, however, that the Facility Agent shall respond as promptly
as may be practicable after receipt by the Facility Agent of a request of the
Borrower for the Facility Agent's consent to any modification, amendment or
supplement of, or any waiver with respect to, any provision of the
Indemnification Agreement.
SECTION 5.07. FINANCED LOANS SERVICED BY GREAT LAKE SERVICING
CORPORATION. The outstanding Principal Balance of Financed Loans serviced by
Great Lakes Educational Loan Services, Inc. shall not exceed 10% of the
aggregate outstanding Principal Balance of all Financed Loans.
SECTION 5.08. ADMINISTRATION AND COLLECTION OF FINANCED LOANS. All
Financed Loans shall be administered and collected either by the Borrower or by
a Servicer in a competent, diligent and orderly fashion and in accordance with
all requirements of the Higher Education Act, the Department of Education, this
Agreement, the Federal Reinsurance Agreements, the Trustee Guarantee Agreements
and any other guarantee agreement issued by any Guarantor to the Trustee.
SECTION 5.09. AMENDMENT OF FORM OF STUDENT LOAN PURCHASE AGREEMENT. The
Borrower shall notify the Trustee and the Facility Agent in writing of any
proposed material amendments to the form of Student Loan Purchase Agreement. No
such amendment shall become effective unless and until the Facility Agent has
consented in writing thereto (which consent shall not be unreasonably withheld).
SECTION 5.10. CUSTODIAN. Each Custodian shall hold the Student Loan
Notes in a safe and secure manner for purposes of perfecting the security
interest in and lien on such Financed Loans as herein provided. The Student Loan
Notes shall be held in a limited access vault facility with a two-hour fire
rating and shall be assigned a designation which is distinct from other
promissory notes held to secure any other financings of the Borrower, if any,
for which the Trustee acts in a fiduciary capacity.
SECTION 5.11. PREPAYMENTS AND REFINANCING. The Borrower or its
Affiliates has entered into, and intend to enter into in the future, upon 7
days' prior written notice to the Trustee and the Facility Agent, agreements
pursuant to which the Borrower or an Affiliate may borrow moneys thereunder, and
pledge Financed Loans or its interest therein (previously pledged hereunder) to
secure the same, or sell Financed Loans or its interest therein (previously
pledged hereunder), none of which agreements constitute or will constitute an
Adverse Claim on the Financed Loans continuing to be Pledged Collateral.
Notwithstanding any provision to the contrary herein, if and to the extent the
Borrower or an Affiliate so borrows money or sells Financed Loans or its
interest therein, upon either (a) payment in full of, or (b) deposit of cash
into a segregated account maintained with the Trustee for the sole benefit of
the Secured Creditors, and in which the Trustee is granted a valid and perfected
first priority security interest
42
subject to no other lien, claim or encumbrance in an amount equal to, all
Advances and other Obligations relating to such Financed Loans and the Pledged
Collateral or any interest therein affected by such action (together with all
accrued and unpaid Trustee Fees, Program Availability Fees, Program Usage Fees,
Alternate Interest Amounts and Liquidity Interest Amounts thereon together with
all Trustee Fees, Program Availability Fees, Program Usage Fees, Alternate
Interest Amounts and Liquidity Interest Amounts which would accrue through the
end of the related Interest Periods) such Financed Loans shall no longer be
security for the Advances. Notwithstanding anything to the contrary contained
herein, without the prior written consent of the Facility Agent, in no event
shall any such payments occur (i) unless the Borrower has provided the Facility
Agent with a Valuation Report acceptable to the Facility Agent and dated not
more than three Business Days prior to proposed prepayment date, (ii) if, after
giving effect to such repayment and the release of the Trustee's security
interest in or removal from the Pledged Collateral of the related Financed
Loans, an Event of Default (or an event that with the passage of time or the
giving of notice, or both, would constitute an Event of Default) or the
requirements giving rise to a collateral call under any provision of this
Agreement would exist or result therefrom; and (iii) on a day other than a
Settlement Date.
SECTION 5.12. PERIODIC REPORTING.
(a) The Borrower will cause the Valuation Agent to
deliver to the Portfolio Administrator and the Facility Agent:
(i) not later than each Valuation Date, a
Valuation Report setting forth, among other things, the Loan
Valuation Percentage; and
(ii) not later than four Business Days prior to
each Advance (other than a Rollover Advance or a Special
Advance), an Advance Percentage Calculation Report.
(b) The Borrower will cause the Portfolio Administrator
to deliver to the Valuation Agent and the Facility Agent, not later
than each Valuation Date, an Asset Coverage Report setting forth the
Aggregate Market Value, the Liabilities and the Asset Coverage Ratio.
(c) The Borrower will cause to be provided to the
Facility Agent and the Valuation Agent, (i) not later than the third
Business Day prior to each Calculation Date, a summary of each servicer
report setting forth the material characteristics of the Financed
Loans, all as of the last day of the immediately preceding calendar
month; and (ii) not later than one Business Day prior to each
Calculation Date, (A) the balances in the Collection Account (including
a breakout of principal and interest received with respect to the
Financed Loans) and the Cash Reserve Account; and (B) the Liabilities,
all as of the last day of the immediately preceding calendar month.
SECTION 5.13. UCC MATTERS; PROTECTION AND PERFECTION OF PLEDGED
COLLATERAL; DELIVERY OF DOCUMENTS. The Borrower will keep its principal place of
business and chief executive office, and the office where it keeps the Records,
at the address of the Borrower referred to in Section 4.01(j) hereof or, upon
30 days' prior written notice to the Trustee and the
43
Facility Agent, at such other locations within the United States where all
actions reasonably requested by the Facility Agent to protect and perfect the
interest of the Borrower and the Secured Creditors in the Pledged Collateral
have been taken and completed. The Borrower will not make any change to its name
or use any tradenames, fictitious names, assumed names, "doing business as"
names or other names, unless prior to the effective date of any such name change
or use, the Borrower delivers to the Facility Agent such executed financing
statements as the Facility Agent may request to reflect such name change or use,
together with such other documents and instruments as the Facility Agent may
request in connection therewith. The Borrower agrees that from time to time, at
its expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that the Facility Agent may reasonably
request in order to perfect, protect or more fully evidence the Trustee's
interest in the Pledged Collateral for the benefit of the Secured Creditors, or
to enable the Trustee or the Secured Creditors to exercise or enforce any of
their respective rights hereunder. Without limiting the generality of the
foregoing, the Borrower will upon the request of the Facility Agent: (a) execute
and file such financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be necessary
or appropriate or as the Facility Agent may request, and (b) ▇▇▇▇ its master
data processing records evidencing such Pledged Collateral with a legend
acceptable to the Facility Agent, evidencing that the Trustee, for the benefit
of the Secured Creditors, has acquired an interest therein as provided in this
Agreement. The Borrower hereby authorizes the Facility Agent, the Trustee, or
any Secured Creditor on behalf of the Borrower, 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 Borrower 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 Borrower fails to perform any of its agreements or
obligations under this Section, the Facility Agent or any Secured Creditor may
(but shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Facility Agent or such Secured
Creditor incurred in connection therewith shall be payable by the Borrower upon
the Facility Agent's or such Secured Creditor's demand therefor. For purposes of
enabling the Facility Agent, any such Secured Creditor and the Trustee to
exercise their respective rights described in the preceding sentence and
elsewhere in this Agreement, the Borrower hereby authorizes, and irrevocably
grants a power of attorney to, the Facility Agent, the Secured Creditors, the
Trustee and their respective successors and assigns to take any and all steps in
the Borrower's name and on behalf of the Borrower necessary or desirable, in the
determination of the Facility Agent, the Secured Creditors or the Trustee, as
the case may be, to collect all amounts due under any and all Financed Loans and
other Pledged Collateral, including, without limitation, endorsing the
Borrower's name on checks and other instruments representing Collections and
enforcing such Financed Loans and other Pledged Collateral.
SECTION 5.14. OBLIGATIONS OF THE BORROWER WITH RESPECT TO PLEDGED
COLLATERAL. The Borrower will (a) at its expense, regardless of any exercise by
any Secured Creditor of its rights hereunder, timely and fully perform and
comply with all provisions, covenants and other promises required to be observed
by it under the Transaction Documents included in the Pledged Collateral to the
same extent as if Pledged Collateral had not been pledged hereunder; and (b) pay
when due any taxes, including without limitation, sales and excise taxes,
payable in connection with the Pledged Collateral. In no event shall any Secured
Creditor have any
44
obligation or liability with respect to any Financed Loans or other instrument
document or agreement included in the Pledged Collateral, nor shall any of them
be obligated to perform any of the obligations of the Borrower or any of its
Affiliates thereunder. The Borrower will timely and fully comply in all respects
with each Transaction Document.
SECTION 5.15. COLLATERAL CALL. The Borrower shall maintain at all times
the Minimum Asset Coverage Requirement. If the Borrower is notified by the
Valuation Agent (with a copy to the Trustee) that the Asset Coverage Ratio is
below the Minimum Asset Coverage Requirement, the Borrower shall deposit cash,
Eligible Loans (valued at no greater than the aggregate Principal Balance
thereon) or Permitted Investments, within three Business Days, or such other
period as agreed to by the Facility Agent in writing, of receipt of notice from
the Valuation Agent, in the Collection Account or the Pledged Collateral, as
applicable, the amount specified by the Valuation Agent as necessary to meet the
Minimum Asset Coverage Requirement. If the Borrower is either unable or
unwilling to deposit such funds, the Facility Agent may declare a Termination
Date to have occurred.
SECTION 5.16. GUARANTOR LIMITATIONS. The Borrower shall not permit any
Financed Loan to be guaranteed by any guaranty agency or entity other than (a)
those specifically named in the definition of the term "Trustee Guarantee
Agreements" in Section 1.01 hereof or (b) any other guaranty agency or entity
specifically approved as a Guarantor by the Facility Agent in advance in
writing.
SECTION 5.17. COVENANTS OF THE BORROWER REGARDING THE TRUSTEE'S
SECURITY INTEREST. The Borrower hereby covenants for the benefit of the Trustee
and the Secured Creditors as follows:
(a) The Trustee shall not waive any of the
representations and warranties set forth in Section 4.02 hereof.
(b) The Borrower shall take all steps necessary, and
shall cause each Servicer to take all steps necessary and appropriate,
to maintain the perfection and priority of the Trustee's security
interest in the Financed Loans.
ARTICLE VI
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
(a) the Borrower fails to pay any of its Obligations
under this Agreement or any of the other Transaction Documents when
such Obligations are due or are declared due and such failure shall
remain unremedied for one Business Day; or
(b) any representation or warranty made or deemed to be
made by the Borrower (or any of its officers) under or in connection
with this Agreement or any other Transaction Document, or other
information or report delivered pursuant hereto or thereto shall prove
to have been false or incorrect in any material respect when made; or
45
(c) the Borrower shall fail to perform or observe any
other term, covenant or agreement contained in any Transaction Document
on its part to be performed or observed (other than in Section 2.06 or
5.15 hereof) and any such failure shall remain unremedied for three
Business Days after written notice thereof shall have been received; or
(d) the Trustee, for the benefit of the Secured
Creditors, shall, for any reason, cease to have a valid and perfected
first priority security interest in any of the Pledged Collateral or
the Borrower shall, for any reason, cease to have a valid and perfected
first priority ownership interest in each Financed Loan and Collections
with respect thereto; or
(e) an Event of Bankruptcy shall have occurred with
respect to the Borrower; or
(f) entry of a judgment or judgments in the aggregate in
excess of $100,000 against the Borrower which are not (i) stayed,
bonded, vacated, paid or discharged within 30 days after entry; or (ii)
fully covered by insurance as to which the insurance carrier has
acknowledged coverage to the Borrower in writing within 30 days after
entry; or
(g) (i) any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings (whether or not existing on the date of execution hereof)
not disclosed in writing by the Borrower to the Facility Agent prior to
the date of execution and delivery of this Agreement is pending against
the Borrower or an Affiliate thereof; or (ii) any material development
not so disclosed has occurred in any litigation (including, without
limitation, derivative actions), arbitration proceedings or
governmental proceedings so disclosed, which, in the case of clause (i)
or (ii) above, in the opinion of the Facility Agent, has a Material
Adverse Effect; or
(h) the Internal Revenue Service shall file notice of a
lien pursuant to Section 6323 of the Internal Revenue Code with regard
to any of the assets of the Borrower and such lien shall not have been
released within 60 days, or the Pension Benefit Guarantee Corporation
shall, or shall indicate its intention to, file notice of a lien
pursuant to Section 4068 of the Employee Retirement Income Security Act
of 1974 with regard to any of the assets of the Borrower or any of its
Affiliates and such lien shall not have been released within 60 days;
or
(i) a Servicer Event of Default shall have occurred or
any Servicing Agreement shall not be in full force and effect for any
reason, and, in either case, such Servicer or Servicing Agreement, as
the case may be, shall not be replaced by a Servicer or a Servicing
Agreement, as the case may be, acceptable to the Facility Agent within
60 days of such event; provided, however, the foregoing event shall not
be an "Event of Default" hereunder if such Servicer Event of Default
arises under a Servicing Agreement with a Servicer that is not an
Affiliate of the Seller and within the 30 days of the occurrence of
such event, all Financed Loans then serviced by such Servicer are
released from the Pledged Collateral in accordance with the terms of
this Agreement; or
46
(j) the Borrower shall fail to perform or observe the
covenants set forth in Section 2.06 or 5.15 hereof; or
(k) the occurrence of an event or circumstance that has a
Material Adverse Effect; or
(1) (i) one or more Liquidity Advances remain unpaid to
the Liquidity Facility Providers for 180 days after any drawing by the
Lender under the Liquidity Agreement, (ii) any Credit Support Advance
(including any Rollover Advances thereof) remains funded by a Credit
Support Provider for 180 days after such Credit Support. Advance is
first made or (iii) any Regular Bank Advance (including a Rollover
Advance thereof) remains funded by the Alternate Lender for 180 days
after such Regular Bank Advance is first made; or
(m) the tangible book value of the assets (excluding
provisions for "good will") on a going concern basis of NELnet and its
subsidiaries, on a consolidated basis, does not exceed the total amount
of the liabilities of NELnet and its subsidiaries, on a consolidated
basis, by at least US $30,000,000; or
(n) NELnet merges or consolidates its assets with any
other entity, or permits any subsidiary to merge or consolidate its
assets with any other entity, and such consolidated entity neither
affirms all of the Borrower's obligations under this Agreement nor
demonstrates to the Facility Agent that, after giving effect to such
merger or consolidation, the tangible book value of the assets
(excluding provisions for "good will") on a going concern basis of the
consolidated entity and its subsidiaries, on a consolidated basis,
exceeds the total amount of the liabilities of the consolidated entity
and its subsidiaries, on a consolidated basis, by at least US
$30,000,000; or
(o) NELnet fails to perform any of its obligations under
the Indemnification Agreement; or
(p) information in any of the reports described in
Exhibits C, D, E or F hereto or in the reports described in the
Valuation Agent Agreement, shall prove to have been false or incorrect
in any material respect and such false or incorrect information shall
remain uncorrected for three Business Days after written notice thereof
shall have been received;
then, and in any such event, the Facility Agent may, by notice to the Borrower
and the Trustee, declare the Termination Date to have occurred, whereupon all of
the Obligations shall become immediately due and payable, except that, in the
case of any event described in subsection (e) above, the Termination Date shall
be deemed to have occurred automatically upon the occurrence of such event and
all of the Obligations shall automatically become and be immediately due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower. Upon any such declaration or
automatic occurrence, the Trustee and the Secured Creditors shall have, in
addition to all other rights and remedies under this Agreement or otherwise, all
other rights and remedies provided to a secured party under the UCC of the
applicable jurisdiction and other applicable laws, which
47
rights shall be cumulative. The rights and remedies of a secured party which may
be exercised by the Trustee and/or the Secured Creditors pursuant to this
Article shall include, without limitation, the right, without notice except as
specified below, to solicit and accept bids for and sell the Pledged Collateral
or any part thereof in one or more parcels at a public or private sale, at any
exchange, broker's board or at any of the Trustee's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the Trustee
or the Secured Creditors may deem commercially reasonable. Any sale or transfer
by the Trustee and/or the Secured Creditors of Financed Loans shall only be made
to an Eligible Lender. The Borrower agrees that, to the extent notice of sale
shall be required by law, 10 Business Days' notice to the Borrower of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification and that it shall be commercially
reasonable for the Trustee to sell the Pledged Collateral to an Eligible Lender
on an "as is" basis, without representation or warranty of any kind. The Trustee
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given and may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Trustee shall be deemed to have notice of an Event of Default
only upon a Corporate Trust Officer of the Trustee being notified, in writing,
by the Borrower, the Facility Agent or a Secured Creditor that such events have
occurred. The Trustee shall be paid its outstanding Trustee Fees prior to the
distribution of any moneys received from the exercise of any remedies pursuant
to this Article.
ARTICLE VII
TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUST. The Trustee hereby accepts the
trusts imposed upon it by this Agreement, and agrees to perform said trusts, but
only upon and subject to the following terms and conditions:
(a) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such
duties and only such duties as are specifically set forth in
this Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
but in the case of any such certificates or opinions which by
any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform as
to form with the requirements of this Agreement and whether or
not they contain the statements required under this Agreement.
(b) In case an Event of Default has occurred and is
continuing, the Trustee, in exercising the rights and powers vested in
it by this Agreement, shall use the same degree
48
of care and skill in their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(c) No provision of this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur any
liability or to institute or defend any suit in respect hereof in the
performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, unless adequately indemnified to its
satisfaction.
(d) Whether or not herein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section.
SECTION 7.02. TRUSTEE'S RIGHT TO RELIANCE. The Trustee shall be
protected in acting upon any notice, resolution, request, consent, order,
certificate, report, servicer's report appraisal, opinion or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee may consult with experts and with
counsel (who may be counsel for the Borrower, the Facility Agent or the
Trustee), and the opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered, and in
respect of any determination made by it hereunder, including payment of moneys
out of any fund or account, in good faith and in accordance with the opinion of
such counsel.
Whenever in the administration hereof the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering, or
omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
a certificate signed by an officer of the Borrower, the Portfolio Administrator,
the Facility Agent or any Secured Creditor.
The Trustee shall not be liable for any action taken, suffered, or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it hereby; provided, however, that
the Trustee shall be liable for its negligence or willful misconduct in taking
such action.
To the extent otherwise permitted by the terms of this Agreement, the
Trustee is authorized, to sell, assign, transfer, convey, or repurchase Financed
Loans in accordance with a request of the Borrower, the Facility Agent or any
Secured Creditor, provided that no such Financed Loan may be sold, assigned,
transferred, or conveyed to any Person who is not an Eligible Lender. The
Trustee is further authorized to enter into agreements with other Persons, in
its capacity as Trustee, in order to carry out or implement the terms and
provisions of this Agreement.
SECTION 7.03. COMPENSATION OF TRUSTEE. The Borrower shall pay to the
Trustee from time to time pursuant to Section 2.05(c)(v) hereof reasonable
compensation for all services rendered by it hereunder, as set forth in the
letter agreement dated February 1, 2002, and also all its reasonable fees,
expenses, charges, and other disbursements and those of its attorneys, agents,
and employees incurred in and about the administration and execution of the
trusts hereby created. The Borrower further agrees to indemnify and hold the
Trustee harmless against any
49
liability which it may incur in the exercise or performance of its powers and
duties hereunder. The Trustee may not change the amount of its annual
compensation without giving the Borrower at least 90 days' written notice prior
to the beginning of a calendar year and without the written consent of the
Facility Agent.
SECTION 7.04. RESIGNATION OF TRUSTEE. The Trustee and any successor to
the Trustee may resign and be discharged from the trust created by this
Agreement by giving to the Borrower and the Facility Agent notice in writing
which notice shall specify the date on which such resignation is to take effect;
provided, however, that such resignation shall only take effect on the day
specified in such notice if a successor Trustee shall have been appointed
pursuant to Section 7.06 hereof (and is qualified to be the Trustee under the
requirements of Section 7.06 hereof). If no successor Trustee has been appointed
by the date specified or within a period of 90 days from the receipt of the
notice by the Borrower and the Facility Agent, whichever period is the longer,
the Trustee may (a) appoint a temporary successor Trustee having the
qualifications provided in Section 7.06 hereof; or (b) request a court of
competent jurisdiction to (i) require the Borrower to appoint a successor, as
provided in Section 7.06 hereof, within three days of the receipt of citation or
notice by the court; or (ii) appoint a Trustee having the qualifications
provided in Section 7.06 hereof. In no event may the resignation of the Trustee
be effective until a qualified successor Trustee shall have been selected and
appointed. In the event a temporary successor Trustee is appointed pursuant to
(a) above, the Borrower may remove such temporary successor Trustee and appoint
a successor thereto pursuant to Section 7.06 hereof.
SECTION 7.05. REMOVAL OF TRUSTEE. The Trustee or any successor Trustee
may be removed (a) by the Borrower for cause or upon the sale or other
disposition of the Trustee or its trust functions or (b) by the Borrower without
cause so long as no Event of Default exists or has existed within the last 90
days, upon payment to the Trustee so removed of all money then due to it
hereunder and appointment of a successor thereto by the Borrower and acceptance
thereof by said successor.
In the event a Trustee (or successor Trustee) is removed, by any person
or for any reason permitted hereunder, such removal shall not become effective
until the successor Trustee has accepted appointment as such.
SECTION 7.06. SUCCESSOR TRUSTEE. In case at any time the Trustee or any
successor Trustee shall resign, be dissolved, cease to be an "eligible lender"
as defined in the Higher Education Act, or otherwise shall be disqualified to
act or be incapable of acting, or in case control of the Trustee or of any
successor Trustee or of its officers shall be taken over by any public officer
or officers, a successor Trustee may be appointed by the Borrower by an
instrument in writing duly authorized by resolution. In the case of any such
appointment by the Borrower of a successor to the Trustee, the Borrower shall
forthwith cause notice thereof to the Facility Agent.
Every successor Trustee appointed by the Borrower shall be a bank or
trust company in good standing, organized and doing business under the laws of
the United States or of a state therein, which has a reported capital and
surplus of not less than $50,000,000, be authorized
50
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 7.07. MANNER OF VESTING TITLE IN TRUSTEE. Any successor Trustee
appointed hereunder shall execute, acknowledge, and deliver to its predecessor
Trustee, and also to the Borrower and the Facility Agent, an instrument
accepting such appointment hereunder, and thereupon such successor Trustee,
without any further act, deed, or conveyance shall become fully vested with all
the estate, properties, rights, powers, trusts, duties, and obligations of its
predecessors in trust hereunder (except that the predecessor Trustee shall
continue to have the benefits to indemnification hereunder together with the
successor Trustee), with like effect as if originally named as Trustee herein;
but the Trustee ceasing to act shall nevertheless, on the written request of the
Borrower, or an authorized officer of the successor Trustee, execute,
acknowledge, and deliver such instruments of conveyance and further assurance
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in such successor Trustee all the right, title,
and interest of the Trustee which it succeeds, in and to the Pledged Collateral
and such rights, powers, trusts, duties, and obligations, and the Trustee
ceasing to act also, upon like request, pay over, assign, and deliver to the
successor Trustee any money or other property or rights subject to the lien of
this Agreement, including any pledged securities which may then be in its
possession. Should any deed or instrument in writing from the Borrower be
required by the successor Trustee for more fully and certainly vesting in and
confirming to such new Trustee such estate, properties, rights, powers, and
duties, any and all such deeds and instruments in writing shall on request be
executed, acknowledged and delivered by the Borrower.
SECTION 7.08. CUSTODIAN AGREEMENT. The Trustee acknowledges the receipt
of copies of the Custodian Agreements attached as Exhibit G hereto.
SECTION 7.09. TRUSTEE COVENANTS WITH RESPECT TO "ELIGIBLE LENDER"
STATUS. The Trustee covenants as follows:
(a) the Trustee represents and warrants that it satisfies
the requirements to be an "eligible lender" as that term is defined in
the Higher Education Act and covenants that it will remain an "eligible
lender" so long as the Trustee remains Trustee under this Agreement;
provided, however, that the Trustee shall have no responsibility or
liability hereunder if it fails to remain as an "eligible lender" as a
result of the actions or inactions of the Borrower or any Servicer; and
(b) the Trustee shall take such actions, but only such
actions, with respect to being an "eligible lender" as shall be
reasonably requested by the Borrower; such actions do not include
taking steps or instituting suits, actions or proceedings necessary or
appropriate for the enforcement of all terms, covenants and conditions
of all Financed Loans and agreements in connection therewith, including
the prompt payment of all principal and interest payments and all other
amounts due thereunder, for which the Borrower is solely responsible.
SECTION 7.10. TRUSTEE'S STATUS AS AN "ELIGIBLE LENDER". For the
purposes of this Agreement, all documents, agreements, understandings and
arrangements relating to this
51
Agreement that are executed by the Trustee have been executed by the Trustee
with the understanding that it may be deemed to be an "eligible lender" under
the Higher Education Act. The Borrower hereby acknowledges the fact that the
Trustee may be deemed an "eligible lender" under the Higher Education Act and
thus may be subject to certain liabilities because of such status and that the
Trustee is willing to accept the status of "eligible lender" hereunder as an
accommodation to the Borrower, and the Borrower hereby agrees that it will
indemnify and hold harmless the Trustee and its officers, directors, employees
and agents for any and all liability which may be incurred because of Trustee's
status as an "eligible lender" or because of the Trustee's entering into this
Agreement or any of the other Transaction Documents that results from the
actions or inactions of the Borrower or any Servicer. The Borrower agrees that
it will not seek recourse or commence any action against the Trustee or its
officers, directors, employees or agents or any of their personal assets for the
performance or payment of any obligation under the Higher Education Act.
ARTICLE VIII
INDEMNIFICATION
Without limiting any other rights which the Trustee, the Facility
Agent, the Lender, the Alternate Lender, the Liquidity Facility Providers, the
Credit Support Providers or any of their respective Affiliates may have
hereunder or under applicable law, and notwithstanding any limitation on
recourse to the Borrower set forth in this Agreement, any of the other
Transaction Documents, the Liquidity Agreement or the Credit Support Agreement,
the Borrower hereby agrees to indemnify the Trustee, the Facility Agent, the
Lender, the Alternate Lender, the Liquidity Facility Providers, the Credit
Support Providers and each of their respective officers, directors, employees,
agents, attorneys-in-fact and Affiliates from and against any and all damages,
losses, claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or as a result of this Agreement, the Liquidity Agreement, the
Credit Support Agreement or the Pledged Collateral, excluding, however,
Indemnified Amounts to the extent resulting from the gross negligence or willful
misconduct of the Person seeking indemnification. Without limiting the
foregoing, the Borrower shall indemnify the Trustee, the Facility Agent, the
Lender, the Alternate Lender, the Liquidity Facility Providers, the Credit
Support Providers and each of their respective officers, directors, employees,
agents, attorneys-in-fact and Affiliates for Indemnified Amounts relating to or
resulting from:
(a) any Financed Loan treated as or represented by the
Borrower to be an Eligible Loan which is not at the applicable time an
Eligible Loan;
(b) any representation or warranty made or deemed made by
the Borrower, any Servicer, NELnet or any of their respective officers
under or in connection with this Agreement or any other Transaction
Document, which shall have been false or incorrect when made or deemed
made or delivered;
(c) the failure by the Borrower or the Servicer to comply
with any term, provision or covenant contained in this Agreement or any
other Transaction Document,
52
or with any applicable law, rule or regulation with respect to any
Pledged Collateral, or the nonconformity of any Financed Loan or any
other Pledged Collateral with any such applicable law, rule or
regulation;
(d) the failure to vest and maintain vested in the
Trustee for the benefit of the Secured Creditors or to transfer to the
Trustee, a first priority security interest in any of the Pledged
Collateral, free and clear of any Adverse Claim (except as otherwise
provided herein);
(e) the failure to file, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Pledged Collateral;
(f) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Financed Loan or any Servicer to the payment of any obligation
otherwise owing under a Transaction Document (including, without
limitation, a defense based on such Financed Loan or obligation or the
related Transaction Document not being a legal, valid and binding
obligation of such Person enforceable against it in accordance with its
terms);
(g) any failure of the Borrower to perform its duties or
obligations in accordance with the provisions of this Agreement or any
other Transaction Document or any failure by the Borrower to perform
its respective duties in respect of the Financed Loans;
(h) any breach of contract by the Borrower or any claim
or action of whatever sort arising out of or in connection with any
Transaction Document or the transactions contemplated thereby;
(i) the failure to pay when due any taxes, including
without limitation, sales, excise or personal property taxes payable in
connection with the Pledged Collateral;
(j) any repayment by the Lender, the Alternate Lender,
the Liquidity Facility Providers or the Credit Support Providers of any
amount previously distributed in payment of Advances or payment of
Program Availability Fees, Program Usage Fees, Alternate Interest
Amounts and Liquidity Interest Amounts or any other amount due
hereunder, in each case which amount any such Lender, the Alternate
Lender, the Liquidity Facility Providers or the Credit Support
Providers believes in good faith is required to be repaid;
(k) the commingling by the Borrower or any of its
Affiliates of Collections at any time with other funds;
(l) any investigation, litigation or proceeding expressly
related to this Agreement, the Liquidity Agreement, the Credit Support
Agreement or any other Transaction Document or the use of proceeds of
Advances or the Pledged Collateral or in respect of any Financed Loan;
53
(m) any failure by the Borrower to give reasonably
equivalent value to any Seller in consideration for the Financed Loans
sold, or deemed to have been sold, to it by such Seller, or any attempt
by any Person to void or otherwise avoid any such transaction under any
statutory provision or common law or equitable action, including,
without limitation, any provision of the Bankruptcy Code;
(n) any failure of the Borrower or any of its agents or
representatives to remit to the Trustee, Collections of Financed Loans
and other Pledged Collateral remitted to the Borrower or any such agent
or representative; or
(o) any failure by NELnet to perform its obligations in
accordance with the provisions of the Indemnification Agreement.
Any amounts subject to the indemnification provisions of this Article
shall be paid by the Borrower to the Trustee, the Facility Agent, the Lender,
the Alternate Lender, the Liquidity Facility Providers, the Credit Support
Providers or their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates, as the case may be, for the benefit of the
applicable payee, within two Business Days following written demand therefor.
ARTICLE IX
FACILITY AGENT
SECTION 9.01. AUTHORIZATION AND ACTION OF FACILITY AGENT. The Lender
and the Alternate Lender hereby accept the appointment of and authorize the
Facility Agent to take such action as agent on their behalf and to exercise such
powers as are delegated to the Facility Agent by the terms hereof, together with
such powers as are reasonably incidental thereto. The Facility Agent reserves
the right, in its sole discretion, to take any actions and exercise any rights
or remedies under this Agreement and any related agreements and documents. The
Facility Agent agrees to give to the Lender and the Alternate Lender prompt
notice of each notice and determination and a copy of each certificate and
report (if such notice, report, determination, or certificate is not given by
the applicable Person to the Lender or the Alternate Lender) given to it by the
Borrower, any Seller, any Servicer, the Valuation Agent, or the Trustee,
pursuant to the terms of this Agreement. Except for actions which the Facility
Agent is expressly required to take pursuant to this Agreement, as the case may
be, the Facility Agent shall not be required to take any action which exposes
the Facility Agent to personal liability or which is contrary to applicable law
unless the Facility Agent shall receive further assurances to its satisfaction
from the Lender and the Alternate Lender that it will be indemnified against any
and all liability and expense which may be incurred in taking or continuing to
take such action.
SECTION 9.02. AGENCY TERMINATION. Subject to Section 9.06 hereof, the
appointment and authority of the Facility Agent hereunder shall terminate upon
the payment to (a) the Lender and the Alternate Lender of all amounts owing to
Lender and the Alternate Lender hereunder and under the Advances and (b) the
Facility Agent of all amounts due hereunder and under the Advances.
54
SECTION 9.03. FACILITY AGENT'S RELIANCE, ETC. Neither the Facility
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it as Facility Agent under or in
connection with this Agreement or any related agreement or document, except for
its own gross negligence or willful misconduct. Without limiting the foregoing,
the Facility Agent: (a) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (b) makes no warranty or
representation to the Lender, the Alternate Lender, any Liquidity Facility
Provider or any Credit Support Provider and shall not be responsible to the
Lender, the Alternate Lender, any Liquidity Facility Provider or any Credit
Support Provider for any statements, warranties or representations made by the
Borrower, any Seller, any Servicer, any Guarantor, NELnet or the Valuation Agent
in connection with this Agreement or any other Transaction Document; (c) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or any other
Transaction Document on the part of the Borrower, any Servicer, any Seller, any
Guarantor, NELnet or the Valuation Agent or to inspect the property (including
the books and records) of the Borrower, any Servicer, any Seller, any Guarantor,
NELnet or the Valuation Agent; (d) shall not be responsible to the Lender, the
Alternate Lender, any Liquidity Facility Provider or any Credit Support
Provider, as the case may be, for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (e) shall incur no
liability under or in respect of this Agreement by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telex) believed by it in good faith to be genuine and
signed or sent by the proper party or parties.
SECTION 9.04. FACILITY AGENT AND AFFILIATES. The Facility Agent and its
Affiliates may generally engage in any kind of business with the Borrower, any
Servicer, any Guarantor, NELnet, any Seller or the Trustee, any of their
respective Affiliates and any Person who may do business with or own securities
of the Borrower, any Servicer, any Guarantor, NELnet, any Seller or the Trustee
or any of their respective Affiliates, all as if Royal Bank of Canada were not
the Facility Agent and without any duty to account therefor to the Lender, the
Alternate Lender, any Liquidity Facility Provider or any Credit Support
Provider.
SECTION 9.05. ADVANCE DECISION. The Lender and the Alternate Lender
acknowledge that each has, independently and without reliance upon the Facility
Agent, and based on such documents and information as it has deemed appropriate,
made its own evaluation and decision to enter into this Agreement and to make
Advances hereunder. The Lender and the Alternate Lender also acknowledge that
each will, independently and without reliance upon the Facility Agent or any of
its Affiliates, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under this Agreement or any related agreement, instrument or other
document.
SECTION 9.06. SUCCESSOR FACILITY AGENT. The Facility Agent may resign
at any time by giving five days' written notice thereof to the Lender, the
Alternate Lender, each Liquidity Facility Provider, each Credit Support
Provider, the Borrower, the Portfolio Administrator and the Trustee. Upon any
such resignation, the Lender and the Alternate Lender shall have the right to
appoint a successor Facility Agent approved by the Borrower (which approval will
not be
55
unreasonably withheld or delayed). If no successor Facility Agent shall have
been so appointed and shall have accepted such appointment, within sixty days
after the retiring Facility Agent's giving of notice of resignation, then the
retiring Facility Agent may, on behalf of the Lender and the Alternate Lender,
appoint a successor Facility Agent. If the successor Facility Agent is not an
Affiliate of the resigning Facility Agent, such successor Facility Agent shall
be subject to the Borrower's prior written approval (which approval will not be
unreasonably withheld or delayed). Upon the acceptance of any appointment as
Facility Agent hereunder by a successor Facility Agent, such successor Facility
Agent shall thereupon succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring Facility Agent, and the retiring
Facility Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Facility Agent's resignation hereunder as Facility
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Facility Agent under
this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. AMENDMENTS AND WAIVERS. No amendment or modification of
any provision of this Agreement shall be effective without the written agreement
of the Borrower, the Lender, the Facility Agent and, to the extent affected
thereby, the Trustee, and no termination or waiver of any provision of this
Agreement or consent to any departure therefrom by the Borrower shall be
effective without the written concurrence of the Facility Agent. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 10.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy or other
electronic means) and mailed, delivered by nationally recognized overnight
courier service, telexed, transmitted or delivered by hand, as to each party
hereto, at its address set forth under its name on the signature pages hereof or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. All such notices and communications shall be
effective, upon receipt, or in the case of (a) notice by mail, five days after
being deposited in the United States mails, first class postage prepaid; (b)
notice by telex, when telexed against receipt of answerback; or (c) notice by
facsimile or other electronic copy, when verbal communication of receipt is
obtained, except that notices and communications pursuant to Article II hereof
shall not be effective until received.
SECTION 10.03. NO WAIVER; REMEDIES. No failure on the part of the
Trustee, the Facility Agent or the Secured Creditors to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 10.04. BINDING EFFECT; ASSIGNABILITY; CONFIDENTIALITY. This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Facility Agent, the Lender, the Alternate Lender, the Liquidity Facility
Providers, the Credit Support Providers, the Trustee and
56
their respective successors and permitted assigns. This Agreement and the rights
and obligations of the Lender, the Alternate Lender, the Liquidity Facility
Providers and the Credit Support Providers hereunder and interest herein shall
be assignable in whole or in part (including by way of the sale of participation
interests therein or by assignment by the Liquidity Facility Providers of any of
its assigns of the whole or any part of the Commitment) by the Lender, the
Alternate Lender, the Liquidity Facility Providers, the Credit Support Providers
and their successors and assigns; provided, however, that the Lender, the
Alternate Lender, the Liquidity Facility Providers and the Credit Support
Providers shall not transfer or assign its interests in the Advances if
immediately after such transfer or assignment, the Advances would be owned by
more than 100 persons as described in Section 1.7704-l(h) of the Treasury
Regulations. The Borrower may not assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the
Facility Agent. The parties to each assignment or participation made pursuant to
this Section shall execute and deliver to the Borrower and the Facility Agent
for their acceptance and recording in their respective books and records, an
assignment or a participation agreement or other transfer instrument reasonably
satisfactory in form and substance to the Borrower and the Facility Agent (and
the Borrower hereby acknowledges that the form of assignment attached to the
Liquidity Agreement and the Credit Support Agreement shall be acceptable in form
and substance). Each such assignment or participation shall be effective as of
the date specified in the agreement or instrument only after the execution,
delivery, acceptance and recording as described in the preceding sentence. The
Lender, the Alternate Lender, the Liquidity Facility Providers and the Credit
Support Providers shall each notify the Borrower of any assignment or
participation thereof made pursuant to this Section. Subject to Section 10.11
hereof, none of the Lender, the Alternate Lender, the Liquidity Facility
Providers or the Credit Support Providers may, in connection with any assignment
or participation or any proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower and the Pledged Collateral
furnished to it by or on behalf of the Borrower, without either (a) first
obtaining the prior written consent of the Borrower, which consent shall not be
unreasonably withheld; or (b) delivering to the Borrower a written agreement
signed by the proposed assignee or participant, for the Borrower's benefit and
otherwise in form and substance reasonably acceptable to the Borrower pursuant
to which the proposed assignee or participant agrees to maintain the
confidentiality of the information concerning the Borrower and the Financed
Loans that may be provided to it by the Facility Agent, the Lender, the
Alternate Lender, the Liquidity Facility Providers or the Credit Support
Providers.
SECTION 10.05. SURVIVAL. The rights and remedies with respect to any
breach of a representation and warranty made by the Borrower pursuant to Article
IV hereof and the indemnification and payment provisions of Articles VII and
VIII hereof and Sections 2.15, 10.08, 10.09 and 10.14 hereof shall be continuing
and shall survive the termination of this Agreement.
SECTION 10.06. GOVERNING LAW; SEVERABILITY. This Agreement shall be
construed in all respects in accordance with, and governed by the internal laws
(as opposed to conflicts of law provisions) of the State of New York. Whenever
possible, each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
57
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. SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. THE
BORROWER. THE LENDER, THE ALTERNATE LENDER AND THE FACILITY AGENT HEREBY SUBMIT
TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE CITY OF NEW YORK, NEW YORK, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT (OTHER THAN PROCEEDINGS WITH RESPECT TO
THE FORECLOSURE ON THE PLEDGED COLLATERAL WHICH MAY BE BROUGHT IN THE
JURISDICTION IN WHICH SUCH PLEDGED COLLATERAL IS LOCATED) SHALL BE LITIGATED IN
SUCH COURTS, AND THE BORROWER, THE LENDER, THE ALTERNATE LENDER AND THE FACILITY
AGENT EACH WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE
ADDRESS SET FORTH ON THE SIGNATURE PAGES TO THIS AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO SUCH ADDRESS.
THE BORROWER, THE LENDER, THE ALTERNATE LENDER AND THE FACILITY AGENT
EACH ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY EXCEED THE
TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY CLAIM OR CAUSE OF ACTION (INCLUDING ANY
COUNTERCLAIM) ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, ANY OF THE TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS OR OTHERWISE, AND WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND
WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE LENDER, THE ALTERNATE
LENDER OR THE FACILITY AGENT. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE
RIGHT OF THE LENDER, THE ALTERNATE LENDER OR THE FACILITY AGENT TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE LENDER,
THE ALTERNATE LENDER OR THE FACILITY AGENT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION TO
THE EXTENT NECESSARY TO ENFORCE ITS LIENS AGAINST PROPERTY LOCATED IN SUCH
JURISDICTIONS. THE BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.
SECTION 10.08. COSTS, EXPENSES AND TAXES. In addition to the rights of
indemnification granted to the Trustee, the Facility Agent, the Lender, the
Alternate Lender and the Liquidity
58
Facility Providers and their respective Affiliates under Article VIII hereof,
and notwithstanding any limitation on recourse set forth herein, the Borrower
agrees to pay on demand all reasonable costs, fees and expenses of the Trustee,
the Facility Agent, the Lender, the Alternate Lender or the Liquidity Facility
Providers incurred in connection with the preparation, execution, delivery,
administration (including periodic auditing), or any amendment or modification
of, or any waiver or consent issued in connection with, this Agreement, the
Liquidity Agreement or any other Transaction Document, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Trustee, the Facility Agent, the Lender, the Alternate Lender or the Liquidity
Facility Providers with respect thereto and with respect to advising the
Trustee, the Facility Agent, the Lender, the Alternate Lender and the Liquidity
Facility Providers as to their respective rights and remedies hereunder or
thereunder, and all costs, fees and expenses, if any (including reasonable
counsel fees and expenses), incurred by the Trustee, the Facility Agent the
Lender, the Alternate Lender or the Liquidity Facility Providers in connection
with the enforcement of this Agreement, the Liquidity Agreement and the other
Transaction Documents.
SECTION 10.09. RECOURSE AGAINST CERTAIN PARTIES. No recourse under or
with respect to any obligation, covenant or agreement (including, without
limitation, the payment of any fees or any other obligations) of the Trustee,
the Facility Agent, the Lender, the Alternate Lender, the Liquidity Facility
Providers or the Credit Support Providers as contained in this Agreement or any
other agreement, instrument or document entered into by it pursuant hereto or in
connection herewith shall be had against any administrator of the Trustee, the
Facility Agent, the Lender, the Alternate Lender, the Liquidity Facility
Providers or the Credit Support Providers or any incorporator, affiliate,
stockholder, officer, employee or director of the Trustee, the Facility Agent,
the Lender, the Alternate Lender, the Liquidity Facility Providers or the Credit
Support Providers or of any such administrator, as such, by the enforcement of
any assessment or by any legal or equitable proceeding, by virtue of any statute
or otherwise; it being expressly agreed and understood that the agreements of
the Trustee, the Facility Agent, the Lender, the Alternate Lender, the Liquidity
Facility Providers and the Credit Support Providers contained in this Agreement
and all of the other agreements, instruments and documents entered into by the
Trustee, the Facility Agent, the Lender, the Alternate Lender, the Liquidity
Facility Providers or the Credit Support Providers pursuant hereto or in
connection herewith are, in each case, solely the corporate obligations of the
Trustee, the Facility Agent, the Lender, the Alternate Lender, the Liquidity
Facility Providers or the Credit Support Providers, as applicable, and that no
personal liability whatsoever shall attach to or be incurred by any
administrator of the Trustee, the Facility Agent, the Lender, the Alternate
Lender, the Liquidity Facility Providers or the Credit Support Providers or any
incorporator, stockholder, affiliate, officer, employee or director of the
Trustee, the Facility Agent, Lender, the Alternate Lender, the Liquidity
Facility Providers or the Credit Support Providers or of any such administrator,
as such, or any other them, under or by reason of any of the obligations,
covenants or agreements of the Trustee, the Facility Agent, the Lender, the
Liquidity Facility Providers or the Credit Support Providers contained in this
Agreement or in any other such instruments, documents or agreements, or which
are implied therefrom, and that any and all personal liability of every such
administrator of the Trustee, the Facility Agent, the Lender, the Alternate
Lender, the Liquidity Facility Providers or the Credit Support Providers and
each incorporator, stockholder, affiliate, officer, employee or director of the
Trustee, the Facility Agent, the Lender, the Alternate Lender, the Liquidity
Facility Providers or the Credit Support Providers or of any such administrator,
or any of them, for breaches by the Trustee, the Facility Agent, the Lender, the
Alternate Lender, the Liquidity Facility Providers or the Credit
59
Support Providers of any such obligations, covenants or agreements, which
liability may arise either at common law or at equity, by statute or
constitution, or otherwise, is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement. The provisions of this
Section shall survive the termination of this Agreement.
SECTION 10.10. EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby. This Agreement contains the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings.
SECTION 10.11. CONFIDENTIALITY. The Trustee, the Facility Agent, the
Lender, the Alternate Lender, the Liquidity Facility Providers and the Credit
Support Providers each agree to keep confidential and not disclose any
non-public information or documents related to the Borrower or any Affiliate of
the Borrower delivered or provided to such Person in connection with this
Agreement, any other Transaction Document or the transactions contemplated
hereby or thereby and which are clearly identified in writing by the Borrower or
such Affiliate as being confidential; provided, however, that each of the
Trustee, the Facility Agent, the Lender, the Alternate Lender, the Liquidity
Facility Providers and the Credit Support Providers may disclose any such
information (a) to the extent required or deemed necessary and/or advisable by
such Person's counsel in any judicial, regulatory, arbitration or governmental
proceeding or under any law, regulation, order, subpoena or decree; (b) to its
officers, directors, employees, accountants, auditors and outside counsel, in
each case, provided they are informed of the confidentiality thereof and agree
to maintain such confidentiality; (c) to or by any liquidity or credit provider
for the Lender, any potential liquidity or credit provider for the Lender, or
any assignee or participant or potential assignee or participant of any
liquidity or credit provider for the Lender, provided they are informed of the
confidentiality thereof and agree to maintain such confidentiality; (d) to any
assignee, participant, or potential assignee or participant of or with any
Trustee, the Facility Agent, the Lender, the Alternate Lender, the Liquidity
Facility Providers or the Credit Support Providers, provided such Person agrees
to be bound by the confidentiality provisions hereof or similar hereto; (e) to
bank examiners and any other Person to whom the Trustee, the Facility Agent, the
Lender, the Alternate Lender, the Liquidity Facility Providers and the Credit
Support Providers, any such liquidity or credit support provider or assignee or
participant is required by law, regulation, decree or order to make such
disclosure; (f) in connection with the enforcement hereof or of any of the other
Transaction Documents, the Liquidity Agreement or the Credit Support Agreement;
(g) to any rating agency rating the commercial paper notes of the Lender; and
(h) to such other Persons as may be approved by the Borrower. Notwithstanding
the foregoing, the foregoing obligations shall not apply to any such
information, documents or portions thereof that: (i) were of public knowledge or
literature generally available to the public at the time of such disclosure; or
(ii) have become part of the public domain by publication or otherwise, other
than as a result of the failure of the Trustee, the
60
Facility Agent, the Lender, the Alternate Lender, the Liquidity Facility
Providers or the Credit Support Providers, or any of their respective employees,
directors, officers, advisors, accountants, auditors, or legal counsel to
preserve the confidentiality thereof.
SECTION 10.12. SECTION TITLES. The section titles contained in this
Agreement shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties.
SECTION 10.13. ENTIRE AGREEMENT. This Agreement, including all
Exhibits, Schedules and other documents attached hereto or incorporated by
reference herein, together with the other Transaction Documents constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersedes all other negotiations, understandings and representations, oral or
written, with respect to the subject matter hereof.
SECTION 10.14. NO PETITION. Each of the Borrower and the Trustee hereby
covenants and agrees that prior to the date which is one year and one day after
the payment in full of all outstanding CP of the Lender, it will not institute
against or join any other person or entity in instituting against the Lender,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
61
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE BORROWER:
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
c/o NELnet, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
THE LENDER:
THUNDER BAY FUNDING INC.
BY: ROYAL BANK OF CANADA, its
attorney-in-fact
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Manager
c/o RBC Capital Markets
One Little Falls Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
And, with respect to any Advance
Request/Prepayment Notice, with a copy to:
Global Securitization Services
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Ext. 13
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
62
THE FACILITY AGENT:
ROYAL BANK OF CANADA
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
c/o RBC Capital Markets
One Little Falls Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
And, with respect to any Advance
Request/Prepayment Notice, with a copy to:
Global Securitization Services
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Ext. 13
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
ALTERNATE LENDER:
ROYAL BANK OF CANADA
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
c/o RBC Capital Markets
One Little Falls Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
63
And with respect to any Advance
Request/Prepayment Notice, with a copy to:
Global Securitization Services
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Ext. 13
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
THE TRUSTEE:
ZIONS FIRST NATIONAL BANK
By /s/ ▇▇▇▇ ▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇, Vice President
Zions First National Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust Services
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
64
EXHIBIT A
FORM OF STUDENT LOAN PURCHASE AGREEMENT
EXHIBIT A
LOAN PURCHASE AGREEMENT
This Loan Purchase Agreement (the "Loan Purchase Agreement") made and
entered into as of this 14th day of February, 2002, by and between Nelnet
Student Loan Warehouse Corporation-1, a Nevada corporation (the "Corporation")
acting by and through Zions First National Bank, not, individually but as
trustee (the "Trustee") under the Financing Agreement (as defined herein) and
Union Bank and Trust Company, a Nebraska state banking corporation and trust
company, organized and existing under the laws of the State of Nebraska, and
having its principal offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ of Lancaster, State of Nebraska, in its individual capacity and as
trustee (the "Seller").
WITNESSETH:
WHEREAS, the Corporation, by and through the Trustee, desires to
purchase from the Seller certain FFELP Loans (as defined below) to assist
students in obtaining a post-secondary education, title to which will be held by
the Trustee pursuant to the Financing Agreement, and the Seller desires to sell
certain FFELP Loans to the Corporation, title to which will be held by and
through the Trustee, in accordance with the terms and conditions of this Loan
Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
Section 1. DEFINITIONS.
"Borrower" means the student or parent obligor under an Eligible Loan.
"Certificate of Insurance" means a certificate of federal loan
insurance issued with respect to an Eligible Loan by the Secretary of Education
pursuant to the provisions of the Higher Education Act.
"Contract of Insurance" means an agreement between the Secretary of
Education and either the Trustee or the Seller providing for the insurance by
the Secretary of Education of the principal of and accrued interest on a FFELP
Loan to the maximum extent permitted under the Higher Education Act.
"Corporation" means Nelnet Student Loan Warehouse Corporation-1, a
Nevada corporation.
"Eligible Loan" means a FFELP Loan authorized to be acquired by the
Corporation by and through the Trustee which (i) is either Insured or
Guaranteed; (ii) if such FFELP Loan is a subsidized ▇▇▇▇▇▇▇▇ loan, qualifies the
holder thereof to receive Interest Subsidy Payments and Special Allowance
Payments; if such FFELP Loan is a consolidation loan authorized under Section
428C of the Higher Education Act, qualifies the holder thereof to receive
Interest Subsidy Payments and Special Allowance Payments to the extent
applicable; and if such FFELP Loan is a PLUS loan authorized under Section 428B
of the Higher Education Act, a SLS loan authorized under Section 428 A of the
Higher Education Act, or an unsubsidized ▇▇▇▇▇▇▇▇ loan authorized under Section
428H
1
of the Higher Education Act, such FFELP Loan qualifies the holder thereof to
receive Special Allowance Payments; (iii) complies with each representation and
warranty with respect thereto contained herein; and (iv) meets the other
criteria set forth in the Loan Purchase Regulations and is eligible for purchase
under the terms of the Financing Agreement.
"Facility Agent" means Royal Bank of Canada, as the Facility Agent
under the Financing Agreement, and any successor or assign.
"Federal Contracts" means all agreements between a Guarantee Agency
and the Secretary of Education providing for the payment by the Secretary of
Education of amounts authorized to be paid pursuant to the Higher Education Act,
including, but not limited to, reimbursement of amounts paid or payable upon
defaulted Eligible Loans and other student loans insured or guaranteed by any
Guarantee Agency and federal interest subsidy payments and Special Allowance
Payments, if applicable, to holders of qualifying student loans guaranteed by
any Guarantee Agency.
"FFELP Loans" means those specific loans acquired by the Trustee, on
behalf of the Corporation, from the Seller pursuant to this Loan Purchase
Agreement, inclusive of the promissory notes evidencing such loans and the
related documentation in connection with each thereof, which were originated
pursuant to the Federal Family Education Loan Program and the Higher Education
Act.
"Financing Agreement" means the Warehouse Loan and Security Agreement,
dated as of February 1, 2002, by and among the Trustee, the Corporation as
Borrower, Royal Bank of Canada, as the Alternative Lender and Facility Agent,
and Thunder Bay Funding Inc. as the Lender, as the same may be amended,
modified, supplemented, restated or otherwise altered, which is utilized to
finance the Corporation's purchase of the FFELP Loans under this Loan Purchase
Agreement.
"Guarantee" or "Guaranteed" means, with respect to a FFELP Loan, the
guarantee by the Guarantee Agency, in accordance with the terms and conditions
of the Guarantee Agreement, of the principal of and accrued interest on the
FFELP Loan to the maximum extent permitted under the Higher Education Act on
FFELP Loans which have been originated, held and serviced in full compliance
with the Higher Education Act, and the coverage of the FFELP Loan by the Federal
Contracts providing, among other things, for reimbursement to the Guarantee
Agency for losses incurred by it on defaulted Eligible Loans guaranteed by it to
the extent of the maximum reimbursement allowed by the Federal Contracts.
"Guarantee Agency" means a state agency or a private nonprofit
institution or organization which administers a Guarantee Program within a
State or any successors and assignees thereof administering the Guarantee
Program which has entered into a Guarantee Agreement with the Trustee on behalf
of the Corporation.
"Guarantee Agreement" means the Federal Contracts, an agreement between
a Guarantee Agency and either the Trustee or the Seller providing for the
Guarantee by such Guarantee Agency of the principal of and accrued interest on
Eligible Loans to Borrowers, made or acquired by the
2
Trustee or the Seller from time to time, and any other similar guarantee or
agreement issued by a Guarantee Agency to the Corporation or the Trustee
pertaining to Financed Eligible Loans.
"Guaranteed Loans" means FFELP Loans that are Guaranteed.
"Guarantee Program" means a Guarantee Agency's student loan guaranty
program pursuant to which such Guarantee Agency guarantees or insures student
loans.
"Higher Education Act" shall mean Title IV, Parts B, F and G, of the
Higher Education Act of 1965, as amended or supplemented and in effect from time
to time, or any successor enactment thereto, and all regulations promulgated
thereunder and any directives issued by the Secretary of Education.
"Insurance" or "Insured" or "Insuring" means, with respect to a FFELP
Loan, the insuring by the Secretary of Education (as evidenced by a Certificate
of Insurance or other document or certification issued under the provisions of
the Higher Education Act) under the Higher Education Act of the principal of and
accrued interest on such FFELP Loan to the maximum extent permitted under the
Higher Education Act for FFELP Loans originated, held and serviced in full
compliance with the Higher Education Act.
"Insured Loans" means FFELP Loans which are Insured.
"Interest Subsidy Payments" means interest subsidy payments received
from the Secretary of Education pursuant to Section 428 of the Higher Education
Act or similar payments authorized by federal law or regulation.
"Loan Purchase Agreement" means this Loan Purchase Agreement including
all exhibits and schedules attached hereto, and any addenda, supplements or
amendments hereto.
"Loan Purchase Date" means the date as-described in Section 2(b)hereof.
"Loan Purchase Regulations" means the rules and regulations of the
Corporation, as may be adopted by the Corporation from time to time (with the
consent of any persons required under the terms of the Financing Agreement),
which pertain to the Program, which shall incorporate all requirements specified
in any indentures or other financing arrangements to which the Corporation is
subject.
"Loan Transfer Schedule" means a written schedule on a form provided by
the Corporation or its servicing agent identifying the Borrower on the FFELP
Loans to be purchased hereunder.
"Master Note" means a Master Promissory Note in the form mandated by
Section 432(m)(1)(D) of the Higher Education Act, as added by Pub. L. 105-244,
Section 427, 112 Stat. 1702 (1998) as amended by Public Law No: 106-554 (enacted
December 21, 2000) and as codified at 20 U. S. C. Section 1082(m)(1).
3
"MPN Loan" means a FFELP Loan evidenced by a Master Note.
"Program" means the Corporation's Eligible Loan acquisition program
under which the Trustee will acquire Eligible Loans to assist students in
obtaining a post-secondary education.
"Secretary of Education" means the Commissioner of Education and the
Secretary of the United States Department of Education (who succeeded to the
functions of the Commissioner of Education pursuant to the Department of
Education Organization Act), or any officer, board, body, commission or agency
succeeding to the functions thereof under the Higher Education Act.
"Seller" means Union Bank and Trust Company, a Nebraska state banking
corporation and trust company, which is an "eligible lender" under the criteria
established by the Higher Education Act that has received an eligible lender
designation by the Secretary of Education with respect to Insured Loans or from
a Guarantee Agency with respect to Guaranteed Loans, identified in the
introduction to this Loan Purchase Agreement, which is selling FFELP Loans to
the Corporation hereunder.
"Special Allowance Payments" means special allowance payments
authorized to be made by the Secretary of Education pursuant to Section 438 of
the Higher Education Act or similar allowances authorized from time to time by
federal law or regulation.
"Trustee" means Zions First National Bank acting in its capacity as
trustee under the Financing Agreement, and not in its individual capacity.
Section 2. PURCHASE OF FFELP LOANS.
(a) Subject to the terms and conditions and in reliance
upon the representations, warranties and agreements set forth herein,
the Seller agrees to sell to the Trustee, acting on behalf of the
Corporation, and the Corporation, acting by and through the Trustee
under the Financing Agreement on behalf of the Corporation, agrees to
buy from the Seller, a portfolio of FFELP Loans which are Eligible
Loans in the aggregate unpaid principal amount as set forth in the Loan
Transfer Addendum in the form set forth in Exhibit A hereto. Additional
portfolios of FFELP Loans may be purchased from the Seller hereunder by
the Corporation by and through the Trustee from time to time in the
future, if the parties hereto execute and deliver a subsequent Loan
Transfer Addendum for each such purchase of a portfolio in the form set
forth in Exhibit A hereto, reflecting the aggregate unpaid principal
balance of Eligible Loans contained in such portfolio and the Loan
Purchase Date, and if the Seller executes and delivers to the
Corporation all documents required under Section 4 hereof as of the
applicable Loan Purchase Date. Any subsequent purchase of an additional
portfolio of FFELP Loans shall be governed in all respects by this Loan
Purchase Agreement together with the Loan Transfer Addendum pertaining
to such portfolio. The Seller shall deliver a Loan Transfer Schedule to
the Corporation, not less than thirty (30) days prior to the applicable
Loan Purchase Date. Consummation of the sale of each FFELP Loan shall
require execution and delivery to the
4
Corporation of the Seller's Closing Certificate in the form of Exhibit
B hereto (and delivery of the documents described in Exhibit B hereto),
the blanket endorsement and ▇▇▇▇ of sale as well as execution and
delivery by the Seller in the forms set forth in Exhibits C and D
hereto, respectively. It is the intention of the Seller that the
transfer from the Seller to the Trustee on behalf of the Corporation
constitutes a true sale of the FFELP Loans hereunder and that neither
the interest in nor title to the FFELP Loans shall become or be deemed
property of the Seller for any purpose under applicable law.
(b) Delivery and payment for the FFELP Loans shall take
place at a location and on a date (the "Loan Purchase Date") to be
specified by the Corporation. The applicable Loan Purchase Date shall
not be later than the date set forth in the Loan Transfer Addendum
pertaining to such FFELP Loans.
(c) Subject to the terms and conditions of this Loan
Purchase Agreement, the Corporation agrees to purchase the FFELP Loans
by and through the Trustee at a price equal to 100% of the outstanding
unpaid principal amount thereof on the Loan Purchase Date with proceeds
from the obligations issued pursuant to the Financing Agreement, or
such other amount agreed upon and specified in the Loan Transfer
Addendum as set forth in Exhibit A. The Seller shall be responsible for
reporting to the Secretary of Education and, if required by the
provisions of the Higher Education Act, offsetting against Interest
Subsidy Payments and Special Allowance Payments made to the Seller by
the Secretary of Education the entire amount of any origination fee
which is authorized to be charged by the Higher Education Act with
respect to the FFELP Loans sold hereunder. Additionally, the Seller
shall, as a condition to the purchase by the Corporation of any FFELP
Loan, be required to pay to the Corporation on the Loan Purchase Date
the amount of any such origination fee which has not at that time been
used to offset such Special Allowance Payments or Interest Subsidy
Payments, to the extent that the Special Allowance Payments or Interest
Subsidy Payments received by the Trustee in connection with such FFELP
Loans shall be affected. Seller shall continue due diligence servicing
in compliance with the Higher Education Act, at Seller's cost, up to
the applicable Loan Purchase Date; thereafter, servicing shall be paid
for by, and shall be the responsibility of, the Corporation.
(d) Subject to the terms and conditions of this Loan
Purchase Agreement, Seller shall sell to the Corporation, by and
through the Trustee, all Eligible Loans made to the same Borrower(s)
which are held by or on behalf of Seller (serial loans).
(e) If Seller originates or purchases a FFELP Loan which
is a consolidation loan under Section 428C of the Higher Education Act,
and the proceeds of such consolidation loan are used to repay the
principal and interest due on a FFELP Loan sold by Seller to the
Corporation hereunder, then Seller shall rebate the premiums paid by
the Corporation to Seller in connection with the purchase of said FFELP
Loan by paying to the Corporation an amount equal to the same
5
percentage of the principal balance of said FFELP Loan then outstanding
as was originally paid by the Corporation therefor.
Section 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
SELLER.
(a) With respect to FFELP Loans sold on a Loan Purchase
Date, the Seller hereby makes the representations and warranties set
forth in Exhibit E hereto as of such Loan Purchase Date. Each
representation, warranty, certification, covenant and agreement
contained in this Loan Purchase Agreement shall survive the applicable
Loan Purchase Date.
(b) The Seller shall not organize under the law of any
jurisdiction other than the State under which it is organized as of the
Closing Date (whether changing its jurisdiction of organization or
organizing under an additional jurisdiction) without giving 30 days
prior written notice of such action to the Corporation. Before
effecting such change, the Seller shall prepare and file in the
appropriate filing office any financing statements or other statements
necessary to continue the perfection of the Corporation's interests in
the FFELP Loans.
Section 4. CONDITIONS OF PURCHASE. The Corporation's obligation to
purchase and pay for the FFELP Loans hereunder by and through the Trustee as of
any applicable Loan Purchase Date shall be subject to each of the following
conditions precedent:
(a) A11 representations, warranties and statements by or
on behalf of the Seller contained in this Loan Purchase Agreement shall
be true on the applicable Loan Purchase Date.
(b) Any notification to or approval by the Secretary of
Education or a Guarantee Agency required by the Higher Education Act or
a Guarantee Agreement as a condition to the assignment of the FFELP
Loans shall have been made or received and evidence thereof delivered
to the Corporation.
(c) The entire interest of the Seller in each FFELP Loan
shall have been duly assigned by endorsement in the form set forth in
Exhibit C hereto, such endorsement to be without recourse except as
provided in Section 6 hereof.
(d) Physical custody and possession of the FFELP Loans
(including all information and documentation which is described in the
Seller's Closing Certificate as specified in Exhibit B hereto) shall be
transferred in the manner directed by the Corporation.
(e) The Corporation and the Facility Agent shall receive
an opinion of the Seller's counsel, dated as of the first Loan Purchase
Date covering such first sale and any other sale of FFELP Loans, in
form and substance satisfactory to the Corporation, the Facility Agent
and the Trustee to the effect that (i) this Loan
6
Purchase Agreement has been duly authorized, executed and delivered by
the Seller and constitutes the legal, valid, binding and enforceable
obligation of the Seller, (ii) the blanket endorsement and ▇▇▇▇ of sale
required by this Loan Purchase Agreement have been duly authorized,
executed and delivered by the Seller, (iii) with respect to all Insured
Loans being acquired, the applicable Contract of Insurance has been
duly authorized, executed and delivered by the Seller, (iv) with
respect to all Guaranteed Loans being acquired, the applicable
Guarantee Agreement has been duly authorized, executed and delivered by
the Seller, and (v) assuming the due execution and delivery thereof,
each FFELP Loan constitutes the legal, valid and binding obligation of
the Borrower (and of each endorser, if any) thereof, enforceable in
accordance with its terms, (vi) to the knowledge of the Seller's
counsel, the execution and delivery of this Loan Purchase Agreement,
the consummation of the transactions therein contemplated and
compliance with the terms, conditions and provisions of this Loan
Purchase Agreement do not and will not conflict with or result in a
breach of any of the terms, conditions or provisions of the charter,
articles or bylaws of the Seller or any agreement or instrument to
which the Seller is a party or by which it is bound or constitute a
default thereunder, (vii) to the knowledge of the Seller's counsel, the
Seller is not a party to or bound by any agreement or instrument or
subject to any charter or other corporation restriction or judgment,
order, writ, injunction, decree, law, rule or regulation which may
materially and adversely affect the ability of the Seller to perform
its obligations under this Loan Purchase Agreement, (viii) no consent,
approval or authorization of any government or governmental body,
including, without limitation, the Federal Deposit Insurance
Corporation ("FDIC"), the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System or any state bank regulatory
agency, is required in connection with the consummation of the
transactions contemplated in this Loan Purchase Agreement, (ix) this
Loan Purchase Agreement shall constitute a security agreement under
Nebraska law and shall be effective to create, in favor of the
Corporation, a perfected valid security interest in the FFELP Loans
subject to no prior liens, (x) if the Corporation and the Seller are
affiliates, that (A) if the Seller became a debtor under the United
States Bankruptcy Code, 11 U. S. C. Sections 101 et seq., as amended
(the "Bankruptcy Code"), (1) Section 541(a)(1) of the Bankruptcy Code
would not apply to deem the FFELP sold by the Seller to the Corporation
and the proceeds therefrom as property of the bankruptcy estate of the
Seller and therefore (2) Section 362(a) of the bankruptcy Code would
not apply to stay payment to the Corporation or its assignees and (B)
if the Seller became a debtor under the Bankruptcy Code, a court would
not disregard the separate identity of the Corporation so that the
assets of the Seller would be consolidated with and become a part of
the Seller's bankruptcy estate, and (xi) if the Seller is a bank or
savings association the deposits of which are insured by the FDIC (a
"Bank") and the FDIC were appointed as receiver or conservator of such
Bank, a court would not recharacterize the transfer and assignment of
the FFELP Loans to the Borrower as a pledge to secure a borrowing
rather than a sale of the FFELP Loans.
7
(f) Delivery by the Seller to the Corporation on or
before the applicable Loan Purchase Date of the following
documentation: Seller's general certificate in the form of Exhibit G
hereto; Seller's Closing Certificate in the form of Exhibit B hereto;
blanket endorsement in the form of Exhibit C hereto; ▇▇▇▇ of sale in
the form of Exhibit D hereto; UCC-1 Financing Statements evidencing the
transfer from the Seller to the Trustee on behalf of the Corporation,
and UCC lien searches sufficiently in advance of the Loan Purchase Date
so as to permit review thereof by the Corporation to its satisfaction,
if either or both are requested by the Corporation or a party to the
Financing Agreement; and UCC termination statements or releases, if
any, releasing any security interest granted by the Seller in any FFELP
Loan.
(g) Delivery by the Seller to the Corporation, prior to
the Loan Purchase Date, of a fully executed and completed Loan Transfer
Addendum substantially in the form of Exhibit A hereto with respect to
FFELP Loans referred to in the ▇▇▇▇ of sale, and delivery of a Loan
Transfer Schedule as required in Section 2(a) hereof.
(h) Adequate funds are available to the Corporation from
an indenture or other financing agreement relating to the Corporation's
bonds and/or notes which will finance the purchase of FFELP Loans under
this Loan Purchase Agreement.
(i) Delivery by the Seller of a closing certificate dated
as of the date of the first sale of FFELP Loans hereunder in form and
substance satisfactory to the Corporation, Facility Agent and Trustee
and a certificate dated as of the date of the first sale of FFELP Loans
hereunder of the a certificate in the form attached as Annex A to the
true sale/non-consolidation opinion of ▇▇▇▇▇ ▇▇▇▇ LLP dated February
14, 2002.
Section 5. REJECTION OF FFELP LOANS.
(a) If (i) the Seller is unable to make or furnish the
representations and warranties required to be made or furnished by it
pursuant to this Loan Purchase Agreement as to a FFELP Loan or (ii) the
Corporation determines that the Seller is unable to fulfill one or more
covenants or conditions of this Loan Purchase Agreement as to a FFELP
Loan, or (iii) the Corporation, in its reasonable judgment, deems that
a FFELP Loan does not comply with the terms and conditions of this Loan
Purchase Agreement or is not being delivered in compliance with such
terms and conditions, or (iv) the Corporation, in its reasonable
judgment deems that a FFELP Loan is for any reason unacceptable to it,
then the Corporation, within thirty days of the Loan Purchase Date, may
refuse to accept and pay for such FFELP Loan (or any substitute FFELP
Loan offered by the Seller in lieu thereof).
(b) If the Corporation rejects a FFELP Loan, any such
FFELP Loan shall be returned to the Seller by registered mail (for
repurchase pursuant to Section 6 hereof if the student loan has
previously been purchased by the Corporation), together with a letter
identifying each returned FFELP Loan and stating the basis for its
return.
8
The Corporation shall cause any FFELP Loan returned to the Seller which
has been endorsed to the Trustee to be endorsed by the Trustee to the
Seller in the form set forth in Exhibit F hereto.
The liability of the Corporation in connection with the loss of or
damage to any FFELP Loan to be returned to the Seller is limited to such loss or
damage occurring as a result of its gross negligence or willful misconduct in
handling or safekeeping FFELP Loans.
Section 6. REPURCHASE OBLIGATION. If:
(i) any representation or warranty made or
furnished by the Seller in or pursuant to this Loan Purchase
Agreement shall prove to have been materially incorrect;
(ii) the Secretary of Education or a Guarantee
Agency, as the case may be, refuses to honor all or part of a
claim filed with respect to a FFELP Loan (including any claim
for Interest Subsidy Payments, Special Allowance Payments,
Insurance, reinsurance or Guarantee payments) on account of
any circumstance or event that occurred prior to the sale of
such FFELP Loan to the Corporation by and through the Trustee;
(iii) on account of any circumstance or event that
occurred prior to the sale of a FFELP Loan to the Corporation,
by and through the Trustee, a defense is asserted by a
Borrower (or endorser, if any) of the FFELP Loan with respect
to Borrower's obligation to pay all or any part of the FFELP
Loan, and the Corporation, in good faith, believes that the
facts reported, if true, raise a reasonable doubt as to the
legal enforceability of such FFELP Loan;
(iv) a FFELP Loan is required to be repurchased
pursuant to subsection 5(b) hereof; or
(v) the instrument which Seller purports to be a
FFELP Loan is not, in fact, a FFELP Loan;
then the Seller shall repurchase such FFELP Loan or purported FFELP Loan upon
the request of the Corporation or the Facility Agent by paying to the
Corporation (or the Trustee, if required by the Facility Agent) the then
outstanding principal balance of such FFELP Loan or purported FFELP Loan
multiplied by the percentage used to calculate the purchase price in the
applicable Loan Transfer Addendum (or such greater amount as may be necessary to
make the Corporation and the Trustee whole in light of the purchase price
originally paid by the Corporation for such loan), plus interest and applicable
Special Allowance Payments with respect to such FFELP Loan or purported FFELP
Loan from the Loan Purchase Date to and including the date of repurchase, plus
any amounts owed to the Secretary of Education with respect to the repurchased
FFELP Loan or purported FFELP
9
Loan, plus any attorneys' fees, legal expenses, court costs, servicing fees or
other expenses incurred by the Corporation and the Trustee in connection with
such FFELP Loan or purported FFELP Loan.
Section 7. NOTIFICATION TO BORROWERS. The servicing agent on behalf of
the Seller shall notify Borrowers under the FFELP Loans as required by the
Higher Education Act of the assignment and transfer to the Trustee of the
Seller's interest in such FFELP Loans and the Seller shall direct each Borrower
to make all payments thereon directly to the Corporation or as it may otherwise
designate.
Section 8. OBLIGATIONS TO FORWARD PAYMENTS AND COMMUNICATIONS.
(a) The Seller shall promptly remit, or cause to be
remitted, to the Corporation all funds received by the Seller after the
applicable Loan Purchase Date which constitute payments of principal or
interest (including Interest Subsidy Payments) or Special Allowance
Payments accrued after the applicable Loan Purchase Date with respect
to any FFELP Loan.
(b) The Seller shall immediately transmit to the
Corporation any communication received by the Seller after the
applicable Loan Purchase Date with respect to a FFELP Loan or the
Borrower under such a FFELP Loan. Such communication shall include, but
not be limited to, letters, notices of death or disability,
adjudication of bankruptcy and similar documents and forms requesting
deferment of repayment or loan cancellations.
Section 9. PAYMENT OF EXPENSES AND TAXES. Each party to this Loan
Purchase Agreement shall pay its own expenses incurred in connection with the
preparation, execution and delivery of this Loan Purchase Agreement and the
transactions herein contemplated, including, but not limited to, the fees and
disbursements of counsel; provided, however, that Seller shall pay any transfer
or other taxes and recording or filing fees payable in connection with the sale
and purchase of the FFELP Loans.
Section 10. INDEMNIFICATION. The Seller specifically acknowledges that
the Corporation, in obtaining financing, will be making representations and
warranties regarding the FFELP Loans based in part on the accuracy of the
Seller's representations and warranties in this Loan Purchase Agreement. The
Seller agrees to indemnify and save the Trustee, the Corporation, the parties to
the Financing Agreement and noteholders or Credit Support Provider under the
Financing Agreement (together with each of their respective successors,
assignees, officers, directors, agents and employees) harmless of, from and
against any and all loss, liability, cost, damage or expense, including
reasonable attorneys' fees and costs of litigation, incurred by reason of any
breach of the Seller's warranties, representations or covenants hereunder or any
false or misleading representations of the Seller or any failure to disclose any
matter which makes the warranties and representations herein misleading or any
inaccuracy in any information furnished by the Seller in connection herewith.
Section 11. SPECIAL PROVISIONS RELATING TO MPN LOANS.
10
(a) The Seller hereby represents and warrants that the
Seller is transferring all of its right title and interest in the MPN
Loans to the Corporation, that it has not assigned any interest in such
MPN Loans (other than security interests that have been released or
ownership interests that the Seller has reacquired) to any person other
than the Corporation, and that no prior holder of the MPN Loans has
assigned any interest in such MPN Loans (other than security interests
that have been released or ownership interests that such prior holder
has reacquired) to any person other than a predecessor in title to the
Seller. The Seller hereby covenants that the Seller shall not attempt
to transfer to any other person any interest in any MPN Loan assigned
hereunder.
(b) The Seller hereby authorizes the Corporation to file
a UCC-1 financing statement identifying the Seller as debtor and the
Corporation as secured party and describing the MPN Loans sold pursuant
to this Loan Purchase Agreement. The preparation or filing of such
UCC-1 financing statement is solely for additional protection of the
Corporation's interest in the MPN Loans and shall not be deemed to
contradict the express intent of the Seller and the Corporation that
the transfer of MPN Loans under this Loan Purchase Agreement is an
absolute assignment of such MPN Loans and is not a transfer of such MPN
Loans as security for a debt.
Section 12. OTHER PROVISIONS.
(a) The Seller shall, at its expense, furnish to the
Corporation such additional information concerning the Seller's student
loan portfolio as the Corporation may reasonably request.
(b) The Seller shall, at its expense, execute all other
documents and take all other steps as may be requested by the
Corporation or the Trustee from time to time to effect the sale
hereunder of the FFELP Loans.
(c) The provisions of this Loan Purchase Agreement cannot
be waived or modified unless such waiver or modification be in writing
and signed by the parties hereto, after written consent is obtained
from the Facility Agent. Inaction or failure to demand strict
performance shall not be deemed a waiver.
(d) This Loan Purchase Agreement shall be governed by the
laws of the State of Nebraska.
(e) All covenants and agreements herein contained shall
extend to and be obligatory upon all successors of the respective
parties hereto.
(f) This Loan Purchase Agreement may be simultaneously
executed in several counterparts, each of which shall be an original
and all of which shall constitute but one and the same instrument.
11
(g) If any provision of this Loan Purchase Agreement
shall be held, deemed to be or shall, in fact, be inoperative or
unenforceable as applied in any particular situation, such
circumstances shall not have the effect of rendering the provision in
question inoperative or unenforceable in any other situation or of
rendering any other provision or provisions herein contained invalid,
inoperative or unenforceable to any extent whatsoever. The invalidity
of any one or more phrases, sentences, clauses or paragraphs herein
contained shall not affect the remaining portions of this Loan Purchase
Agreement or any part hereof.
(h) All notices, requests, demands or other instruments
which may or are required to be given by either party to the other
shall be in writing, and each shall be deemed to have been properly
given when served personally on an officer of the party to whom such
notice is given or upon expiration of a period of 48 hours from and
after the postmark thereof when mailed, postage prepaid, by registered
or certified mail, requesting return receipt, by overnight courier, or
by telecopy, addressed as follows:
If to the Corporation:
Nelnet Student Loan Warehouse Corporation-1
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the Trustee at:
Zions First National Bank
Corporate Trust Division
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇ ▇▇▇▇ - VP & Trust Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Facility Agent:
Royal Bank of Canada
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Managing Director
If to the Seller, addressed in the manner as set forth in the first
paragraph of this Loan Purchase Agreement.
12
Either party may change the address and name of the addressee
to which subsequent notices are to be sent to it by notice to the
others given as aforesaid, but any such notice of change, if sent by
mail, shall not be effective until the fifth day after it is mailed.
(i) This Loan Purchase Agreement may not be terminated by
either party hereto except in the manner and with the effect herein
specifically provided for.
(j) Time is of the essence in this Loan Purchase
Agreement.
(k) This Loan Purchase Agreement shall not be assignable
by the Seller, in whole or in part, without the prior written consent
of the Corporation and the Facility Agent.
(l) No remedy by the terms of this Loan Purchase
Agreement conferred upon or reserved to the Corporation is intended to
be exclusive of any other remedy, but each and every such remedy shall
be cumulative and in addition to every other remedy given under this
Loan Purchase Agreement or existing at law or in equity (including,
without limitation, the right to such equitable relief by way of
injunction) or by statute on or after the date of this Loan Purchase
Agreement.
(m) Acts to be taken by the Corporation with respect to
acquiring and holding title to FFELP Loans hereunder shall be taken by
the Trustee as directed by the Corporation, which qualifies as an
"eligible lender" trustee under the Higher Education Act, and all
references herein to the Corporation shall incorporate by this
reference the fact that the Trustee will be acquiring and holding title
to FFELP Loans on behalf of the Corporation, all as required under the
Higher Education Act.
(n) The parties hereto acknowledge that the Trustee, the
Facility Agent and other parties to the Financing Agreement, shall be
third party beneficiaries of this Loan Purchase Agreement with the
power and right to enforce the provisions thereof, and the Trustee and
any such credit providers may become an assignee of the Corporation.
The foregoing creates a permissive right on the part of such third
party beneficiaries, and such third party beneficiaries shall be under
no duties or obligations hereunder.
(o) This Loan Purchase Agreement has been made and
entered into not only for the benefit of the Corporation and Seller but
also for the benefit of the Trustee in connection with the financing of
Eligible Loans as defined in the Financing Agreement, and upon
assignment by the Corporation to the Trustee, its provisions may be
enforced not only by the parties to this Loan Purchase Agreement but by
the Trustee. The foregoing creates a permissive right on behalf of the
Trustee and the Trustee shall not be under any duties or obligations
hereunder.
13
This Loan Purchase 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 Loan Purchase 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, the Trustee shall not be under any
duties or obligations hereunder.
If there is an Event of Default (as defined in the
Financing Agreement) under the Financing Agreement and the Trustee
forecloses on its security interest on the Eligible Loans, then the
Trustee shall assume all duties and obligations of the Corporation
hereunder.
Section 13. SECURITY INTEREST. The parties to this Agreement intend
that the conveyance of the Seller's right, title and interest in and to the
FFELP Loans sold pursuant to this Agreement (the "Student Loans") shall
constitute an absolute sale, conveying good title free and clear of any liens,
claims, encumbrances or rights of others from the Seller to the Corporation. The
parties to this Agreement intend that the arrangements with respect to the
Student Loans shall constitute a purchase and sale of such Student Loans and not
a loan. In the event, however, that it were determined by a court of competent
jurisdiction that the transactions evidenced by this Agreement shall constitute
a loan and not a purchase and sale, the parties hereto intend that this
Agreement would constitute a security agreement under applicable law and that
the Seller shall be deemed to have granted, and hereby does grant (subject to
the condition above), to the Corporation a first priority perfected security
interest in all of the Seller's right, title and interest, whether now owned or
hereafter acquired, in, to and under all accounts, general intangibles, chattel
paper, instruments, documents, goods, investment property, money, deposit
accounts, certificates of deposit, letters of credit, advices of credit and
other property consisting of, arising from or related to the following
collateral to secure the rights of the Corporation hereunder and the obligations
of the Seller hereunder (collectively, the "Pledged Collateral"):
(a) all Student Loans;
(b) all revenues and recoveries of principal from Student
Loans, including all borrower payments and reimbursements of principal
and accrued interest on default claims received from any Guarantor;
(c) any other revenues and recoveries of principal and
interest and other payments and reimbursements of principal and accrued
interest received with respect to any Student Loan and any other
collection of cash with respect to such Student Loan (including but
not limited to, Interest Subsidy Payments Special Allowance Payments,
finance charges and payments representing the repurchase of any Student
Loan or rebate of premium thereon pursuant to this Agreement) received
or deemed to have been received and all other cash collections, tax
refunds and other cash
14
proceeds of the Pledged Collateral held in various funds and accounts
created under this Agreement;
(d) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment
of such Student Loans, whether, pursuant to the contract related to
such Student Loans or otherwise;
(e) all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch
cards, data processing software and related property and rights)
maintained with respect to Student Loans otherwise in respect of the
Pledged Collateral; and
(f) all proceeds of the foregoing (including, but not by
way of limitation, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and
every kind, and other forms of obligations and receivables or other
liquidated property which at any time constitute all or part or are
included in the proceeds of any of the foregoing property).
The Seller agrees that from time to time, at its expense, it will
properly execute and deliver all further instruments and documents (including,
without limitation, UCC-1 financing statements and custodian agreements with the
Servicer), and take all further action that Corporation or Facility Agent may
reasonably request in order to perfect, protect or more fully evidence the
Corporation's or the Facility Agent's interest in the Pledged Collateral or to
enable the Corporation to exercise or enforce any of its rights hereunder.
Section 14. INFORMATION AND REPORTING. Seller shall furnish to the
Corporation: (a) upon execution of this Agreement, Seller's most recent audited
financial statement prepared in accordance with generally accepted accounting
principles and duly certified by nationally recognized independent certified
public accountants selected by Seller, as well as Seller's most recent unaudited
financial statement and balance sheet; (b) as soon as available and in any event
within 90 days after the end of each fiscal year of the Seller, an updated
audited financial statement prepared in accordance with generally accepted
accounting principles and duly certified by nationally recognized independent
certified public accountants selected by Seller; and (c) such other financial
information as the Corporation may reasonably request from time to time. Seller
shall verify and reconcile Eligible Loan disbursements and cancellations of
Eligible Loans sold hereunder, in such manner as the Corporation may reasonably
request from time to time. Seller shall furnish to the Corporation a certificate
of good standing and a certified copy of resolutions of Seller's board of
directors approving and authorizing execution and performance of this Agreement
and all ancillary documents with respect thereto in a form reasonably
satisfactory to the Corporation.
15
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
Union Bank and Trust Company Nelnet Student Loan Warehouse Corporation-1
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------------ ------------------------
Title: Senior Vice President Title:______________________
16
EXHIBIT A TO LOAN PURCHASE AGREEMENT
LOAN TRANSFER ADDENDUM
This Loan Transfer Addendum (the "Addendum") is made and entered into
as of the ____ day of_______________, ______, by and between Nelnet Student Loan
Warehouse Corporation-1 (the "Corporation") and _____________________ (the
"Seller").
WHEREAS, the parties hereto entered into that Loan Purchase Agreement
dated as of _____________________________________, ______, (the "Loan Purchase
Agreement"), and the Seller wishes to sell a portfolio of Eligible Loans (as
defined in the Loan Purchase Agreement) to the Corporation, pursuant to and in
accordance with the terms and conditions of the Loan Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereto agree as follows:
1. Definitions. All capitalized terms in this Addendum shall have
the same meanings given to them in the Loan Purchase
Agreement, unless otherwise specifically stated herein.
2. Purchase of Eligible Loans. Subject to the terms and
conditions of the Loan Purchase Agreement and in reliance upon
the representations, warranties and covenants as set forth in
the Loan Purchase Agreement, the Seller agrees to sell to the
Trustee, as trustee under the Financing Agreement on behalf of
the Corporation, a portfolio of Eligible Loans identified in
the Loan Transfer Schedule attached hereto, having an
aggregate outstanding principal balance of approximately
$_________(the "Current Purchase Portfolio").
3. Purchase Price. Subject to the terms and conditions of the
Loan Purchase Agreement, the Corporation agrees to purchase
the Eligible Loans in the Current Purchase Portfolio at a
purchase price equal to______% of the aggregate unpaid
principal balance thereon plus 100% of the accrued and unpaid
interest thereon, each as of the Loan Purchase Date set forth
in Section 4 hereof.
4. Loan Purchase Date. The Loan Purchase Date shall be no later
than __________, _______.
5. Representations and Warranties. The Seller hereby reconfirms
all the representations and warranties set forth in the Loan
Purchase Agreement as of the Loan Purchase Date set forth in
Section 4 hereof.
6. Effect on Loan Purchase Agreement. This Addendum sets forth
the terms of purchase and sale solely with respect to the
Current Purchase Portfolio. This Addendum shall have no effect
upon any other sale or purchase of any Eligible Loans
consummated or contemplated prior to or after the Loan
Purchase Date, and all other
17
terms, conditions and agreements contained in the Loan
Purchase Agreement shall remain in full force and effect.
Prior or subsequent purchases and sales of Eligible Loans
shall each be governed by a separate Loan Transfer Addendum.
7 Special Terms. [Reserved]
NAME OF SELLER: Nelnet Student Loan Warehouse Corporation-1
By:________________________ By:_____________________________
Title:_____________________ Title:__________________________
18
EXHIBIT B TO LOAN PURCHASE AGREEMENT
SELLER'S CLOSING CERTIFICATE
(DO NOT COMELETEY)(the "Seller") does hereby certify that
all representations, warranties and statements by or on behalf of the Seller
contained in a certain Loan Purchase Agreement dated
_________________________________________,__________(the "Agreement"), by and
between the Seller and Nelnet Student Loan Warehouse Corporation-1 (the
"Corporation"), are true and correct on and as of the Loan Purchase Date,
without exception or qualification whatsoever;
FURTHERMORE, the Seller does hereby certify that the following
documents, where applicable to each FFELP Loan (as defined in the Agreement)
acquired under the Agreement, have heretofore been furnished to the Corporation
or are simultaneously herewith delivered in accordance with the instructions of
the Corporation, pursuant to subsection 4(d) of the Agreement:
Department of Education application or Guarantee Agency application, as
supplemented
Interim note(s) for each Loan that is not an MPN Loan
Payout note(s) for each Loan that is not an MPN Loan
Disclosure and Loan information statement
Certificate of Insurance and Contract of Insurance with respect to each
Insured Loan (or certified copy thereof)
Guarantee Agreement, Agreement for Participation in the Guaranteed Loan
Program and Notification of Loan Approval by the Guarantee Agency
with respect to each Guaranteed Loan (or certified copy thereof)
Any other documentation held by the Seller relating to the history of
such Eligible Loan
Secretary of Education and Guarantee Agency Loan Transfer Statements
Uniform Commercial Code financing statement, if any, securing any
interest in an Eligible Loan to be Financed, and an executed
termination statement related thereto
Evidence of Loan disbursement
Any other document required to be submitted with a claim to the
Guarantee Agency.
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed and delivered by an officer hereunto duly authorized as of the Loan
Purchase Date, _____.
(DO NOT COMPLETE)
------------------
NAME OF SELLER
BY (DO NOT SIGN)
---------------------
TITLE (DO NOT SIGN)
19
EXHIBIT C TO LOAN PURCHASE AGREEMENT
BLANKET ENDORSEMENT OF
STUDENT LOAN PROMISSORY NOTES
Pursuant to the Loan Purchase Agreement
dated___________________________, the undersigned ("Seller"), by execution of
this instrument, hereby endorses all promissory notes purchased by Zions First
National Bank as trustee (the "Trustee") under a Warehouse Loan and Security
Agreement among the Trustee, Nelnet Student Loan Warehouse Corporation-1 (the
"Corporation") and Thunder Bay Funding Inc. This endorsement is in blank,
unrestricted form. This endorsement is without recourse, except as provided
under the terms of the Loan Purchase Agreement. All right, title, and interest
of Seller in and to the promissory notes and related documentation identified in
the attached loan ledger are transferred and assigned to Trustee on behalf of
the Corporation.
This endorsement may be further manifested by attaching this instrument
or a facsimile hereof to each or any of the Promissory Notes and related
documentation acquired by the Trustee on behalf of the Corporation from Seller,
or by attaching this instrument to the loan ledger schedule, as the Corporation
may require or deem necessary.
Dated this____day of___________________,______.
SELLER (DO NOT COMPLETE)
DO NOT SIGN
-----------------------
SIGNATURE OF AUTHORIZED
OFFICER OF SELLER
20
EXHIBIT D TO LOAN PURCHASE AGREEMENT
▇▇▇▇ OF SALE
FOR VALUE RECEIVED,______________________________________ (the
"Seller"), pursuant to the terms and conditions of that certain Loan Purchase
Agreement dated as of___________,______ (the "Agreement") between the Seller and
Nelnet Student Loan Warehouse Corporation-1 (the "Corporation") does hereby
grant, sell, assign, transfer and convey to Zions First National Bank, solely in
its capacity as trustee (the "Trustee") on behalf of the Corporation and its
successors and assigns, all right, title and interest of the Seller in and to
the following:
(1) The loans described in Annex I attached hereto (the
"Loans"), including the guarantee of the Loans issued by a guarantee
agency pursuant to the Federal Family Education Loan Program (20
U.S.C. Section 1071 et seq.);
(2) All promissory notes and related documentation
evidencing the indebtedness represented by such Loans; and
(3) All proceeds of the foregoing including, without
limitation, all payments made by the obligor thereunder or with respect
thereto, all guarantee payments made by any guarantee agency with
respect thereto, and all interest benefit payments and special
allowance payments with respect thereto made under Title IV, Part B, of
the Higher Education Act of 1965, as amended, and all rights to receive
such payments, but excluding any proceeds of the sale made hereby.
TO HAVE AND TO HOLD the same unto the Trustee on behalf of the
Corporation, its successors and assigns, forever. This ▇▇▇▇ of Sale is made
pursuant to and is subject to the terms and provisions of the Agreement, and is
without recourse, except as provided in the Agreement.
IN WITNESS WHEREOF, the Seller has caused this instrument to
be, executed by one of its officers duly authorized to be effective as of
the_day of_________,______.
[NAME OF SELLER]
By: _______________________________________
Title: ____________________________________
21
EXHIBIT E TO LOAN PURCHASE AGREEMENT
REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS OF SELLER
A. Any information furnished by the Seller to the Corporation, or
the Corporation's agents with respect to a FFELP Loan, including the Loan
Transfer Schedule attached to the Loan Transfer Addendum, is true, complete and
correct.
B. The amount of the unpaid principal balance of each FFELP Loan
is due and owing, and no counterclaim, offset, defense or right to rescission
exists with respect to any FFELP Loan which can be asserted and maintained or
which, with notice, lapse of time or the occurrence or failure to occur of any
act or event could be asserted and maintained by the Borrower against the
Trustee or the Corporation as assignee thereof. The Seller shall have taken all
reasonable actions to assure that no maker of a FFELP Loan has or may acquire a
defense to the payment thereof. No payment of principal or interest with respect
to any FFELP Loan is, as of the date hereof, more than 60 days delinquent and no
applicable payment of principal or interest with respect to any FFELP Loan will,
at the applicable Loan Purchase Date, be more than 60 days delinquent. No FFELP
Loan carries a rate of interest less than, or in excess of, the applicable rate
of interest required by the Higher Education Act. If the Higher Education Act
permits Sellers to charge an interest rate less than the applicable rate of
interest, no FFELP Loan purchased hereunder bears interest at a rate lower than
the applicable rate of interest; provided, however, that the Corporation may
approve, in its sole discretion, in writing, interest reductions which are part
of a borrower repayment incentive program of Seller, the terms of which have
been fully described in detail and in writing to the Corporation.
C. Each FFELP Loan has been duly executed and delivered and
constitutes the legal, valid and binding obligations of the maker (and the
endorser, if any) thereof, enforceable in accordance with its terms.
D. Each FFELP Loan complies in all respects with the requirements
of the Higher Education Act and the Loan Purchase Regulations and is an Eligible
Loan, as that term is defined in the Loan Purchase Agreement.
E. The Seller or Seller's eligible lender trustee has applied for
and received the Secretary of Education's or a Guarantee Agency's designation,
as the case may be, as an "Eligible Lender" under the Higher Education Act, and
the Seller has entered into all agreements required to be entered into for
participation in the Federal Family Education Loan Program under the Higher
Education Act.
F. The Seller and the Seller's eligible lender trustee on behalf
of Seller is the sole owner and holder of each FFELP Loan and has full right and
authority to sell and assign the same free and clear of all liens, pledges or
encumbrances; no FFELP Loan has been pledged or assigned for any purpose; and
each FFELP Loan is free of any and all liens, charges, encumbrances and security
interests of any description. The Corporation has a valid and perfected first
priority security interest in the Pledged Collateral.
22
G. Each FFELP Loan is either Insured or Guaranteed; such
Insurance or Guarantee, as the case may be, is in full force and effect, is
freely transferable as an incident to the sale of each FFELP Loan; all amounts
due and payable to the Secretary of Education or a Guarantee Agency, as the case
may be, have been or will be paid in full by the Seller, and none of the FFELP
Loans has at any time been tendered to either the Secretary of Education or any
Guarantee Agency for payment.
H. There are no circumstances or conditions with respect to any
FFELP Loan, the Borrower thereunder or the creditworthiness of said Borrower
that would reasonably cause prudent private investors to regard any of the FFELP
Loans as an unacceptable investment, or adversely affect the value or
marketability thereof, the insurance thereof and any applicable Guarantee.
I. Each FFELP Loan was made in compliance with all applicable
local, State and federal laws, rules and regulations, including, without
limitation, all applicable nondiscrimination, truth-in-lending, consumer credit
and usury laws.
J. The Seller has carefully reviewed the Loan Purchase
Regulations supplied by the Corporation and has complied with the Loan Purchase
Regulations.
K. The FFELP Loans pursuant to the Agreement include all Eligible
Loans of any one Borrower held by the Seller.
L. The Seller has, and its officers acting on its behalf have,
full legal authority to engage in the transactions contemplated by the Loan
Purchase Agreement; the execution and delivery of the Loan Purchase Agreement,
the consummation of the transactions herein contemplated and compliance with the
terms, conditions and provisions of the Loan Purchase Agreement do not and will
not conflict with or result in a breach of any of the terms, conditions or
provisions of the charter, articles or bylaws of the Seller or any agreement or
instrument to which the Seller is a party or by which it is bound or constitute
a default thereunder; the Seller is not a party to or bound by any agreement or
instrument or subject to any charter or other corporation restriction or
judgment, order, writ, injunction, decree, law, rule or regulation which may
materially and adversely affect the ability of the Seller to perform its
obligations under the Loan Purchase Agreement and the Loan Purchase Agreement
constitutes a valid and binding obligation of the Seller enforceable against it
in accordance with its terms, and no consent, approval or authorization of any
government or governmental body, including, without limitation, the Federal
Savings and Loan Insurance Corporation, the Federal Deposit Insurance
Corporation, the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System or any state bank regulatory agency, is required in
connection with the consummation of the transactions herein contemplated.
M. The Seller is duly organized, validly existing and in good
standing under the laws of its applicable jurisdiction and has the power and
authority to own its assets and carry on its business as now being conducted.
N. The Seller and any independent servicer have each exercised
due diligence and reasonable care in making, administering, servicing and
collecting the FFELP Loans, and the Seller has conducted a reasonable
investigation of sufficient scope and content to enable it duly to make
23
the representations and warranties contained in this Exhibit E. The Seller shall
be solely responsible for the payment of the costs and expenses incident to
origination of FFELP Loans, without any right of reimbursement therefor from the
Corporation.
O. With respect to all Insured Eligible Loans being acquired,
Insurance is in effect with respect thereto; the applicable Contract and
Certificates of Insurance are valid and binding upon the parties thereto in all
respects material to the security for any bonds and/or notes issued by the
Corporation; and the Seller is not in default in the performance of any of its
covenants and agreements made in respect thereof.
P. With respect to all Guaranteed Eligible Loans being acquired,
a Guarantee Agreement is in effect with respect thereto and is valid and binding
upon the parties thereto in all respects material to the security of the bonds
and/or notes issued by the Corporation to finance the FFELP Loans; and the
Seller is not in default in the performance of any of its covenants and
agreements made in such Guarantee Agreement.
Q. The Seller does not (i) discriminate by pattern or practice
against any particular class or category of students by requiring, as a
condition to the receipt of a student loan, that a student or his family
maintain a business relationship with the Seller, except as may be permitted
under applicable laws or (ii) discriminate on the basis of race, sex, color,
creed or national origin.
R. The FFELP Loans are a representative sample of all student
loans held by the Seller with respect to the educational institution attended
by, or the age, sex, race, national origin or place of residence of, the
Borrower to whom such loans were made, or with respect to any other identifying
characteristic of such Borrowers.
S. Each instrument transferred to the Corporation under the Loan
Purchase Agreement is a FFELP Loan which constitutes an Eligible Loan.
T. No promissory note evidencing an Eligible Loan bears any
apparent evidence of forgery or alteration or is otherwise so irregular or
incomplete as to call into question its authenticity.
U. Except as may have been disclosed by the UCC lien search
required by Section 4(f) hereof for the Seller, no other financing statements or
assignment filings naming the Seller as debtor or assignor under its legal name
or trade names has been filed.
V. The fair salable value of the assets on a going concern basis
of the Seller and its subsidiaries, on a consolidated basis, as of the time of
each sale of FFELP Loans hereunder is in excess of the total amount of their
liabilities.
24
EXHIBIT F TO LOAN PURCHASE AGREEMENT
ACKNOWLEDGMENT
The assignment of the within promissory note and related documents to
(DO NOT COMPLETE) under a Loan Purchase Agreement between ________________ and
______________________, dated as of_______________, _______, did not become
effective thereunder, and no rights in the same have been conveyed thereby.
Dated: (DO NOT COMPLETE)
25
EXHIBIT B
FORM OF VALUATION AGENT AGREEMENT
EXHIBIT B
--------------------------------------------------------------------------------
VALUATION AGENT AGREEMENT
among
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.,
as the Valuation Agent
NELnet STUDENT LOAN WAREHOUSE CORPORATION-1,
as the Borrower
THUNDER BAY FUNDING INC.,
as the Lender
and
ROYAL BANK OF CANADA,
as the Facility Agent and the Alternate Lender
Dated as of February 1, 2002
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms....................................... 2
Section 1.02. Computation of Time Periods................................. 3
ARTICLE II
VALUATION AGENT; TERM OF AGREEMENT
Section 2.01. Appointment and Acceptance.................................. 3
Section 2.02. Performance by Other Parties................................ 4
Section 2.03. Resignation and Discharge................................... 4
Section 2.04. Term of Agreement........................................... 4
ARTICLE III
CALCULATIONS
Section 3.01. Maximum Advance Percentage Calculations..................... 4
Section 3.02. Loan Valuation Percentage Calculations...................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES............................................. 5
ARTICLE V
INDEMNIFICATION............................................................ 6
ARTICLE VI
MISCELLANEOUS
Section 6.01. Confidentiality............................................. 8
Section 6.02. Amendment................................................... 8
Section 6.03. Governing Law............................................... 8
Section 6.04. Notices..................................................... 8
Section 6.05. Third Party Beneficiary..................................... 10
Section 6.06. Assignment by the Lender.................................... 10
Section 6.07. Submission to Jurisdiction; Waiver of Jury and Bond......... 10
Section 6.08. No Petition................................................. 11
Section 6.09. Limited Recourse Nature of Transactions..................... 11
Section 6.10. Execution in Counterparts................................... 11
Section 6.11. Severability................................................ 11
Section 6.12. Section Titles.............................................. 12
Section 6.13. Entire Agreement............................................ 12
EXHIBIT A--FORM OF ADVANCE PERCENTAGE CALCULATION REPORT
EXHIBIT B--FORM OF VALUATION REPORT
EXHIBIT C--FORM OF REQUEST FOR VALUATION REPORT
EXHIBIT D--INITIAL LOAN SERVICING FEES
EXHIBIT E--VALUATION REPORT ASSUMPTIONS
ii
THIS VALUATION AGENT AGREEMENT (this "Valuation Agent Agreement") is
made as of February 1, 2002 by and among RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ INC., a corporation
duly organized under the laws of the State of Delaware (the "Valuation Agent").
NELnet STUDENT LOAN WAREHOUSE CORPORATION-1. a corporation duly organized under
the laws of the State of Nevada (the "Borrower"), THUNDER BAY FUNDING INC., a
Delaware special purpose finance company (the "Lender"), and ROYAL BANK OR
CANADA, a Canadian banking corporation, as the alternate lender (in such
capacity, the "Alternate Lender") and as agent of the Lender, the Alternate
Lender and the hereindefined Liquidity Facility Providers and Credit Support
Providers (in such capacity, the "Facility Agent").
PRELIMINARY STATEMENTS
WHEREAS, the Borrower, the Lender, the Alternate Lender, the Facility
Agent and Zions First National Bank, as trustee (the "Trustee"), have entered
into a Warehouse Loan and Security Agreement, dated as of February 1, 2002 (the
"Loan Agreement"), pursuant to which the Alternate Lender has agreed and the
Lender may agree to make loans to the Borrower from time to time subject to the
conditions set forth therein for the purpose of financing the purchase of
certain types of education loans (the "Eligible Loans", and when financed under
the Loan Agreement, the "Financed Loans"); and
WHEREAS, to provide liquidity support to the Lender in connection with
the loans made by it under the Loan Agreement, the Lender and Royal Bank of
Canada have entered into a Liquidity Asset Purchase Agreement, dated as of
February 1, 2002 (as amended or modified from time to time, the "Liquidity
Agreement"), between the Lender and Royal Bank of Canada, pursuant to which the
Lender may, from time to time, assign all or a part of such loans to Royal Bank
of Canada and or to certain other financial institutions as assignees of the
commitment of the Royal Bank of Canada (collectively, the "Liquidity Facility
Providers") pursuant to the terms of the Liquidity Agreement; and
WHEREAS, to provide credit support to the Lender in connection with the
loans being made by it under the Loan Agreement, the Lender and Royal Bank of
Canada have entered into a Credit Support Asset Purchase Agreement, dated as of
September 25, 1997 (as amended or modified from time to time, the "Credit
Support Agreement"), between the Lender and Royal Bank of Canada, pursuant to
which Royal Bank of Canada or certain other financial institutions as assignees
of the commitment of Royal Bank of Canada (collectively, the "Credit Support
Providers") have agreed to purchase undivided interests in loans not purchase by
the Liquidity Facility Providers; and
WHEREAS, the Loan Agreement provides that, in order to secure the
prompt and complete payment of all amounts due and payable thereunder, the
Borrower will grant to the Trustee, for the benefit of the Lender, the Alternate
Lender, the Liquidity Facility Providers and the Credit Support Providers, a
security interest in the Financed Loans, all revenue and recoveries of principal
from the Financed Loans and any other collections, funds and accrued earnings
held thereon held in the various funds and accounts created under the Loan
Agreement (collectively, the "Pledged Collateral"); and
WHEREAS, the maximum amount of funds the Lender, the Alternate Lender,
the Liquidity Facility Providers or the Credit Support Providers will make
available to the Borrower from time to time for the purpose of financing Student
Loans is in part based upon the characteristics of the Financed Loans and
certain other assumptions as described herein; and
WHEREAS, the Valuation Agent has agreed to perform certain calculations
relating to the Pledged Collateral, in accordance with the assumptions and
procedures described herein and at the times and under the circumstances
specified in the Loan Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Valuation Agent
Agreement and its exhibits, the terms set forth above and in this Section shall
have the meanings ascribed thereto (such meanings to be equally applicable to
both the singular and plural forms of the terms defined) unless a contrary
definition is given to such term in the Loan Agreement, in which case the
definition in the Loan Agreement shall be controlling.
"Advance Percentage Calculation Report" means the report prepared by
the Valuation Agent and delivered to the Facility Agent and the Borrower not
later than four Business Days prior to each Advance, other than a Rollover
Advance or a Special Advance, setting forth the Maximum Advance Percentage for
the Eligible Loans to be financed with such Advance, in the form attached as
Exhibit A hereto.
"Borrower Incentive Program" means any interest rate reduction program
applicable to any Financed Loans or Student Loans to be financed.
"Cash Flow Projections" mean the estimates prepared by the Valuation
Agent for the period commencing on the most recent date for which the Valuation
Agent has received the Portfolio Characteristics illustrating: (a) the income to
be received from the Financed Loans (excluding borrower interest, federal
interest subsidy and federal special allowance payments accrued thereon and
unpaid as of the date of the Portfolio Characteristics) and Permitted
Investments, including borrower principal and interest payments, federal
interest subsidy payments, federal special allowance payments, guaranty
payments, sale proceeds and investment earnings (collectively, the "Revenue"),
(b) the costs incurred in the financing of such Financed Loans, including
acquisition fees, debt service, servicing fees, valuation fees, trustee fees,
administrative fees, consolidation loan rebate and any other charges relating to
the financing, servicing and administration of such loans (collectively, the
"Expenses"), and (c) the periodic and cumulative Revenues less the periodic and
cumulative Expenses (the "Net Revenue").
"Cost of Funds" means the interest rate per annum used by the Valuation
Agent in the Cash Flow Projections for computing debt interest expense.
2
"Current T-▇▇▇▇" means the most recent bond equivalent yield per annum
available to the Valuation Agent for the auction of 13-week U.S. Treasury Bills,
as set forth on the Department of the Treasury web site
(▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇▇▇.▇▇▇/▇▇/▇▇▇▇▇▇▇.▇▇▇).
"Discount Rate" means the rates of discount per annum stipulated in the
Valuation Report Assumptions, as applicable, to be used by the Valuation Agent
in connection with its determination of the present value of Net Revenue.
"Loan Valuation Percentage" as determined by the Valuation Agent means:
(a) (i) the present value of the Net Revenue (using the Portfolio
Characteristics and the Valuation Report Assumptions) divided by (ii) the
outstanding Principal Balance of the Student Loans to be financed and/or the
Financed Loans, as the case may be; plus (b) 100%.
"Net Revenue" means the projected net income to be received from the
Student Loans to be financed and/or the Financed Loans, as the case may be,
after taking into account financing costs, loan defaults and delinquencies, fees
and other charges, all as set forth in the Valuation Report Assumptions.
"Portfolio Characteristics" means the information contained in the
reports provided to the Valuation Agent by or at the direction of the Borrower,
in a form acceptable to the Valuation Agent (such form could also include a
computer tape provided by any Servicer), prior to: (a) each proposed financing
of new Student Loans, and (b) each Valuation Date. Such reports shall set forth
all of the particular characteristics of Student Loans to be financed or
Financed Loans, as the case may be, necessary in order that the Valuation Agent
shall be able to perform the calculations required hereunder or under the Loan
Agreement, including, but not limited to breakdowns by loan type, borrower
interest rate, borrower status, special allowance margin, disbursement date,
remaining term by status, applicable loan servicer, guarantee level and
eligibility for, level of participation in and terms of any Borrower Incentive
Program.
"Valuation Report" means the report prepared by the Valuation Agent and
delivered to the Facility Agent and the Borrower pursuant to Section 5.12(a)(i)
of the Loan Agreement, in the form attached as Exhibit B hereto.
"Valuation Report Assumptions" means the cash flow and related
assumptions set forth in Exhibit E hereto.
SECTION 1.02. COMPUTATION OF TIME PERIODS. Unless otherwise stated in
this Valuation Agent Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
ARTICLE II
VALUATION AGENT; TERM OF AGREEMENT
SECTION 2.01. APPOINTMENT AND ACCEPTANCE. The Borrower and the Facility
Agent hereby appoint RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. as Valuation Agent under this
Valuation Agent Agreement in connection with the Loan Agreement and RBC ▇▇▇▇
▇▇▇▇▇▇▇▇ Inc. hereby accepts
3
such appointment. For purposes of this Valuation Agent Agreement the principal
office of RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. shall be ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, unless otherwise indicated to the other parties hereto in
writing by RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
SECTION 2.02. PERFORMANCE BY OTHER PARTIES. The Valuation Agent shall
be obligated to perform hereunder only upon performance in all material respects
by the Borrower (a) to provide statistical information to the Valuation Agent at
the times and in the manner described in the Loan Agreement and (b) of its
duties and responsibilities hereunder.
SECTION 2.03. RESIGNATION AND DISCHARGE.
(a) The Valuation Agent may at any time resign and be
discharged of the duties and obligations created by this Valuation
Agent Agreement by giving at least sixty (60) days' written notice to
the Borrower, the Facility Agent and the Trustee.
(b) The Valuation Agent may be removed upon at least
sixty (60) days written notice to the Valuation Agent, at the
direction of the Borrower with the consent of the Facility Agent, by an
instrument signed by the Borrower and filed with the Valuation Agent,
the Facility Agent and the Trustee. Upon the occurrence of an Event of
Default (as defined in the Loan Agreement), the Facility Agent may
remove the Valuation Agent at any time.
Notwithstanding the foregoing, no resignation or removal of the
Valuation Agent shall be effective until a successor shall have been appointed
by the Borrower with the consent of the Facility Agent, which shall not be
unreasonably withheld, or by the Facility Agent after an Event of Default,
provided that such resignation by the Valuation Agent shall be effective upon
sixty days' written notice whether or not a successor has been appointed if and
when the Valuation Agent reasonably determines that one of the following shall
occur: (i) the Borrower is not diligently pursuing the appointment of a
successor Valuation Agent at the level of compensation generally paid in the
marketplace for the services to be performed by the Valuation Agent; (ii) the
Loan Agreement or the Liquidity Agreement has been amended or modified in such a
manner as would affect the Valuation Agent in general or its ability to properly
perform its duties hereunder without the consent of the Valuation Agent; or
(iii) any condition to performance by the Valuation Agent hereunder or under the
Loan Agreement has not been satisfied.
SECTION 2.04. TERM OF AGREEMENT. Unless otherwise terminated pursuant
to the provisions of Section 2.03 hereof, this Valuation Agent Agreement shall
terminate on February 1, 2005, unless extended to such later date as mutually
agreed to in writing by the Borrower, the Facility Agent and the Valuation
Agent.
ARTICLE III
CALCULATIONS
SECTION 3.01. MAXIMUM ADVANCE PERCENTAGE CALCULATIONS.
(a) Pursuant to the terms and at the times required in
the Loan Agreement, the Valuation Agent shall compute the Maximum
Advance Percentage by undertaking
4
certain analytical procedures with respect to the Eligible Loans to be
financed thereunder. The Maximum Advance Percentage shall be determined
by: (i) dividing (A) the present value of the Net Revenue (using the
Portfolio Characteristics and the Valuation Report Assumptions) by (B)
the outstanding principal balance of Eligible Loans to be financed, and
(ii) adding 100% to the resulting percentage.
(b) Not later than four Business Days prior to each
Advance that does not constitute a Special Advance or a Rollover
Advance, the Valuation Agent shall:
(i) perform Cash Flow Projections based upon the
Portfolio Characteristics and the Valuation Report Assumptions;
(ii) calculate the Maximum Advance Percentage (as defined
herein and in the Loan Agreement) using the results of the Cash Flow
Projections described in Section 3.01 (b)(i) hereof; and
(iii) submit an Advance Percentage Calculation Report to
the Borrower, the Facility Agent and the Trustee in the form attached
as Exhibit A hereto.
SECTION 3.02. LOAN VALUATION PERCENTAGE CALCULATIONS.
(a) Pursuant to the terms and at the times required in
the Loan Agreement, the Valuation Agent shall compute the Loan
Valuation Percentage by undertaking certain analytical procedures with
respect to the Financed Loans.
(b) Within 30 days after the Valuation Agent's receipt of
a written request for a Valuation Report from the Portfolio
Administrator or the Facility Agent, in the form attached as Exhibit C
hereto, and in any case not later than the fourth Business Day
preceding each Settlement Date occurring in the months of March, June,
September and December (each a "Quarterly Valuation Date"), the
Valuation Agent shall:
(i) perform Cash Flow Projections based upon the
Portfolio Characteristics and the Valuation Report
Assumptions;
(ii) calculate the Loan Valuation Percentage
using the results of the Cash Flow Projections described in
Section 3.02(b)(i) hereof; and
(iii) submit the Valuation Report to the Borrower,
the Facility Agent and the Trustee in the form attached as
Exhibit B hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Valuation Agent represents and warrants as follows:
5
(a) The Valuation Agent is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware and is duly qualified to do business, and is in good standing,
in every jurisdiction in which the nature of its business requires it
to be so qualified.
(b) The execution, delivery and performance by the
Valuation Agent of this Valuation Agent Agreement is within the
Valuation Agent's organizational powers, has been duly authorized by
all necessary organizational action, does not contravene (i) the
Valuation Agent's articles of incorporation or bylaws, (ii) any law,
rule or regulation applicable to the Valuation Agent, (iii) any
contractual restriction binding on or affecting the Valuation Agent or
its property or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting the Valuation Agent or its property.
This Valuation Agent Agreement has been duly executed and delivered by
the Valuation Agent.
(c) No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority is required for
the due execution, delivery and performance by the Valuation Agent of
this Valuation Agent Agreement.
(d) This Valuation Agent Agreement constitutes the legal,
valid and binding obligations of the Valuation Agent enforceable
against the Valuation Agent in accordance with its terms, subject to
(i) applicable bankruptcy, insolvency, moratorium, or other similar
laws affecting the rights of creditors, and (ii) general principals of
equity, whether such enforceability is considered in a proceeding in
equity or at law.
(e) There is no pending or, to the knowledge of the
Valuation Agent, threatened, action or proceeding affecting the
Valuation Agent before any court, governmental agency or arbitrator
that may materially adversely affect the financial condition of the
Valuation Agent or the ability of the Valuation Agent to perform its
obligations under this Valuation Agent Agreement. The Valuation Agent
is not in default with respect to any order of any court, arbitrator or
any other Governmental Authority.
(f) Each document and report delivered by, or to be
delivered by, the Valuation Agent pursuant to the terms of Articles II
or III hereof shall be executed on behalf of the Valuation Agent by a
duly authorized officer of the Valuation Agent.
ARTICLE V
INDEMNIFICATION
(a) Without limiting any other rights which the Lender,
the Alternate Lender, the Facility Agent, the Borrower or any of their
respective Affiliates may have hereunder or under applicable law, and
notwithstanding any limitation on recourse to the Valuation Agent set
forth in this Valuation Agent Agreement, the Valuation Agent hereby
agrees to indemnify the Lender, the Alternate Lender, the Facility
Agent, the Borrower, the Trustee and each of their respective officers,
directors, employees, agents, attorneys-in-fact, Affiliates and assigns
(including without limitation the Liquidity Facility Providers and the
Credit Support Providers) from and against any and all damages, losses,
claims,
6
liabilities and related costs and expenses, including reasonable
attorneys fees and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or as a result of this Valuation
Agent Agreement, excluding, however, Indemnified Amounts to the extent
resulting from the gross negligence or willful misconduct of the Person
seeking indemnification. Without limiting the foregoing, the Valuation
Agent shall indemnify the Lender, the Alternate Lender, the Facility
Agent, the Borrower, the Trustee and each of their respective officers,
directors, employees, agents, attorneys-in-fact. Affiliates and assigns
(including without limitation the Liquidity Facility Providers and the
Credit Support Providers) for Indemnified Amounts relating to or
resulting from:
(i) any representation or warranty made or
deemed made by the Valuation Agent, under or in connection
with this Valuation Agent Agreement, which shall have been
false or incorrect when made or deemed made or delivered;
(ii) the failure by the Valuation Agent to comply
with any term, provision or covenant contained in this
Valuation Agent Agreement; and
(iii) any failure of the Valuation Agent to
perform its duties or obligations in accordance with the
provisions of this Valuation Agent Agreement.
(b) Without limiting any other rights which the Valuation
Agent or any of its respective Affiliates may have hereunder or under
applicable law, and notwithstanding any limitation on recourse to the
Borrower set forth in this Valuation Agent Agreement, the Borrower
hereby agrees to indemnify the Valuation Agent and each of its
officers, directors, employees, agents, attorneys-in-fact and
Affiliates from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or as a result of this Valuation
Agent Agreement, excluding, however, Indemnified Amounts to the extent
resulting from the gross negligence or willful misconduct of the
Valuation Agent or its Affiliates. Without limiting the foregoing, the
Borrower shall indemnify the Valuation Agent and each of its respective
officers, directors, employees, agents, attorneys-in-fact and
Affiliates for Indemnified Amounts relating to or resulting from:
(i) any representation or warranty made or
deemed made by the Borrower under or in connection with this
Valuation Agent Agreement, which shall have been false or
incorrect when made or deemed made or delivered;
(ii) the failure by the Borrower to comply with
any term, provision or covenant contained in this Valuation
Agent Agreement; and
(iii) any failure of the Borrower to perform its
duties or obligations in accordance with the provisions of
this Valuation Agent Agreement.
Any amounts determined by a court of competent jurisdiction as a result of a
proceeding brought which is subject to the indemnification provisions of this
Article shall be paid by the Valuation Agent to the Lender, the Alternate
Lender, the Facility Agent, the Borrower or their respective
7
officers, directors, employees, agents, attorneys-in-fact. Affiliates or the
Liquidity Facility Providers, or by the Borrower to the Valuation Agent or its
officers, directors, employees, agents, attorneys-in-fact or Affiliates, as the
case may be, for the benefit of the applicable payee, within two Business Days
following written demand therefor.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. CONFIDENTIALITY. Except as permitted by the Loan
Agreement, the Valuation Agent, the Lender, the Alternate Lender, the Facility
Agent and the Borrower each agree to keep confidential and not to disclose any
non-public information, calculations, exhibits or documents related to this
Valuation Agent Agreement or the Loan Agreement, without the express written
consent of the other parties thereto.
SECTION 6.02. AMENDMENT. This Valuation Agent Agreement may be amended
only by a written agreement signed by those parties hereto.
SECTION 6.03. GOVERNING LAW. this Valuation Agent Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 6.04. NOTICES.
(a) The Lender and the Alternate Lender agree to provide
written notice (which may be by facsimile or other electronic means) to
the Valuation Agent within three Business Days of the following: (i) a
new Facility Agent and (ii) the assignment by the Secured Creditors of
the Investment of the Lender or the Alternate Lender in the Advances to
the Borrower, such notice to include the amount of such assignment.
(b) All notices, requests or other communications to the
Valuation Agent, the Borrower, the Lender, the Alternate Lender, the
Facility Agent and the Trustee, including the notices required in
paragraph (a) above, shall be in writing (unless otherwise specified
herein) and shall be deemed to have been validly given or made when
delivered (via telecopy or by hand) or mailed, registered or certified
mail, return receipt requested and postage prepaid, addressed as
follows:
If to the Valuation Agent,
addressed to: RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
If to the Borrower,
8
addressed to it at: NELnet Student Loan Warehouse Corporation-1
c/o National Higher Education Loan Program
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇. ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lender,
addressed to it at: Thunder Bay Funding Inc.
▇/▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇)-▇▇▇-▇▇▇▇
If to the Alternate Lender,
addressed to it at: Royal Bank of Canada
c/o RBC Capital Markets
One Little Falls Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇)-▇▇▇-▇▇▇▇
If to the Facility
Administrator,
addressed to it at: Royal Bank of Canada
c/o RBC Capital Markets
One Little Falls Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇)-▇▇▇-▇▇▇▇
If to the Trustee,
addressed to it at: Zions First National Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: Corporate Trust Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9
Each entity listed above may change the address for service of notice
upon it by a notice in writing to the other entities named above. Each such
notice, request or communication shall be effective when delivered to the
address specified herein.
SECTION 6.05. THIRD PARTY BENEFICIARY. The Valuation Agent
acknowledges that the Borrower has granted a security interest in favor of the
Trustee for the benefit of the Secured Creditors all of the Borrower's right,
title and interest in, to and under this Valuation Agent Agreement. The
Valuation Agent consents to the grant of such security interest and agrees (a)
that the representations, warranties, covenants and other agreements of the
Valuation Agent contained herein (including, but not limited to, the Valuation
Agent's indemnity obligations hereunder) shall run directly to the Trustee and
the Secured Creditors and (b) that the Trustee and the Secured Creditors shall
be entitled to rely on and enforce such representations, warranties, covenants
and other agreements (including, but not limited to, the Valuation Agent's
indemnity obligations hereunder) to the same extent as if they were a party
hereto. The foregoing creates a permissive right on behalf of the Trustee and
the Secured Creditors, and the Trustee and the Secured Creditors shall be under
no duties or obligations hereunder.
SECTION 6.06. ASSIGNMENT BY THE LENDER. The Valuation Agent and the
Borrower acknowledge and agree that to the extent of any assignment by the
Lender of its right, title and interest in and to the Investment of the Lender
in the Advances to the Borrower pursuant to the terms of the Liquidity Agreement
or the Credit Support Agreement, the Liquidity Facility Providers and the Credit
Support Providers, as applicable, shall succeed to the rights and obligations of
the Lender hereunder and the Lender shall be released from such obligations
without any further act by the Borrower or the Valuation Agent.
SECTION 6.07. SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. EACH
OF THE BORROWER, THE LENDER, THE ALTERNATE LENDER, THE FACILITY AGENT AND THE
VALUATION AGENT HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE CITY OF NEW YORK, NEW YORK, AND IRREVOCABLY
AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS VALUATION AGENT AGREEMENT
SHALL BE LITIGATED IN SUCH COURTS, AND THE BORROWER, THE LENDER, THE ALTERNATE
LENDER, THE FACILITY AGENT AND THE VALUATION AGENT EACH WAIVE ANY OBJECTION
WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT
OF ANY PROCEEDING IN ANY PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE ADDRESS SET FORTH
HEREIN THAT SERVICE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT OR FIVE DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO SUCH ADDRESS.
EACH OF THE BORROWER, THE LENDER, THE ALTERNATE LENDER, THE FACILITY
AGENT AND THE VALUATION AGENT ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR
TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY
WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY CLAIM OR CAUSE OF
ACTION (INCLUDING ANY COUNTERCLAIM) ARISING DIRECTLY OR INDIRECTLY OUT OF,
10
UNDER OR IN CONNECTION WITH THIS VALUATION AGENT AGREEMENT. ANY OTHER DOCUMENT,
INSTRUMENT OR AGREEMENT EXECUTED AND/OR DELIVERED IN CONNECTION HEREWITH OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE, AND WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE
BORROWER, THE LENDER, THE ALTERNATE LENDER, THE FACILITY AGENT OR THE VALUATION
AGENT. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTY
HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH OF THE
BORROWER. THE LENDER. THE ALTERNATE LENDER, THE FACILITY AGENT AND THE VALUATION
AGENT WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
SECTION 6.08. NO PETITION. Each of the Borrower and the Valuation Agent
hereby covenants and agrees that prior to the date which is one year and one day
after the payment in full of all outstanding CP of the Lender, it will not
institute against or join any other person or entity in instituting against the
Lender, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
SECTION 6.09. LIMITED RECOURSE NATURE OF TRANSACTIONS. Each of the
Borrower and the Valuation Agent hereby acknowledges and agrees that all
transactions with the Lender hereunder shall be without recourse of any kind to
the Lender. The Lender shall have no obligation to pay any amounts owing
hereunder unless and until the Lender has received such amounts pursuant to the
Loan Agreement. In addition, each of the Borrower and the Valuation Agent agrees
that the Lender shall have no obligation to pay any amounts constituting fees, a
reimbursement for expenses or indemnities (collectively, "Expense Claims") and
such Expense Claims shall not constitute a claim against the Lender (as defined
in Section 101 of Title 11 of the United States Bankruptcy Code), unless or
until the Lender has received amounts sufficient to pay such Expense Claims
pursuant to the Loan Agreement and such amounts are not required to pay the CP
of the Lender.
SECTION 6.10. EXECUTION IN COUNTERPARTS. This Valuation Agent Agreement
may be executed in any number of counterparts, each of which when so executed
and delivered shall constitute an original, but such counterparts together shall
constitute but one and the same instrument.
SECTION 6.11. SEVERABILITY. In the event any one or more of the
provisions of this Valuation Agent Agreement shall for any reason be held to be
illegal or invalid, such illegality or invalidity shall not affect any other
provisions of this Valuation Agent Agreement, and this Valuation Agent Agreement
shall be construed and enforced as if such illegal or invalid provisions had not
been contained herein.
11
SECTION 6.12. SECTION TITLES. The section titles contained in this
Valuation Agent Agreement are for convenience of reference only and shall be
without substantive meaning or content of any kind whatsoever and are not a part
of the Agreement among the parties hereto.
SECTION 6.13. ENTIRE AGREEMENT. This Valuation Agent Agreement,
including all Exhibits attached hereto or incorporated by reference therein
constitutes the entire Agreement among the undersigned with respect to the
subject matter hereof and supersedes all other negotiations, understandings and
representations, both oral and written, with respect to the subject matter
hereof.
12
IN WITNESS WHEREOF, the undersigned have caused this Valuation Agent
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
THE VALUATION AGENT:
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Director
THE BORROWER:
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
THE LENDER:
THUNDER BAY FUNDING INC.
By: ROYAL BANK OF CANADA, its attorney-
in-fact.
By /s/ Sofia Shield
---------------------------------------
Sofia Shield, Manager
THE ALTERNATE LENDER:
ROYAL BANK OF CANADA
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
13
THE FACILITY AGENT:
ROYAL BANK OF CANADA
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
14
EXHIBIT A
FORM OF ADVANCE PERCENTAGE CALCULATION REPORT
In accordance with the Valuation Agreement, dated as of February 1,
2002. among RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., as valuation agent, NELnet Student Loan
Warehouse Corporation-1, as borrower. Thunder Bay Funding Inc., as lender, and
Royal Bank of Canada, as alternate lender and facility agent, RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇
Inc. has acted as Valuation Agent far purposes of preparing this Advance
Percentage Calculation Report. Based upon the Portfolio Characteristics and the
Valuation Report Assumptions (as defined therein), we hereby submit the
following summary of our calculations:
Date of Report:
Date of Proposed Advance:
Cut-off Date for Portfolio Characteristics:
A. Principal balance of loans to be financed $
B. Total Revenue $
C. Total Expenses $
D. Total Net Revenue (B - C) $
E. Present value of Net Revenue ("PV") $
F. PV AS A % OF LOAN PRINCIPAL BALANCE (E / A), PLUS 100%
("MAXIMUM ADVANCE PERCENTAGE") %
EXHIBIT B
FORM OF VALUATION REPORT
In accordance with the Valuation Agreement, dated as of February 1,
2002, among RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., as valuation agent. NELnet Student Loan
Warehouse Corporation-1, as borrower, Thunder Bay Funding Inc., as lender, and
Royal Bank of Canada, as alternate lender and facility agent, RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇
Inc. has acted as Valuation Agent for purposes of preparing this Valuation
Report. Based upon the Portfolio Characteristics and the Valuation Report
Assumptions (as defined therein), we hereby submit the following summary of our
calculations:
Valuation Date:
Date of Report:
Cut-off Date for Portfolio Characteristics:
A. Principal balance of loans $
B. Total Revenue $
C. Total Expenses $
D. Total Net Revenue (B - C) $
E. Present value of Net Revenue ("PV") $
F. PV AS A % OF LOAN PRINCIPLE BALANCE (E / A), PLUS 100%
("LOAN VALUATION PERCENTAGE") (1) %
----------------
(1) If subsequent to any repayment or refinancing pursuant to Section 5.11 of
the Loan Agreement, the Principal Balance of Defaulted Student Loans exceeds 10%
of the Principal Balance of all Financed Loans in "repayment status", the
Aggregate Market Value of all Defaulted Student Loans shall be valued separately
as Defaulted Student Loans on the related Valuation Date. Such separate
valuation has been used to prepare the Loan Valuation Percentage: Yes: ___
No: ___.
EXHIBIT C
FORM OF REQUEST FOR VALUATION REPORT
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: Education Loan Finance Group
[and, if requested by the Facility Agent:
NELnet Student Loan Warehouse Corporation-1
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇, Vice President]
Ladies and Gentlemen:
Pursuant to the terms of the Valuation Agent Agreement, dated as of
February 1, 2002, among RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., as valuation agent, NELnet
Student Loan Warehouse Corporation-1, as borrower, (the "Borrower"), Thunder Bay
Funding Inc., as lender (the "Lender") and Royal Bank of Canada, as alternate
lender and facility agent, and in particular Section 2.02(b) thereof, we hereby
request that you provide us with a Valuation Report.
[Such notice is also being provided at this time to the Borrower, in
order that they can prepare the Portfolio Characteristics and other information
required by you to compute the Loan Valuation Percentage.]
or, if requested by the Portfolio Administrator:
[The information required for you to prepare the Valuation Report,
including the Portfolio Characteristics and other information required to
compute the Loan Valuation Percentage is attached hereto.]
In accordance with the terms of the Valuation Agent Agreement, please
submit your report to us on or before [insert date], which is not less than 7
days from the later of (i) the date this notice has been provided to you and
(ii) the date the Portfolio Characteristics and other information required by
you to compute the Loan Valuation Percentage have been provided to you.
Sincerely,
[Royal Bank of Canada], or
[NELnet Inc.]
EXHIBIT D
INITIAL LOAN SERVICING FEES
I. STUDENT LOANS SERVICED BY NELNET LOAN SERVICES, INC.
▇▇▇▇▇▇▇▇, SLS CONSOLIDATION
PER ACCOUNT SERVICING FEES & PLUS LOANS LOANS
Enrolled $1.76 (1) per month N/A
Grace $3.31 (2) per month N/A
Deferment $3.31 (2) per month $3.75 per month
Forbearance $3.31 (2) per month $3.75 per month
Repayment $3.31 (2) per month $3.75 per month
Default claim filing $15.00 per claim filed $15.00 per claim filed
----------------
(1) Add $0.25 per month for any account
with an Unsubsidized Loan
(2) Add $0.05 per month for any account
with an Unsubsidized Loan
II. STUDENT LOANS SERVICED BY ▇▇▇▇▇▇ ▇▇▇ SERVICING ▇.▇.
▇▇▇▇▇▇▇▇, SLS CONSOLIDATION
PER ACCOUNT SERVICING FEES & PLUS LOANS LOANS
Enrolled
Grace
Deferment
Forbearance
Repayment
Default claim filing
III. STUDENT LOANS SERVICED BY GREAT LAKES SERVICE CORPORATION
▇▇▇▇▇▇▇▇, SLS
PER ACCOUNT SERVICING FEES & PLUS LOANS
Enrolled
Grace
Deferment
Forbearance
Repayment
Default claim filing
IV. STUDENT LOANS SERVICED BY PENNSYLVANIA HIGHER EDUCATION ASSISTANCE
AGENCY
▇▇▇▇▇▇▇▇, SLS CONSOLIDATION
PER ACCOUNT SERVICING FEES & PLUS LOANS LOANS
Enrolled
Grace
Deferment
Forbearance
Repayment
Default claim filing
D-2
EXHIBIT E
VALUATION REPORT ASSUMPTIONS
ROYAL BANK OF CANADA
THUNDER BAY FUNDING COMMERCIAL PAPER CONDUIT
[NELnet LOGO]
STUDENT LOAN WAREHOUSE FACILITY
PROPOSED MAXIMUM ADVANCE PERCENTAGE & LOAN VALUATION PERCENTAGE ASSUMPTIONS
CUMULATIVE DEFAULT RATES: BLENDED AVERAGE IF
4-YR. SCHOOL 2-YR. SCHOOL PROP/VOTECH SCHOOL TYPE NOT KNOWN
▇▇▇▇▇▇▇▇ Loans 30.0% 45.0% 68.0% 37.3%
PLUS Loans 22.0% 28.0% 35.0% 24.6%
SLS Loans 25.0% 45.0% 68.0% 33.8%
Consolidation Loans 25.0% 45.0% 68.0% 33.8%
ALLOWABLE SEASONING CREDIT: 100.0% of actual seasoning
using a default curve of
40/20/15/10/5/5/5
DEFAULT SPEED: 70/20/10
REIMBURSEMENT LOSS: 1%
REIMBURSEMENT LAG: 540 Days
PAYMENT LAGS:
Government Payments 60 Days 60%
Borrower Receipts Current 40%
30 Days
DEFERMENTS: Actual percentage for 18 months for
loans in Deferment status.
20% for 24 months of loans in School
or Grace status.
FORBEARANCES: Actual percentage for 9 months for
loans in Forbearance status.
15% for 12 months of loans in School
or Grace status.
INCENTIVE PARTICIPATION:
For Automatic Debit Incentive
Programs 20%
For Timely Payment Programs Attrition, if
applicable:
12 Month Qualification Program 65% 65/45/30/20
24 Month Qualification Program 45% 45/30/20
36 Month Qualification Program 30% 30/20
48 Month Qualification Program 20% None
INTEREST RATES:
91-Day T-▇▇▇▇ For variable rate FFELP loans, the Current T-▇▇▇▇
For fixed rate FFELP loans, the greater of (i) Current T-▇▇▇▇ and (ii)
the principal balance weighted average of the July 1 reset rates that
were in effect when the borrower interest rates were fixed
90-Day Financial CP T-▇▇▇▇ + 45 basis points
Thunder Bay Rate Actual Thunder Bay Interest Rate
Reinvestment Rate Actual GIC rate or T-▇▇▇▇
All-in Cost of Funds Greater of 90-Day Financial CP + 28 bps or Thunder Bay Rate + 28 bps
Discount Rate Cost of Funds + 80 basis points for the portion of the portfolio that
has 91 Day T-▇▇▇▇ Based Special Allowance Payments
Cost of Funds + 20 basis points for the portion of the portfolio that
has 90 Day Financial CP Based Special Allowance Payments
CASH RELEASE LEVEL: 103.0%
CASH RESERVE LEVEL: 0.50%
4
EXHIBIT C
REGULAR ADVANCE NOTICE
NELnet STUDENT LOAN WAREHOUSE CORPORATION-1 2002 WAREHOUSING FINANCING
WITH THUNDER BAY FUNDING INC. AS THE LENDER, AND ROYAL BANK OF CANADA, AS THE
ALTERNATE LENDER
REGULAR ADVANCE NOTICE
EXHIBIT C
Date: [3 Business Days prior to date Advance is to be made]
In accordance with Section 2.02 of the Warehouse Loan and Security
Agreement dated as of February 1, 2002 (the "Agreement"), by and among
NELnet Student Loan Warehouse Corporation-1, as borrower (the
"Borrower"), Zions First National Bank, at trustee (the "Trustee"),
Thunder Bay Funding Inc., as lender, and Royal Bank of Canada, as
facility agent and alternate lender, the Borrower hereby requests an
Advance in the amount and as of the date provided below. This request
is accompanied by an Advance Percentage Calculation Report if required
pursuant to Section 3.02 of the Agreement.
Date of Advance -----------
ADDITIONAL ADVANCES/ROLLOVER ADVANCES:
Total Required Additional Advances/Rollover Advances as required
pursuant to Exhibit E to the Agreement -----------
NEW ADVANCES FOR THE FUNDING OF STUDENT LOANS:
Aggregate Amount of Student Loans to be Financed
Principal -----------
Maximum Advance Amount, as provided
in the Advance Percentage Calculation Report %
for the most recently ended quarter -----------
Requested Advance Percentage, not to exceed the %
the Maximum Advance Amount provided above -----------
Amount of borrowing required for principal funding
(Student Loan Principal multiplied by Requested Advance %) -----------
Amount of borrowing required for interest funding -----------
Total Amount of New Advances ===========
TOTAL ADVANCES ===========
(Sum of Additional Advances/Rollover Advances and
Amount of New Advances, provided above)
TEST OF FACILITY AMOUNT:
Total available Facility Amount 300,000,000
Less the sum of:
Total outstanding Advances -----------
Total projected interest due on all outstanding Advances -----------
Total outstanding Advances & interest -----------
Remaining facility amount ===========
Capitalized terms not otherwise defined herein shall have the meanings
assigned to them in the Agreement.
Please consider this proper authorization to transfer the Total
Advances to be Advanced in the Amount noted above to the Collection
Advance Subaccount held by the Trustee on [DATE OF ADVANCE]. Pursuant
to Article III of the Agreement, I hereby certify that NELnet Student
Loan Warehouse Corporation-1 has met the Conditions precedent to all
borrowings as required and as described in such section. I further
certify that to the best of my knowledge and belief, (i) the amounts
provided above are accurate and complete and (ii) no Event of Default
or Early Amortization Event under the Agreement has occurred and is
continuing.
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
C-2
EXHIBIT D
SPECIAL ADVANCE NOTICE
NELnet STUDENT LOAN WAREHOUSE CORPORATION-1 2002 WAREHOUSING
FINANCING WITH THUNDER BAY FUNDING INC., AS THE LENDER, AND ROYAL BANK
OF CANADA, AS THE ALTERNATE LENDER
SPECIAL ADVANCE NOTICE
EXHIBIT D
Date: [One Business Day prior to date Advance is to be made]
In accordance with Section 2.02 of the Warehouse Loan and Security
Agreement, dated as of February 1, 2002 (the "Agreement"), by and among
NELnet Student Loan Warehouse Corporation-1, as borrower (the
"Borrower"), Zions First National Bank, as trustee (the "Trustee"),
Thunder Bay Funding Inc., as lender, and Royal Bank of Canada, as
facility agent and alternate lender, the Borrower hereby requests an
Advance in the amount and as of the date provided below.
Date of Advance -----------
NEW ADVANCES FOR THE FUNDING OF STUDENT LOANS:
Aggregate Amount of Student Loans to be Financed
Principal (not to exceed the aggregate
principal amount of Student Loans to be
financed) -----------
-----------
Amount of borrowing required for interest funding -----------
Total Amount of New Advances ===========
TEST OF FACILITY AMOUNT:
Total available Facility Amount 300,000,000
Less the sum of:
Total outstanding Advances ------------
Total projected interest due on all outstanding Advances ------------
Total outstanding Advances & interest -----------
Remaining facility amount ===========
Capitalized terms not otherwise defined herein shall have the meanings
assigned to them in the Agreement.
Please consider this proper authorization to transfer the Total Amount
of New Advances in the Amount noted above to the Collection Advance
Subaccount held by the Trustee on [DATE OF ADVANCE). Pursuant to
Article III of the Agreement, I hereby certify that NELnet Student Loan
Warehouse Corporation-1 has met the Conditions precedent to all
borrowings as required and as described in such section. I further
certify that to the best of my knowledge and belief, (i) the amounts
provided above are accurate and complete and (ii) no Event of Default
or Early Amortization Event under the Agreement has occurred and is
continuing.
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
EXHIBIT E
MONTHLY REPORT
NELnet STUDENT LOAN WAREHOUSE CORPORATION-1 2002 WAREHOUSING FINANCING WITH
THUNDER BAY FUNDING INC., AS THE LENDER, AND ROYAL BANK OF CANADA, AS THE
ALTERNATE LENDER
MONTHLY REPORT
EXHIBIT E
CALCULATION DATE: [4th Business Day preceding each Settlement Date]
CALCULATION PERIOD: [Calendar month preceding the Settlement Date]
SETTLEMENT DATE: [First Business Day of each month]
COLLECTION DATE: [6th Business Day preceding the end of each month]
INTEREST PRINCIPAL
COLLECTIONS COLLECTIONS TOTAL
----------- ----------- -----
COLLECTIONS:
Interest Payments received by Servicers ----------- ----------- -----
Government Interest & Special Allowance
Payments received (from DOE) ----------- ----------- -----
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 Advances -----
TOTAL COLLECTIONS AND ADDITIONAL ADVANCES =====
PAYMENT WATERFALL:
1. Accrued and unpaid Servicer Fees and Custodian Fees as of the close of
business on the last day of the immediately preceding Calculation Period -----
2. Accrued and unpaid Program Availability Fees, Program Usage Fees,
Alternate Interest Amounts and Liquidity Interest Amounts due and owing
as of the close of business on the last day of the immediately preceding
Calculation Period -----
3. Maturing Principal Amount of Advances net of any new Rollover Advance,
in each case, due and owning as of such Settlement Date -----
4. Accrued and unpaid Liquidity Fees and other Obligations owed to the
Lender, the Alternate Lender, the Liquidity Facility Providers and the
Credit Support Providers as of the Settlement Date -----
5. Accrued and unpaid Trustee Fees as of the close of business on the
last day of the immediately preceding Calculation Period -----
6. Amounts necessary to restore the Cash Reserve Account to the Cash
Reserve Requirement or amounts allowed to be withdrawn from the Cash
Reserve Account -----
7. Accrued and unpaid Portfolio Administration Fees as of the close
of business on the last day of the immediately preceding Calculation
Period -----
8. Amounts designated by the Borrower to reduce the Amount of the
Outstanding Advances -----
9. Accrued and unpaid Obligations as of the close of business on the
last day of the immediately preceding Calculation Period -----
10. Estimated Taxes payable prior to the next Settlement Date -----
11. On the Settlement Date immediately following each Quarterly
Valuation Date, amounts calculated pursuant to the provisions of
Exhibit F to the Agreement, and as further directed by the Borrower -----
TOTAL REQUIRED PAYMENTS PURSUANT TO SECTION 2.05(c) OF THE AGREEMENT -----
=====
[ATTACH A DESCRIPTION OF THE CHARACTERISTICS OF THE FINANCED LOANS, INCLUDING THE AGGREGATE
OUTSTANDING PRINCIPAL BALANCE OF THE FINANCED LOANS BY LOAN TYPE, BORROWER STATUS,
DELINQUENCY CATEGORY AND SCHOOL TYPE]
The following calculations have been performed to evidence that an Early Amortization Event
has not occurred:
The outstanding Principal Balance of Financed Loans constituting Proprietary Loans, computed
as a percentage of the Principal Balance of all Financed Loans, which shall be 20% or less, equals: ____%
The outstanding Principal Balance of unsubsidized ▇▇▇▇▇▇▇▇ Loans in either "enrolled" or "grace" status.
computed as a percentage of the Principal Balance of all Financed Loans, which shall be 60% or less ____%
equals:
The outstanding Principal Balance of Financed Loans that are thirty (30) or more days delinquent
computed as a percentage of the Principal Balance of all Financed Loans in "repayment status,"
which shall be 23% or less, equals: ____%
The outstanding Principal Balance of Financed Loans in "claim" status, computed as a percentage of
the Principal Balance of all Financed Loans in "repayment status," which shall be 20% or less, equals: ____%
The outstanding Principal Balance of Financed Loans in "claim" status, computed as a percentage of
the Principal Balance of Financed Loans in "repayment" status, which shall be 15% or less, equals: ____%
As an authorized representative of NELnet Student Loan Warehouse Corporation-1.
I hereby certify that to the best of my knowledge and belief (i) the amounts
provided above are accurate and complete as determined on the Settlement Date
and in accordance with the provisions of the Warehouse Loan and Security
Agreement, dated as of February 1, 2002 (the "Agreement"), by and among NELnet
Student Loan Warehouse Corporation-1, as borrower, Zions First National Bank, as
trustee, Thunder Bay Funding Inc., as lender, and Royal Bank of Canada, as
facility agent and alternate lender, and (ii) no Event of Default or Early
Amortization Event under the Agreement has occurred and is continuing.
Capitalized terms not defined herein shall have the meanings assigned to them in
the Agreement.
This Exhibit E shall constitute the written direction to the Trustee to make the
deposits and transfers set forth in Section 2.05(c) of the Agreement. The
Trustee may conclusively rely on this Exhibit E and shall be under no duty to
review or examine the information set forth herein.
NELnet, Inc., as Portfolio Administrator
________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Date:____________________________________
APPROVED:
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1, as Borrower
_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Date: ___________________________
E-2
EXHIBIT F
FORMS OF ASSET COVERAGE REPORT AND CASH RELEASE CERTIFICATE
NELnet STUDENT LOAN WAREHOUSE CORPORATION-1 2002 WAREHOUSING FINANCING WITH
THUNDER BAY FUNDING INC., AS THE LENDER, AND ROYAL BANK OF CANADA, AS THE
ALTERNATE LENDER
ASSET COVERAGE REPORT
EXHIBIT F
AGGREGATE MARKET VALUE*:
(i) Outstanding principal balance of Financed Loans,
multiplied by the Loan Valuation Percentage(1)
(ii) Accrued and unpaid borrower interest, federal interest
subsidies and special allowance payments
(iii) Outstanding principal balance of Permitted Investments,
including accrued and unpaid interest thereon
(iv) Cash Balances in Collection Account and Cash Reserve
Account
(v) Payments on Financed Loans or other assets received by
the Servicer or the Borrower and not yet transferred to
the Trustee
(vi) The unamortized value of any prepaid expenses
TOTAL AGGREGATE MARKET VALUE
LIABILITIES*:
(i) Facility Amount Advances
(ii) Accrued and unpaid Program Availability Fees, Program
Usage Fees, Alternate Interest Amounts, Liquidity
Interest Amounts and Liquidity Fees
(iii) Any other accrued and unpaid fees:
(a) Custodian Fees
(b) Liquidity Fees
(c) Servicing Fees
(d) Trustee Fees
(e) Portfolio Administration Fees
(f) Indemnities and Other Fees
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.
------------------
(1) If subsequent to any repayment or refinancing pursuant to Section 5.11 of
the Loan Agreement, the Principal Balance of Defaulted Student Loans exceeds 10%
of the Principal Balance of all Financed Loans in "repayment status", the
Aggregate Market Value of all Defaulted Student Loans shall be valued separately
as Defaulted Student Loans on the related Valuation Date.
As an authorized representative of NELnet Student Loan Warehouse Corporation-1,
I hereby certify that to the best of my knowledge and belief (i) the calculation
of the Asset Coverage Ratio is accurate and complete as determined on the
Calculation Date and in accordance with the provisions of the Warehouse Loan and
Security Agreement, dated as of February 1, 2002 (the "Agreement"), by and
among NELnet Student Loan Warehouse Corporation-1, as borrower, Zions First
National Bank, at trustee, Thunder Bay Funding Inc., as lender, and Royal Bank
of Canada, as facility agent and alternate lender, and (ii) no Event of Default
or Early Amortization Event under the Agreement has occurred and is continuing.
All capitalized terms not defined herein shall have the meanings assigned to
them in the Agreement.
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
__________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Date: ___________________________
F-2
NELnet STUDENT LOAN WAREHOUSE CORPORATION-1 2002 WAREHOUSING FINANCING WITH
THUNDER BAY FUNDING INC., AS THE LENDER, AND ROYAL BANK OF CANADA, AS THE
ALTERNATE LENDER
FORM OF CASH RELEASE CERTIFICATE
EXHIBIT F
Calculation Date (Quarterly): [Fourth Business Day preceding each Settlement
Date occurring in the months of March, June September and December]
Settlement Date following each Quarterly Valuation Date: [First Business Day of
March, June, September and December]
Corporate Trust Officer
Zions First National Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Pursuant to Section 2.05(c)(xi) of the Warehouse Loan and Security Agreement,
dated as of February 1, 2002 (the "Agreement"), by and among NELnet Student Loan
Warehouse Corporation, as borrower (the "Borrower"), Zions First National Bank,
as trustee, Thunder Bay Funding Inc., as lender, and Royal Bank of Canada, as
facility agent and alternate lender, you are hereby instructed to release funds
in the amount of $_________(the "Excess Coverage Amount") to be transferred to
the Borrower or any other Person as directed by the Borrower (by wire transfer
as directed by the Borrower) on the Settlement Date of________. The Excess
Coverage Amount is the amount of funds permitted to be withdrawn pursuant to
Exhibit E to the Agreement and as further permitted by the calculation of the
Asset Coverage Ratio, included herewith. Provided below is the calculation of
the restated Asset Coverage Ratio following the withdrawal of the Excess
Coverage Amount. Additionally, provided in connection with this Cash Release
Certificate is the Asset Coverage Ratio and the Valuation Report. As an
authorized representative of NELnet Student Loan Warehouse Corporation-1, I
hereby certify that to the best of my knowledge and belief the calculation of
the Excess Coverage Amount and the restated Asset Coverage Ratio are accurate
and complete as determined on the Calculation Date; and I further certify that
any transfer hereunder shall not result in (i) Net Revenues of less than $0,
(ii) an Asset Coverage Ratio of less than 103% and (iii) an Event of Default or
a required collateral call pursuant to the provisions of the Agreement.
All capitalized terms not defined herein shall have the meanings assigned to
them in the Agreement
RESTATED ASSET COVERAGE RATIO:
Total Aggregate Market Value
Less: Permitted Excess Coverage Amount ( )
Total Restated Aggregate Market Value
Total Liabilities calculated pursuant to Exhibit __
RESTATED ASSET COVERAGE RATIO %
Required Release Ratio 103.00%
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Date: _____________
F-3
EXHIBIT G
COPIES OF CUSTODIAN AGREEMENTS
EXHIBIT G
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated as of February 1, 2002 (this "Custodian
Agreement"), is by and among NELnet STUDENT LOAN WAREHOUSE CORPORATION-1 (the
"Borrower"), ZIONS FIRST NATIONAL BANK, as Trustee (the "Trustee"), and NELnet
LOAN SERVICES, INC., as custodian (the "Custodian").
WHEREAS, the Borrower, the Trustee, Thunder Bay Funding Inc., and Royal
Bank of Canada have entered into a Warehouse Loan and Security Agreement, dated
as of February 1, 2001 (the "Loan Agreement"), pursuant to which the Borrower,
through the Trustee as the Eligible Lender (as defined in the Loan Agreement),
will acquire student loans (the "Financed Loans"); and
WHEREAS, pursuant to the Loan Agreement, the Borrower has granted to
the Trustee, and its successors and assigns, a security interest in, among other
things, the promissory notes and certain other documents relating to certain
Financed Loans as security, pursuant to the performance and observance by the
Borrower of all of the covenants, terms and conditions expressed or implied in
the Loan Agreement; and
WHEREAS, the Trustee has requested, and the Borrower has agreed, that
all Financed Loans (including all Financed 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 Borrower has entered into a Loan Servicing Agreement,
dated as of February 1, 2002 (the "Servicing Agreement"), with the Custodian, as
servicer; and
WHEREAS, the Borrower desires to contract for the Custodian to provide
the custodial services set forth herein; and
WHEREAS, the Borrower has directed the Trustee to enter into this
Custodian Agreement for the purpose of appointing the Custodian as its agent to
take possession and custody of the Deposited Loans (as defined below) and the
proceeds therefrom; and
WHEREAS, the Borrower will from time to time in the future deliver, or
cause the Trustee to deliver, to the Custodian Financed Loans to be serviced by
the Custodian, as servicer;
NOW, THEREFORE, the Trustee and the Borrower hereby authorize the
Custodian to so hold all Deposited Loans as bailee and agent of the Trustee and
authorize the Custodian to perform the following functions, and duties in
connection therewith, and the Custodian agrees to perform such functions and
duties (in the case of the custodian, as bailee and agent of the Trustee),
including perfecting and continuing the perfection of the Trustee's security
interest in the Deposited Loans:
1. DEFINITIONS. Unless otherwise defined herein, all capitalized
terms used herein, including the premises thereof, shall have the meanings
ascribed to such terms in the Loan Agreement.
"Deposited Loans" means all Financed Loans financed pursuant to the
Loan Agreement which now or at any time hereafter are serviced by or in the
possession of the Custodian, as servicer, pursuant to the Servicing Agreement as
well as all records and other instruments and documents relating thereto.
2. SAFEKEEPING OF THE DEPOSITED LOANS. The Custodian hereby
agrees to perform the following services for the Trustee with respect to the
Deposited Loans:
(a) To hold in its fireproof storage vault and under its
exclusive control the following documents with respect to each of the
Deposited Loans and shall use due care to preserve and protect the
same:
(i) the original promissory note or a copy of
the Master Promissory Note and documentation related to the
Deposited Loans issued pursuant to the Master Promissory Note;
(ii) the Notification of Loan Approval, if any,
from a Guarantor guaranteeing the Financed Loan (each a
"Guarantor"); and
(iii) any further documentation required by the
Secretary of Education (the "Secretary"), if applicable, or
the applicable Guarantor.
provided, however, that to the extent permitted in accordance with the
rules and regulations of the Secretary and/or the applicable Guarantor,
the Custodian may retain any of such documentation (other than original
promissory notes) on microfilm or other electronic, image or similar
storage system.
(b) Upon the written demand of the Borrower or the
Trustee and in circumstances authorized in the Loan Agreement, the
Custodian shall deliver and immediately release to the Trustee any and
all of the Deposited Loans at the time held by Custodian, as well as
all related information and documents required to be held under the
Servicing Agreement.
(c) To furnish the Trustee semiannually a list containing
the names and social security numbers of the obligors of the Deposited
Loans, the unpaid principal balance of all Deposited Loans of each of
said obligors, and such other information with respect to the Deposited
Loans which is reasonably requested by the Trustee.
(d) To permit inspection at all reasonable times and upon
reasonable advance notice by the Borrower or Trustee, the Guarantors,
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.
(e) To furnish the Trustee from time to time upon written
request of the Trustee such reports as are required by the Servicing
Agreement.
2
(f) To furnish to the Trustee, at the request of the
Trustee or the Borrower, prior to the acquisition of any Student Loans,
a confirmation that all records, documents and other instruments
described in clause (a) above with respect to such Student Loans, have
been received by the Custodian; and
(g) To take any and all such other action with respect to
the Deposited Loans as the Trustee may, consistent with its rights and
obligations under the Servicing Agreement, reasonably request.
In accordance with the written direction of the Borrower, the Trustee
hereby appoints the Custodian as its agent solely to take physical possession
and custody of the Deposited Loans and the proceeds thereof in accordance with
the terms of this Custodian Agreement. The Custodian hereby accepts such
appointment 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 Loan Agreement.
4. RELEASE OF COLLATERAL. The Custodian may release Deposited
Loans and all related information and documentation held by the Custodian only
as follows:
(a) the Custodian may release to any Person at any time
any Deposited Loan that has been paid in full;
(b) the Custodian may release to an applicable Guarantor
any Deposited Loan which is eligible for claim payment and with respect
to which a claim is (or is to be) filed; and
(c) the Custodian may, in accordance with the provisions
of Section 2(b) hereof, release to the Trustee the Deposited Loans and
any records, documents and instruments relating thereto, subject to the
provisions of the Servicing Agreement.
Except as described in this paragraph and except upon termination of
this Custodian Agreement, the Custodian will not release any Deposited Loans
unless the Custodian is in receipt of written authorization from the Trustee.
5. NO LIABILITY. The Trustee shall have no responsibility for
loss or damage suffered by the Borrower with respect to any Deposited Loan
delivered or released pursuant to this Custodian Agreement.
6. TERMINATION OF THIS CUSTODIAN AGREEMENT. This Custodian
Agreement shall remain in effect until the date on which either of the following
shall occur: (a) the Servicing Agreement shall have expired or otherwise been
terminated; or (b) upon satisfaction of all indebtedness of the Borrower the
payment of which is secured under the Loan Agreement, including indebtedness for
any penalties, costs of collection or other charges. Upon termination of this
Custodian Agreement for any reason other than full satisfaction of indebtedness
of the
3
Borrower, the Deposited Loans then held by Custodian shall be forthwith
delivered to the party designated by the Trustee, subject to the terms of the
Servicing Agreement. Upon termination of this Custodian Agreement following
satisfaction of indebtedness of the Borrower, Deposited Loans and materials
relating thereto in the possession of the Custodian shall be delivered to the
Borrower or its designee. This Custodian Agreement shall not be subject to
termination other than as specifically provided in this paragraph.
7. INSPECTION RIGHTS. To the extent permitted by law, all records
maintained by the Custodian with respect to the Deposited Loans shall be
available for inspection or audit from time to time by the Trustee, the Credit
Facility Provider (as defined in the Loan Agreement) and the Borrower (or their
respective designees) upon request of the Trustee or the Borrower, 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. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CUSTODIAN.
(a) The Custodian agrees to accept delivery of the
promissory notes and other documents pertaining to the Deposited Loans
and to have and maintain continuous and exclusive possession and
control over all documents evidencing the Deposited Loans delivered to
it under this Custodian Agreement.
(b) The Custodian shall exercise reasonable care and
diligence in the possession, retention and protection of the Deposited
Loans delivered to it hereunder. The Custodian accepts the custodial
duties and responsibilities imposed upon it hereunder and agrees to
perform such custodial duties and responsibilities in a sound and
prudent manner consistent in all respects with sound custodial
practices and principles.
(c) The Custodian shall at all times during the term of
this Custodian Agreement maintain insurance which shall include, but
not be limited to, dishonesty of employees or other crimes resulting in
the loss of the Deposited Loans and comprehensive general liability,
including personal injury and loss or damage to documents.
(d) The Custodian shall at all times maintain records
indicating the borrower name and Social Security number, at a minimum,
of all Deposited Loans which are delivered to it to hold as Custodian
pursuant to this Custodian Agreement and indicating that such Deposited
Loans have been pledged to the Trustee.
9. MISCELLANEOUS.
(a) This Custodian Agreement shall be binding upon the
parties hereto and their successors, transferees and assigns, and shall
inure to the benefit of and be enforceable by all parties hereto and
their respective successors, transferees and assigns.
(b) The Custodian acknowledges and agrees that its
services under this Custodian Agreement are in addition to, and not in
lieu of its services as servicer of the Deposited Loans under and
pursuant to the Servicing Agreement.
4
(c) This Custodian Agreement may be executed and
delivered in any number of counterparts, each of which, when so
executed and delivered, shall be an original; provided, however, that
such counterparts shall together constitute but one and the same
instrument.
(d) Any provision of this Custodian Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be effective to the extent of such
prohibition, unenforceability or nonauthorization without invalidating
the remaining provisions hereof or affecting the validity or
enforceability or legality of such provision in any other jurisdiction.
(e) THIS CUSTODIAN AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
COLORADO.
(f) All notices, requests, demands and other
communications under or in respect of this Custodian Agreement shall be
in writing 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 Borrower: NELnet Student Loan Warehouse Corporation-1
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to: NELnet, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee: Zions First National Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Phone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
5
If to the Custodian: NELnet Loan Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
6
IN WITNESS WHEREOF, the parties have signed this Custodian Agreement as
of the date first written above.
ZIONS FIRST NATIONAL BANK, as Trustee
under the Loan Agreement
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
NELnet LOAN SERVICES, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
BY /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
7
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated as of February 1, 2002 (this "Custodian
Agreement"), is by and among NELnet STUDENT LOAN WAREHOUSE CORPORATION-1 (the
"Borrower"), ZIONS FIRST NATIONAL BANK, as Trustee (the "Trustee"), and EFS
SERVICES, INC., as custodian (the "Custodian").
WHEREAS, the Borrower, the Trustee, Thunder Bay Funding Inc., and Royal
Bank of Canada have entered into a Warehouse Loan and Security Agreement, dated
as of February 1, 2001 (the "Loan Agreement"), pursuant to which the Borrower,
through the Trustee as the Eligible Lender (as defined in the Loan Agreement),
will acquire student loans (the "Financed Loans"); and
WHEREAS, pursuant to the Loan Agreement, the Borrower has granted to
the Trustee, and its successors and assigns, a security interest in, among other
things, the promissory notes and certain other documents relating to certain
Financed Loans as security, pursuant to the performance and observance by the
Borrower of all of the covenants, terms and conditions expressed or implied in
the Loan Agreement; and
WHEREAS, the Trustee has requested, and the Borrower has agreed, that
all Financed Loans (including all Financed 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 Borrower has entered into a Loan Servicing Agreement,
dated as of February 1,2002, with NELnet Loan Servicing, Inc. as servicer (the
"Servicier"); and
WHEREAS, the Borrower has entered into an EFS Subservicing Agreement,
dated as of February 1, 2002 (the "Subservicing Agreement"), with EFS Services,
Inc. as servicer; and
WHEREAS, the Borrower desires to contract for the Custodian to provide
the custodial services set forth herein; and
WHEREAS, the Borrower has directed the Trustee to enter into this
Custodian Agreement for the purpose of appointing the Custodian as its agent to
take possession and custody of the Deposited Loans (as defined below) and the
proceeds therefrom; and
WHEREAS, the Borrower will from time to time in the future deliver, or
cause the Trustee to deliver, to the Custodian Financed Loans to be serviced by
the Custodian, as servicer;
NOW, THEREFORE, the Trustee and the Borrower hereby authorize the
Custodian to so hold all Deposited Loans as bailee and agent of the Trustee and
authorize the Custodian to perform the following functions, and duties in
connection therewith, and the Custodian agrees to perform such functions and
duties (in the case of the custodian, as bailee and agent of the Trustee),
including perfecting and continuing the perfection of the Trustee's security
interest in the Deposited Loans:
1. DEFINITIONS. Unless otherwise defined herein, all capitalized
terms used herein, including the premises thereof, shall have the meanings
ascribed to such terms in the Loan Agreement.
"Deposited Loans" means all Financed Loans financed pursuant to the
Loan Agreement which now or at any time hereafter are serviced by or in the
possession of the Custodian, as subservicer, pursuant to the Subservicing
Agreement as well as all records and other instruments and documents relating
thereto.
2. SAFEKEEPING OF THE DEPOSITED LOANS. The Custodian hereby
agrees to perform the following services for the Trustee with respect to the
Deposited Loans:
(a) To hold in its fireproof storage vault and under its
exclusive control the following documents with respect to each of the
Deposited Loans and shall use due care to preserve and protect the
same:
(i) the original promissory note or a copy of
the Master Promissory Note and documentation related to the
Deposited Loans issued pursuant to the Master Promissory Note;
(ii) the Notification of Loan Approval, if any,
from a Guarantor guaranteeing the Financed Loan (each a
"Guarantor"); and
(iii) any further documentation required by the
Secretary of Education (the "Secretary"), if applicable, or
the applicable Guarantor.
provided, however, that to the extent permitted in accordance with the
rules and regulations of the Secretary and/or the applicable Guarantor,
the Custodian may retain any of such documentation (other than original
promissory notes) on microfilm or other electronic, image or similar
storage system.
(b) Upon the written demand of the Borrower or the
Trustee and in circumstances authorized in the Loan Agreement, the
Custodian shall deliver and immediately release to the Trustee any and
all of the Deposited Loans at the time held by Custodian, as well as
all related information and documents required to be held under the
Subservicing Agreement.
(c) To furnish the Trustee semiannually a list containing
the names and social security numbers of the obligors of the Deposited
Loans, the unpaid principal balance of all Deposited Loans of each of
said obligors, and such other information with respect to the Deposited
Loans which is reasonably requested by the Trustee.
(d) To permit inspection at all reasonable times and upon
reasonable advance notice by the Borrower or Trustee, the Guarantors,
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
(e) To furnish the Trustee from time to time upon written
request of the Trustee such reports as are required by the Subservicing
Agreement.
(f) To furnish to the Trustee, at the request of the
Trustee or the Borrower, prior to the acquisition of any Student Loans,
a confirmation that all records, documents and other instruments
described in clause (a) above with respect to such Student Loans have
been received by the Custodian; and
(g) To take any and all such other action with respect to
the Deposited Loans as the Trustee may, consistent with its rights and
obligations under the Subservicing Agreement, reasonably request.
In accordance with the written direction of the Borrower, the Trustee
hereby appoints the Custodian as its agent solely to take physical possession
and custody of the Deposited Loans and the proceeds thereof in accordance with
the terms of this Custodian Agreement. The Custodian hereby accepts such
appointment 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 Loan Agreement.
4. RELEASE OF COLLATERAL. The Custodian may release Deposited
Loans and all related information and documentation held by the Custodian only
as follows:
(a) the Custodian may release to any Person at any time
any Deposited Loan that has been paid in full;
(b) the Custodian may release to an applicable Guarantor
any Deposited Loan which is eligible for claim payment and with respect
to which a claim is (or is to be) filed; and
(c) the Custodian may, in accordance with the provisions
of Section 2(b) hereof, release to the Trustee the Deposited Loans and
any records, documents and instruments relating thereto, subject to the
provisions of the Subservicing Agreement.
Except as described in this paragraph and except upon termination of
this Custodian Agreement, the Custodian will not release any Deposited Loans
unless the Custodian is in receipt of written authorization from the Trustee.
5. NO LIABILITY. The Trustee shall have no responsibility for
loss or damage suffered by the Borrower with respect to any Deposited Loan
delivered or released pursuant to this Custodian Agreement.
6. TERMINATION OF THIS CUSTODIAN AGREEMENT. This Custodian
Agreement shall remain in effect until the date on which either of the following
shall occur: (a) the Subservicing Agreement shall have expired or otherwise been
terminated; or (b) upon satisfaction of all
3
indebtedness of the Borrower the payment of which is secured under the Loan
Agreement, including indebtedness for any penalties, costs of collection or
other charges. Upon termination of this Custodian Agreement for any reason other
than full satisfaction of indebtedness of the Borrower, the Deposited Loans then
held by Custodian shall be forthwith delivered to the party designated by the
Trustee, subject to the terms of the Subservicing Agreement. Upon termination of
this Custodian Agreement following satisfaction of indebtedness of the Borrower,
Deposited Loans and materials relating thereto in the possession of the
Custodian shall be delivered to the Borrower or its designee. This Custodian
Agreement shall not be subject to termination other than as specifically
provided in this paragraph.
7. INSPECTION RIGHTS. To the extent permitted by law, all records
maintained by the Custodian with respect to the Deposited Loans shall be
available for inspection or audit from time to time by the Trustee, the Credit
Facility Provider (as defined in the Loan Agreement) and the Borrower (or their
respective designees) upon request of the Trustee or the Borrower, 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. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CUSTODIAN.
(a) The Custodian agrees to accept delivery of the
promissory notes and other documents pertaining to the Deposited Loans
and to have and maintain continuous and exclusive possession and
control over all documents evidencing the Deposited Loans delivered to
it under this Custodian Agreement.
(b) The Custodian shall exercise reasonable care and
diligence in the possession, retention and protection of the Deposited
Loans delivered to it hereunder. The Custodian accepts the custodial
duties and responsibilities imposed upon it hereunder and agrees to
perform such custodial duties and responsibilities in a sound and
prudent manner consistent in all respects with sound custodial
practices and principles.
(c) The Custodian shall at all times during the term of
this Custodian Agreement maintain insurance which shall include, but
not be limited to, dishonesty of employees or other crimes resulting in
the loss of the Deposited Loans and comprehensive general liability,
including personal injury and loss or damage to documents.
(d) The Custodian shall at all times maintain records
indicating the borrower name and Social Security number, at a minimum,
of all Deposited Loans which are delivered to it to hold as Custodian
pursuant to this Custodian Agreement and indicating that such Deposited
Loans have been pledged to the Trustee.
9. MISCELLANEOUS.
(a) This Custodian Agreement shall be binding upon the
parties hereto and their successors, transferees and assigns, and shall
inure to the benefit of and be enforceable by all parties hereto and
their respective successors, transferees and assigns.
4
(b) The Custodian acknowledges and agrees that its
services under this Custodian Agreement are in addition to, and not in
lieu of its services as servicer of the Deposited Loans under and
pursuant to the Subservicing Agreement.
(c) This Custodian Agreement may be executed and
delivered in any number of counterparts, each of which, when so
executed and delivered, shall be an original; provided, however, that
such counterparts shall together constitute but one and the same
instrument.
(d) Any provision of this Custodian Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be effective to the extent of such
prohibition, unenforceability or nonauthorization without invalidating
the remaining provisions hereof or affecting the validity or
enforceability or legality of such provision in any other jurisdiction.
(e) THIS CUSTODIAN AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
COLORADO.
(f) All notices, requests, demands and other
communications under or in respect of this Custodian Agreement shall be
in writing 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 Borrower: NELnet Student Loan Warehouse Corporation-1
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: NELnet, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
5
If to the Trustee: Zions First National Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Phone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Custodian: EFS Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
6
IN WITNESS WHEREOF, the parties have signed this Custodian Agreement as
of the date first written above.
ZIONS FIRST NATIONAL BANK, as Trustee
under the Loan Agreement
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Vice President
EFS SERVICES, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
BY /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
7
EXHIBIT H
FORM OF PARTICIPATION AGREEMENT
EXHIBIT H
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT is made and entered into as of the 1st day
of February, 2002, by and between UNION BANK AND TRUST COMPANY, a Nebraska
banking corporation ("Lender"), in its individual capacity and as trustee, and
NELNET STUDENT LOAN WAREHOUSE CORPORATION-1, a Nevada corporation
("Participant").
WHEREAS, Lender is or will be the owner and holder of FFELP Loans (as
defined herein), or beneficial interests therein, originated by or on behalf of
Lender or acquired by Lender; and
WHEREAS, Lender desires to sell, and Participant desires to purchase,
an undivided 100% participation interest in certain FFELP Loans on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
"Agreement" means this Participation Agreement and any amendment or
supplement hereto.
"Borrower" means the student or parent obligor under an Eligible Loan.
"Certificate of Insurance" means a certificate of federal loan
insurance issued with respect to an Eligible Loan by the Secretary of Education
pursuant to the provisions of the Higher Education Act.
"Commitment Amount" means the aggregate outstanding principal balance
of up to $265,000,000 of FFELP Loans, participation interests in which are
committed to be sold by Lender and purchased by the Participant pursuant to this
Agreement.
"Commitment Period" means the period of time commencing on the date
first set forth above and terminating 364 days thereafter, and renewing
thereafter for successive 364-day periods, unless either party gives written
notice of intent to terminate at least 30 days to the other party and to the
Facility Agent and the Trustee prior to the termination of the initial
Commitment Period or any renewal/extension Commitment Period. The Commitment
Period shall terminate immediately upon a default by Lender of any of its
obligations hereunder.
"Contract of Insurance" means an agreement between the Secretary of
Education and either the Eligible Lender Trustee or Lender providing for the
insurance by the Secretary of Education of the principal of and accrued interest
on a FFELP Loan to the maximum extent permitted under the Higher Education Act.
"Eligible Lender Trustee " means Union Bank and Trust Company, acting
in its capacity as eligible lender trustee, and not in its individual capacity.
"Eligible Loan" means a FFELP Loan in which a participation interest is
authorized to be acquired by the Participant which (a) is either Insured or
Guaranteed: (b) if such FFELP Loan is a subsidized ▇▇▇▇▇▇▇▇ loan, qualifies the
holder thereof to receive Interest Subsidy Payments and Special Allowance
Payments; if such FFELP Loan is a consolidation loan authorized under Section
428C of the Higher Education Act, qualifies the holder thereof to receive
Interest Subsidy Payments and Special Allowance Payments to the extent
applicable; and if such FFELP Loan is a PLUS loan authorized under Section 428B
of the Higher Education Act, a SLS loan authorized under Section 428A of the
Higher Education Act, or an unsubsidized ▇▇▇▇▇▇▇▇ loan authorized under Section
428H of the Higher Education Act, such FFELP Loan qualifies the holder thereof
to receive Special Allowance Payments; (c) complies with each representation and
warranty with respect thereto contained herein; and (d) meets the other
applicable criteria set forth in the Loan Purchase Regulations and an undivided
participation interest in which is eligible for purchase under the terms of the
Warehouse Loan and Security Agreement.
"Facility Agent" means Royal Bank of Canada, as the Facility Agent
under the Warehouse Loan and Security Agreement, and any successor or assign.
"Federal Contracts" means all agreements between a Guarantee Agency and
the Secretary of Education providing for the payment by the Secretary of
Education of amounts authorized to be paid pursuant to the Higher Education Act,
including, but not limited to, reimbursement of amounts paid or payable upon
defaulted Eligible Loans and other student loans insured or guaranteed by any
Guarantee Agency and federal interest subsidy payments and Special Allowance
Payments, if applicable, to holders of qualifying student loans guaranteed by
any Guarantee Agency.
"FFELP Loans" means those specific loans in which a participation
interest is acquired by Participant from Lender pursuant to this Agreement,
inclusive of the promissory notes evidencing such loans and the related
documentation in connection with each thereof, which were originated pursuant to
the Federal Family Education Loan Program and the Higher Education Act.
"Guarantee" or "Guaranteed" means, with respect to a FFELP Loan, the
guarantee by the Guarantee Agency, in accordance with the terms and conditions
of the Guarantee Agreement, of the principal of and accrued interest on the
FFELP Loan to the maximum extent permitted under the Higher Education Act on
FFELP Loans which have been originated, held and serviced in full compliance
with the Higher Education Act, and the coverage of the FFELP Loan by the Federal
Contracts providing, among other things, for reimbursement to the Guarantee
Agency for losses incurred by it on defaulted Eligible Loans guaranteed by it to
the extent of the maximum reimbursement allowed by the Federal Contracts.
"Guarantee Agency" means a state agency or a private nonprofit
institution or organization which administers a Guarantee Program within a State
or any successors and assignees thereof administering the Guarantee Program
which has entered into a Guarantee Agreement with Lender or the Eligible Lender
Trustee on behalf of Lender.
"Guarantee Agreement" means the Federal Contracts, an agreement between
a Guarantee Agency and either Lender or the Eligible Lender Trustee on behalf of
Lender providing for the Guarantee by such Guarantee Agency of the principal of
and accrued interest on Eligible Loans to Borrowers, made or acquired by Lender
or the Eligible Lender Trustee on
2
behalf of Lender from time to time, and any other similar guarantee or agreement
issued by a Guarantee Agency to Lender or the Eligible Lender Trustee on behalf
of Lender pertaining to Eligible Loans.
"Guaranteed Loans" means FFELP Loans that are Guaranteed.
"Guarantee Program" means a Guarantee Agency's student loan guaranty
program pursuant to which such Guarantee Agency guarantees or insures student
loans.
"Higher Education Act" shall mean Title IV, Parts B, F and G, of the
Higher Education Act of 1965, as amended or supplemented and in effect from time
to time, or any successor enactment thereto, and all regulations promulgated
thereunder and any directives issued by the Secretary of Education.
"Insurance" or "Insured" or "Insuring" means, with respect to a FFELP
Loan, the insuring by the Secretary of Education (as evidenced by a Certificate
of Insurance or other document or certification issued under the provisions of
the Higher Education Act) under the Higher Education Act of the principal of and
accrued interest on such FFELP Loan to the maximum extent permitted under the
Higher Education Act for FFELP Loans originated, held and serviced in full
compliance with the Higher Education Act.
"Insured Loans" means FFELP Loans which are Insured.
"Interest Subsidy Payments" means interest subsidy payments received
from the Secretary of Education pursuant to Section 428 of the Higher Education
Act or similar payments authorized by federal law or regulation.
"Lender" means Union Bank and Trust Company, a Nebraska banking
corporation, an "eligible lender" under criteria established by the Higher
Education Act that has received an eligible lender designation by the Secretary
of Education with respect to Insured Loans or from a Guarantee Agency with
respect to Guarantee Loans, which is selling participation interests in FFELP
Loans to the Participant hereunder or, if Lender is not designated as an
eligible lender under the Higher Education Act, Lender holds beneficial
ownership of Eligible Loans through the Eligible Lender Trustee, which is an
eligible lender under the Higher Education Act.
"Lender's Retained Interest" means that portion of the income earned
with respect to Eligible Loans covered by the Participation Certificate which is
equal to zero basis points (0.00%), on an annualized basis, of the average
quarterly aggregate principal balance of Eligible Loans covered by the
Participation Certificate; provided, however, that if changes in the Higher
Education Act subsequently reduce the interest rates, Special Allowance Payments
or Interest Subsidy Payments, then Lender's Retained Interest shall be reduced
on a pro tanto basis.
"Loan Purchase Agreement" means the Loan Purchase Agreement including
all exhibits and schedules attached thereto, substantially in the form of
Schedule A hereto.
"Loan Purchase Regulations " means the rules and regulations of the
Participant, as may be adopted by the Participant from time to time, which
pertain to acquisition of participation interests hereunder, which shall
incorporate all requirements specified in any indentures or other financing
arrangements to which the Participant is subject.
3
"Master Note" means a Master Promissory Note in the form mandated by
Section 432(m)(1)(D) of the Higher Education Act, as added by Pub. L. 105-244,
Section 427.112 Stat. 1702 (1998). as amended by Public Law No: 106-554 (enacted
December 21, 2000) and as codified at 20 U.S.C. Section 1082 (m)(1).
"MPN Loan" means a FFELP Loan evidenced by a Master Note.
"Participant" means NELnet Student Loan Warehouse Corporation-1, a
Nevada corporation, and its successors and assigns.
"Participation Certificate" means the master participation certificate
in the form attached hereto as Schedule B.
"Purchase Price" means 100.68% of the outstanding principal balance
plus 100% of the accrued and unpaid interest thereon with respect to Eligible
Loans covered by the Participation Certificate, each as of the date of purchase.
"Secretary of Education" means the Commissioner of Education and the
Secretary of the United States Department of Education (who succeeded to the
functions of the Commissioner of Education pursuant to the Department of
Education Organization Act), or any officer, board, body, commission or agency
succeeding to the functions thereof under the Higher Education Act.
"Servicer" means (a) NELnet Loan Services, Inc., (b) ▇▇▇▇▇▇ ▇▇▇
Servicing L.P., (c) Great Lakes Service Corporation, (d) Pennsylvania Higher
Education Assistance Agency and (e) any other servicing agent approved as may be
required in the Warehouse Loan and Security Agreement; provided, however, ▇▇▇▇▇▇
Mae Servicing L.P., Great Lakes Service Corporation and Pennsylvania Higher
Education Assistance Agency shall not service any Financed Loans until the
Facility Agent has approved its respective Servicing Agreement.
"Servicing Agreement" means the agreement in which the Servicer is
engaged by Participant to administer and service Eligible Loans covered in the
Participation Certificate.
"Special Allowance Payments" means special allowance payments
authorized to be made by the Secretary of Education pursuant to Section 438 of
the Higher Education Act or similar allowances authorized from time to time by
federal law or regulation.
"Trustee" means Zions First National Bank, acting in its capacity as
trustee and eligible lender trustee under the Warehouse Loan and Security
Agreement, and not in its individual capacity.
"Warehouse Loan and Security Agreement" means the Warehouse Loan and
Security Agreement, dated as of February 1, 2002, among the Participant, as
borrower, the Trustee, as trustee, Thunder Bay Funding Inc., as lender, Royal
Bank of Canada, as alternate lender, and the Facility Agent, and any amendments
or supplements thereto made in accordance with its terms, which is utilized to
finance Participant's purchase of participation interests in the FFELP Loans
hereunder.
4
ARTICLE II
PURCHASE OF PARTICIPATION INTEREST
SECTION 2.01. PURCHASE OF PARTICIPATION INTEREST. Subject to the terms
and conditions and in reliance upon the representations, warranties and
agreements set forth herein, during the Commitment Period, Lender agrees to sell
to Participant, and Participant agrees to purchase from Lender, in an aggregate
amount up to a maximum of the Commitment Amount, an undivided participation
interest in 100.0% of the outstanding principal balance and accrued interest
thereon of Eligible Loans and a portion of the income generated by the Eligible
Loans as provided herein. Participant shall pay to Lender or its designee the
Purchase Price for the participation interest in each Eligible Loan purchased
hereunder, by wire transfer of immediately available funds, on such dates as the
parties may mutually agree upon. The participation interest acquired by
Participant shall include the promissory note and related documents in
connection with each participated Eligible Loan. The participation interest
purchased by Participant shall represent a participation interest in each and
every Eligible Loan specifically identified in the Participation Certificate
with respect thereto, and the parties agree that Participant is not purchasing
an interest in an undivided pool of Eligible Loans. It is the intention of
Lender, that the transfer from Lender to Participant constitutes a true,
absolute sale of the participation interest in Eligible Loans hereunder and that
the ownership of such participation interests shall not become or be deemed to
be property of Lender for any purposes under applicable law. Except as expressly
set forth in this Agreement, the sale of participation interests in Eligible
Loans shall be without recourse to Lender in connection with Borrowers' default
on such Eligible Loans. If a Borrower defaults on an Eligible Loan, and the
proceeds from the liquidation of the Eligible Loan are insufficient to pay the
interest accrued on the Eligible Loan, interest shall be distributed on a pro
rata basis between the Participant and Lender based on the proportion of the
basis points comprising Lender's Retained Interest and the total basis points
comprising the interest rate on the Eligible Loan.
The Lender hereby authorizes the Participant to file a UCC-1 financing
statement identifying the Lender as debtor/seller and the Participant as secured
party/buyer and describing the participation interest in the Eligible Loans sold
pursuant to this Agreement. The preparation or filing of such UCC-1 financing
statement is solely for additional protection of the Participant's interest in
the Eligible Loans and shall not be deemed to contradict the express intent of
the Lender and the Participant that the transfer of Eligible Loans under this
Agreement is an absolute assignment of such Eligible Loans and is not a transfer
of such Eligible Loans as security for a debt.
SECTION 2.02. PARTICIPATION CERTIFICATE. On the date of the initial
sale of a participation interest with respect to a portfolio of Eligible Loans
hereunder, or thereafter as mutually agreed upon by the parties hereto, Lender
shall execute and deliver to Participant the Participation Certificate
evidencing a 100% participation and beneficial ownership interest in Eligible
Loans in that portfolio as identified in Schedule A attached to the
Participation Certificate. Lender shall attach or cause to be attached to the
executed original Participation Certificate a schedule of the participated
Eligible Loans, legal title to which shall be retained by Lender (if an eligible
lender under the Higher Education Act) or by the Eligible Lender Trustee. As
Lender sells additional participation interests in Eligible Loans to Participant
hereunder, no more frequently than on a monthly basis. Lender shall issue (or
cause to be issued) supplemental schedules to Participant to be substituted and
attached to the Participation Certificate. The participation interest shall be
5
deemed to have been transferred to Participant upon payment of the Purchase
Price therefor, irrespective of whether such supplemental schedules are issued
by Lender. Lender shall also perform any reasonable or necessary acts to perfect
Participant's ownership of the participation interest in Eligible Loans
including, without limitation, providing notice to the Borrowers of the transfer
of the participation interest if Participant or Facility Agent determines such
acts are necessary to perfect such sale.
Section 2.03. DISTRIBUTION OF PAYMENTS RECEIVED. Upon issuance of the
Participation Certificate with respect to a particular portfolio of Eligible
Loans. Participant shall be entitled to 100% of payments and income earned with
respect to the Eligible Loans covered by the Participation Certificate, less
Lender's Retained Interest which shall be deducted therefrom and paid to Lender
on a quarterly basis. Lender shall pay for all origination fees payable to the
Secretary of Education pursuant to the Higher Education Act, servicing fees
charged by Servicer pursuant to the Servicing Agreement and any other costs
incidental to or associated with origination. Guarantee, ownership,
administration, servicing and collection with respect to each of the Eligible
Loans covered by the Participation Certificate. Lender agrees to account and
deliver to Participant, or cause to be delivered to Participant, all sums of
principal, interest, Special Allowance Payments, Interest Subsidy Payments or
other income received by Lender or Servicer on behalf of Lender on account of
Participant's participation interest in the Eligible Loans covered by the
Participation Certificate during the term of this Agreement, less Lender's
Retained Interest. Lender shall cause Servicer to furnish to Participant, on a
monthly basis, all reports issued by Servicer pursuant to the Servicing
Agreement showing the amount of the balances of each of the Eligible Loans
covered by the Participation Certificate and other information generated by
Servicer, and such other specific information on individual Eligible Loans
covered by the Participation Certificate as Participant may reasonably require
from time to time, subject to the abilities of Servicer. Participant shall have
access to inspect documents in connection with Eligible Loans covered by the
Participation Certificate at the Servicer on a day to day basis.
SECTION 2.04. SERVICING AND CONTROL OF ELIGIBLE LOANS. Lender and
Participant shall cause Servicer to service and collect each of the Eligible
Loans covered by the Participation Certificate under the Servicing Agreement, in
accordance with the terms of the Higher Education Act, and any rules and any
regulations adopted by the applicable Guarantee Agency or the Secretary of
Education. Servicer shall act at the direction of Participant. Lender shall
promptly deliver the promissory notes and other documents evidencing or relating
to the Eligible Loans covered in the Participation Certificate to the Servicer
or its agent. The promissory notes and other documents evidencing or relating to
the Eligible Loans covered in the Participation Certificate shall be retained by
Servicer or its agent for safekeeping as custodian in connection with the
Servicing Agreement for the benefit of Lender and Participant. Servicer shall
segregate the Eligible Loans in a separate account for servicing purposes for
the benefit of Lender and Participant. During the term of this Agreement, Lender
shall not (and shall cause the Eligible Lender Trustee to not) pledge, encumber,
sell, transfer or otherwise dispose of any interest in any Eligible Loan covered
by a Participation Certificate, except as may be expressly permitted herein.
SECTION 2.05. CONDITIONS OF PURCHASE. Participant's obligation to
purchase and pay for participation interests in Eligible Loans hereunder shall
be subject to each of the following conditions precedent:
6
(a) all representations, warranties and statements made
by Lender contained in this Agreement shall be true on the applicable
date of purchase;
(b) Participant, Facility Agent and Trustee shall receive
an opinion of Lender's counsel dated as of the date of the first sale
of Participation Certificates hereunder (covering such first sale and
any other sale of Participation Certificates), in form and substance
satisfactory to Participant, Facility Agent and Trustee, to the effect
that (i) this Agreement has been duly authorized, executed and
delivered by Lender and constitutes the legal, valid, binding and
enforceable obligation of Lender; (ii) the Participation Certificate
has been duly authorized, executed and delivered by Lender; (iii) with
respect to all Insured Loans in which participation interests are being
acquired, the applicable Contract of Insurance has been duly
authorized, executed and delivered by the Lender; (iv) with respect to
participation interests in all FFELP Loans in which participation
interests are being acquired, the applicable Guarantee Agreement has
been duly authorized, executed and delivered by Lender; (v) assuming
the due execution and delivery thereof, each FFELP Loan in which a
participation interest is acquired hereunder constitutes the legal,
valid and binding obligation of the Borrower (and of each endorser, if
any) thereof, enforceable in accordance with its terms; (vi)to the
knowledge of Lender's counsel, the execution and delivery of this
Agreement, the consummation of the transactions therein contemplated
and compliance with the terms, conditions and provisions of this
Agreement do not and will not conflict with or result in a breach of
any of the terms, conditions or provisions of the charter, articles or
bylaws of Lender or any agreement or instrument to which Lender is a
party or by which it is bound or constitute a default thereunder; (vii)
to the knowledge of Lender's counsel, Lender is not a party to or bound
by any agreement or instrument or subject to any charter or other
corporate restriction or judgment, order, writ, injunction, decree,
law, rule or regulation which may materially or adversely affect the
ability of Lender to perform its obligations under this Agreement;
(viii) no consent, approval or authorization of any government or
governmental body, including, without limitation, the Federal Savings
and Loan Insurance Corporation, Federal Deposit Insurance Corporation,
the Comptroller of the Currency, the Board of Governors of the Federal
Reserve System or any state banking regulatory agency, is required in
connection with the consummation of the transactions contemplated in
this Agreement; (ix) this Agreement shall constitute a security
agreement under State of Nebraska law and shall be effective to create,
in favor of the Participant, a valid, perfected security interest in
the Eligible Loans evidenced by each Participation Certificate sold
hereunder; (x) the Participant shall have a perfected security interest
in the participation interests in Eligible Loans evidenced by the
Participation Certificate subject to no prior liens, (xi) if the Lender
and the Participant are affiliates, that (A) if the Lender became a
debtor under the United States Bankruptcy Code, 11 U.S.C. Sections 101
et seq., as amended (the "Bankruptcy Code"), (i) Section 541(a)(l) of
the Bankruptcy Code would not apply to deem the participation interests
in Eligible Loans transferred by the Lender to the Participant and the
proceeds therefrom as property of the bankruptcy estate of the Lender
and therefore (ii) Section 362(a) of the Bankruptcy Code would not
apply to stay payment to the Participant or its assignees and (B) if
the Lender became a debtor under the Bankruptcy Code, a court would not
disregard the separate identity of the Participant so that the assets
of the Participant would be consolidated with and become a part of the
Lender's bankruptcy estate and (xii) if the Lender is a bank or saving
association the deposits of which are insured by FDIC (a "Bank") and
the FDIC were appointed as a receiver or conservator of such Bank, a
court would not recharacterize the
7
transfer and assignment of the participation interests in Eligible
Loans to the Participant as a pledge to secure a borrowing rather than
as a sale of the participation interests in Eligible Loans.
(c) delivery by Lender to Participant on or before the
applicable date of purchase of the Participation Certificate, original
or supplemental schedules to the Participation Certificate listing and
identifying each Eligible Loan in which a participation interest is
being transferred to Participant; UCC-1 Financing Statements evidencing
the transfer from Lender to Participant, UCC Lien Searches, and UCC
Termination Statements or Releases, if any, releasing any security
interest granted by Lender in any Eligible Loan covered by the
Participation Certificate; and
(d) adequate funds are available to Participant from the
Warehouse Loan and Security Agreement or otherwise which will finance
the purchase of participation interests in Eligible Loans under this
Agreement.
SECTION 2.06. REPURCHASE OBLIGATION. If:
(a) any representation or warranty made or furnished by
Lender in or pursuant to this Agreement with respect to a FFELP Loan
shall prove to have been materially incorrect;
(b) the Secretary of Education or a Guarantee Agency, as
the case may be, refuses to honor all or part of a claim with respect
to a FFELP Loan (including any claim for Interest Subsidy Payments,
Special Allowance Payments, Insurance, reinsurance or Guarantee
Payments) on account of any circumstance or event that occurred prior
to the sale of such FFELP Loan to the Participant by and through the
Trustee;
(c) on account of any circumstance or event that occurred
prior to the sale of a FFELP Loan to the Participant by and through the
Trustee, a defense is asserted by a Borrower (or endorser, if any) of
the FFELP Loan with respect to a Borrower's obligation to pay all or
any part of the FFELP Loan, and Participant, in good faith, believes
that the facts reported, if true, raise reasonable doubts as to the
legal enforceability of such FFELP Loan; or
(d) the instrument which Lender purports to be a FFELP
Loan is not, in fact, a FFELP Loan;
then Lender shall repurchase the participation interest in such FFELP Loan or
purported FFELP Loan upon the request of Participant or the Facility Agent by
paying Participant or the Trustee (if required by the Facility Agent) the then
outstanding principal balance of such FFELP Loan or purported FFELP Loan (or
such greater amount as may be necessary to make the Participant whole), plus
interest and applicable Special Allowance Payments with respect to such FFELP
Loan or purported FFELP Loan from the date of purchase of the participation
interest therein to and including the date of repurchase, plus any amounts owed
to the Secretary of Education with respect to the repurchased FFELP Loan or
purported FFELP Loan, plus any attorney fees, legal expenses, court costs,
servicing fees or other expenses incurred by Participant in connection with such
FFELP Loan or purported FFELP Loan, less Lender's Retained Interest with respect
to such FFELP Loan.
8
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01. LENDER'S REPRESENTATIONS AND WARRANTIES. Lender hereby
represents, warrants and covenants to Participant and Facility Agent as follows:
(a) Any information furnished by Lender to the
Participant, or the Participant's agents with respect to a FFELP Loan
is true, complete and correct.
(b) The amount of the unpaid principal balance of each
FFELP Loan is due and owing, and no counterclaim, offset, defense or
right to rescission exists with respect to any FFELP Loan which can be
asserted and maintained or which, with notice, lapse of time or the
occurrence or failure to occur of any act or event could be asserted
and maintained by the Borrower against the Eligible Lender Trustee or
the Participant as assignee thereof. Lender shall have taken all
reasonable actions to assure that no maker of a FFELP Loan has or may
acquire a defense to the payment thereof. No payment of principal or
interest with respect to any FFELP Loan is, as of the date hereof, more
than 90 days delinquent and no applicable payment of principal or
interest with respect to any FFELP Loan will, at the date of the
applicable Participation Certificate, be more than 60 days delinquent.
No FFELP Loan carries a rate of interest less than, or in excess of,
the applicable rate of interest required by the Higher Education Act.
If the Higher Education Act permits Lender to charge an interest rate
less than the applicable rate of interest, no FFELP Loan purchased
hereunder bears interest at a rate lower than the applicable rate of
interest; provided, however, that the Participant may approve, in its
sole discretion, in writing, interest reductions which are part of a
borrower repayment incentive program of Lender, the terms of which have
been fully described in detail and in writing to the Participant.
(c) Each FFELP Loan has been duly executed and delivered
and constitutes the legal, valid and binding obligations of the maker
(and the endorser, if any) thereof, enforceable in accordance with its
terms.
(d) Each FFELP Loan complies in all respects with the
requirements of the Higher Education Act and is an Eligible Loan.
(e) Lender or Eligible Lender Trustee has applied for and
received the Secretary of Education's or a Guarantee Agency's
designation, as the case may be, as an "Eligible Lender" under the
Higher Education Act, and Lender has entered into all agreements
required to be entered into for participation in the Federal Family
Education Loan Program under the Higher Education Act.
(f) Lender (and the Eligible Lender Trustee, if
applicable) is the sole owner and holder of each FFELP Loan and has
full right and authority to sell and assign the same free and clear of
all liens, pledges or encumbrances; no FFELP Loan has been pledged or
assigned for any purpose; and each FFELP Loan is free of any and all
liens, charges, encumbrances and security interests of any description.
The Participant has a valid and perfected first priority security
interest in the Pledged Collateral (as defined herein).
9
(g) Each FFELP Loan is either Insured or Guaranteed: such
Insurance or Guarantee, as the case may be. is in full force and
effect, is freely transferable as an incident to the sale of each FFELP
Loan: all amounts due and payable to the Secretary of Education or a
Guarantee Agency, as the case may be, have been or will be paid in full
by-Lender, and none of the FFELP Loans has at any time been tendered to
either the Secretary of Education or any Guarantee Agency for payment.
(h) There are no circumstances or conditions with respect
to any FFELP Loan, the Borrower thereunder or the creditworthiness of
said Borrower that would reasonably cause prudent private investors to
regard any of the FFELP Loans as an unacceptable investment, or
adversely affect the value or marketability thereof, the insurance
thereof and any applicable Guarantee.
(i) Each FFELP Loan was made in compliance with all
applicable local, State and federal laws, rules and regulations,
including, without limitation, all applicable nondiscrimination,
truth-in-lending, consumer credit and usury laws.
(j) Lender has, and its officers acting on its behalf
have, full legal authority to engage in the transactions contemplated
by this Agreement; the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and compliance
with the terms, conditions and provisions of this Agreement do not and
will not conflict with or result in a breach of any of the terms,
conditions or provisions of the charter, articles or bylaws of Lender
or any agreement or instrument to which Lender is a party or by which
it is bound or constitute a default thereunder; Lender is not a party
to or bound by any agreement or instrument or subject to any charter or
other Participant restriction or judgment, order, writ, injunction,
decree, law, rule or regulation which may materially and adversely
affect the ability of Lender to perform its obligations under this
Agreement and this Agreement constitutes a valid and binding obligation
of Lender enforceable against it in accordance with its terms, and no
consent, approval or authorization of any government or governmental
body, including, without limitation, the Federal Savings and Loan
Insurance Participant, the Federal Deposit Insurance Participant, the
Comptroller of the Currency, the Board of Governors of the Federal
Reserve System or any state bank regulatory agency, is required in
connection with the consummation of the transactions herein
contemplated.
(k) Lender is duly organized, validly existing and in
good standing under the laws of its applicable jurisdiction and has the
power and authority to own its assets and carry on its business as now
being conducted.
(l) Lender and Servicer have each exercised (and shall
continue to exercise) due diligence and reasonable care in making,
administering, servicing and collecting the FFELP Loans, and Lender has
conducted a reasonable investigation of sufficient scope and content to
enable it duly to make the representations and warranties contained in
this Agreement. Lender shall be solely responsible for the payment of
the costs and expenses incident to origination of FFELP Loans, without
any right of reimbursement therefor from the Participant.
(m) With respect to all Insured Eligible Loans in which a
participation interest is being acquired. Insurance is in effect with
respect thereto; the applicable Contract and
10
Certificates of Insurance are valid and binding upon the parties
thereto in all respects material to the security for any bonds and/or
notes issued by the Participant: and Lender is not in default in the
performance of any of its covenants and agreements made in respect
thereof.
(n) With respect to all Guaranteed Eligible Loans in
which a participation interest is being acquired, a Guarantee Agreement
is in effect with respect thereto and is valid and binding upon the
parties thereto in all respects material to the security of the bonds
and/or notes issued by the Participant to finance the FFELP Loans; and
Lender is not in default in the performance of any of its covenants and
agreements made in such Guarantee Agreement.
(o) Lender does not (i) discriminate by pattern or
practice against any particular class or category of students by
requiring, as a condition to the receipt of a student loan, that a
student or his family maintain a business relationship with Lender,
except as may be permitted under applicable laws; or (ii) discriminate
on the basis of race, sex, color, creed or national origin.
(p) The FFELP Loans are a representative sample of all
student loans held by Lender with respect to the educational
institution attended by, or the age, sex, race, national origin or
place of residence of, the Borrowers to whom such loans were made, or
with respect to any other identifying characteristic of such Borrowers.
(q) Each participation interest transferred to the
Participant under this Agreement is a participation interest in a FFELP
Loan which constitutes an Eligible Loan.
(r) The fair salable value of the assets on a going
concern basis of Lender and its subsidiaries, on a consolidated basis,
as of the time of each sale of participation interests hereunder is in
excess of the total amount of their liabilities.
(s) Lender has carefully reviewed the Loan Purchase
Regulations supplied by the Participant and has complied, and shall
continue to comply, with all applicable Loan Purchase Regulations.
(t) Each FFELP Loan in which a participation interest is
purchased pursuant to this Agreement includes all Eligible Loans of any
one Borrower held by Lender.
(u) The Lender hereby represents and warrants that the
Lender is transferring all of its right tile and interest in the MPN
Loans to the Participant, that it has not assigned any interest in such
MPN Loans (other than security interests that have been released or
ownership interests that the Lender has reacquired) to any person other
than the Participant, and that no prior holder of the MPN Loans has
assigned any interest in such MPN Loans (other than security interests
that have been released or ownership interests that such prior holder
has reacquired) to any person other that a predecessor in title to the
Lender. The Lender hereby covenants that the Lender shall not attempt
to transfer to any other person any interest in any MPN Loan assigned
hereunder.
11
(v) No promissory note evidencing an Eligible Loan bears
any apparent evidence of forgery or alteration or is otherwise so
irregular or incomplete as to call into question its authenticity.
(w) Except as may have been disclosed by the UCC Lien
Search required by Section 2.05(c) hereof for the Lender, no other
financing statements or assignment filings naming the Lender as debtor
or assignor under its legal name or trade names has been filed.
SECTION 3.02. PARTICIPANT'S REPRESENTATIONS AND WARRANTIES. Participant
hereby represents and warrants to Lender that the execution, delivery and
performance of this Agreement by Participant (a) has been duly authorized or
ratified effective as of the date of execution by all necessary corporate action
on the part of Participant; (b) does not and will not contravene the laws of the
state of its incorporation providing for the organization and governing of
Participant; (c) does not and will not conflict with, or result in a violation
of, any applicable laws; and (d) does not and will not require any consent or
approval of any creditor or constitute a violation of or default under any
agreement or instrument to which Participant is a party or whereby any of its
property may be bound.
SECTION 3.03. ORGANIZATIONAL JURISDICTION OF LENDER. The Lender shall
not organize under the law of any jurisdiction other that the State under which
is it organized as of the Closing Date (whether changing its jurisdiction of
organization or organizing under an additional jurisdiction) without giving 30
days prior written notice of such action to the Participant. Before effecting
such change, the Lender shall prepare and file in the appropriate filing office
any financing statements or other statements necessary to continue the
perfection of the Participant's interest in the FFELP Loans.
ARTICLE IV
TERM
SECTION 4.01. TERMINATION. The term of this Agreement shall be from the
date first set forth above until the termination of the Commitment Period. If
Lender or the Eligible Lender Trustee transfers title to a specific Eligible
Loan covered by the Participation Certificate to Participant, the participation
interest with respect to such transferred Eligible Loan shall terminate on the
date of such transfer. Immediately upon termination (without renewal) of this
Agreement and of the Participation Certificate, or any portion thereof. Lender's
Retained Interest, as then accrued and unpaid, shall be paid and if Participant
is not in material default of its obligations under this Agreement, Lender shall
immediately transfer to Participant or its designee legal title to the Eligible
Loans covered by the terminated portion of the Participation Certificate. At or
prior to such transfer of legal title, Lender shall execute and deliver to
Participant or its designee an executed Loan Purchase Agreement, together with
all documents of transfer in connection therewith, between Lender as Seller and
Participant or its designee as Purchaser, effective to transfer title to the
Eligible Loans covered in the terminated portion of the Participation
Certificate as of the termination of the participation, free and clear of any
liens, encumbrances, pledges, or security interests of any nature. Title to an
Eligible Loan which is partially disbursed as of the termination of this
Agreement shall be transferred as described in the preceding sentence as soon as
possible after such Eligible Loan is fully disbursed.
12
ARTICLE V
OTHER PROVISIONS
SECTION 5.01. INDEMNIFICATION. Lender specifically acknowledges that
the Participant will be making representations and warranties regarding the
Eligible Loans based in part on the accuracy of Lender's representations and
warranties in this Agreement. Lender agrees to indemnify and hold Participant,
the parties to the Warehouse Loan and Security Agreement and noteholders or
Credit Support Providers under the Warehouse Loan and Security Agreement
(together with each of their respective successors, assigns. Officers,
directors, agents and employees) harmless from and against any and all loss,
liability, cost, damage or expense (including reasonable attorneys fees and
costs of litigation) incurred by reason of any breach of Lender's
representations, warranties or covenants hereunder or any false or misleading
representations or any failure to disclose any matter which makes the warranties
and representations herein misleading or any inaccuracy in any information
furnished by Lender in connection herewith. This indemnity obligation shall
survive execution of this Agreement and termination of the Commitment Period.
SECTION 5.02. ASSIGNMENT. The rights of Participant under this
Agreement may be freely assigned or subparticipated, in whole or in part,
without prior written consent of Lender. The rights and obligations of Lender
under this Agreement may not be assigned in whole or in part without the prior
written consent of Participant and the Facility Agent. This Agreement shall be
binding upon the parties hereto, and their permitted successors and assigns.
Lender acknowledges that Participant has assigned all of its right, title and
interest in and to the Participation Certificate and this Agreement to the
Trustee under the Warehouse Loan and Security Agreement with the power and right
to enforce the provisions thereof and hereof.
SECTION 5.03. NO PARTNERSHIP. This Agreement shall not be construed to
create a partnership or joint venture between Lender and Participant. The
transaction evidenced by this Agreement is a loan participation transaction
pursuant to which Lender and Participant are participating in the Eligible
Loans.
SECTION 5.04. AMENDMENT. This Agreement may be modified or otherwise
amended only if such modification or amendment is in writing and signed by
Lender, Participant and Facility Agent. The parties agree to make such
modifications or amendments to this Agreement from time to time as may be
reasonably necessary to maintain compliance with the Higher Education Act.
SECTION 5.05. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered with a written receipt from the recipient or mailed by certified
United States mail, sufficient postage pre-paid, or sent by nationally
recognized overnight delivery service such as Federal Express, addressed as
follows:
If to Lender: Union Bank and Trust Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
13
If to Participant: NELnet Student Loan Warehouse Corporation-1
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
If to Facility Agent: Royal Bank of Canada
c/o RBC Capital Markets
One Little Falls Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
or to any such address as either party may direct in writing delivered to the
other party as set forth herein. Notice shall be effective (a) if mailed or
delivered, upon receipt, refusal of receipt or the date marked as uncollected,
or (b) if sent by overnight delivery, the earlier of receipt of two business
days after deposit with the delivery service.
SECTION 5.06. CONTINUING REPRESENTATIONS. The warranties and
representations of the parties contained in Article III hereof shall survive
execution of this Agreement and the Commitment Period and bind the parties
hereto as continuing covenants.
SECTION 5.07. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nebraska.
SECTION 5.08. COUNTERPARTS. This Agreement may be simultaneously
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
SECTION 5.09. SEVERABILITY. If any provision of this Agreement shall be
held, deemed to be or shall, in fact, be inoperative or unenforceable as applied
to any particular situation, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
situation or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatsoever. The invalidity
of any one or more phrases, sentences, clauses or paragraphs herein contained,
shall not affect the remaining portions of this Agreement or any part hereof.
SECTION 5.10. NON-EXCLUSIVE REMEDIES. No remedy by the terms of this
Agreement conferred upon or reserved to Participant is intended to be exclusive
of any other remedy, but each and every other remedy shall be cumulative and in
addition to every other remedy given under this Agreement or existing at law or
in equity (including, without limitation, the right to such equitable relief by
way of injunction) or by statute on or after the date of this Agreement.
SECTION 5.11. SERVICING. Each Eligible Loan covered by the
Participation Certificate shall be serviced pursuant to the Servicing Agreement
for the life of such loan by Servicer and shall not be removed from the
servicing system of Servicer, except as provided below. Lender agrees that each
FFELP Loan participated pursuant to this Agreement which is held by or on behalf
of Lender or any of Lender's affiliates after the date of this Agreement shall
be serviced by Servicer under a servicing agreement for a term of the life of
such loan and shall not be removed from the servicing system of Servicer;
provided, however, that Lender may engage a servicing agent other than Servicer
only if Participant and the Facility Agent approves such
14
servicing agent in writing and the Borrower attends an educational institution
which expressly requires servicing of all student loans made to its students to
be performed exclusively by a servicing agent other than Servicer. and provided
further, however, that Participant may. at its option, require transfer of
servicing to a new servicing agent as approved by Participant and the Facility
Agent upon material default under the Servicing Agreement or insolvency or
filing of bankruptcy by Servicer.
SECTION 5.12. TERMINATION OF AGREEMENT OR BANKRUPTCY OF LENDER. Upon
the termination of this Agreement or the filing of bankruptcy or receivership by
Lender. Lender shall cause title to each Eligible Loan covered by the
Participation Certificate to be transferred by Lender or the Eligible Lender
Trustee to Participant or its designee.
SECTION 5.13. FURTHER ASSURANCES. Lender shall, at its expense, execute
all other documents and take all other steps as may be requested by Participant
from time to time to effect the sale of the participation interests in the FFELP
Loans hereunder.
SECTION 5.14. INFORMATION. Lender shall, at its expense, furnish to
Participant such additional information concerning Lender's FFELP Loan portfolio
as Participant may reasonably request.
SECTION 5.15. SECURITY INTEREST. The parties to this Agreement intend
that the conveyance of Lender's right, title and interest in and to the FFELP
Loans shall constitute an absolute sale, conveying good title free and clear of
any liens, claims, encumbrances or rights of others from Lender to Participant.
The parties to this Agreement intend that the arrangements with respect to the
participation interest in FFELP Loans shall constitute a purchase and sale of
such participation interests and not a loan. In the event, however, that it were
determined by a court of competent jurisdiction that the transactions evidenced
by this Agreement shall constitute a loan and not a purchase and sale, the
parties hereto intend that this Agreement would constitute a security agreement
under applicable law and that Lender shall be deemed to have granted, and hereby
does grant (subject to the condition above), to Participant a first priority
perfected security interest in all of Lender's right, title and interest,
whether now owned or hereafter acquired, in, to and under all accounts, general
intangibles, chattel paper, instruments, documents, goods, investment property,
money, deposit accounts, certificates of deposit, letters of credit, advices of
credit and other property consisting of, arising from or related to the
following collateral to secure the rights of Participant hereunder and the
obligations of Lender hereunder (collectively, the "Pledged Collateral"):
(a) all participation interests in FFELP Loans;
(b) all revenues and recoveries of principal from
participation interests in FFELP Loans, including all borrower payments
and reimbursements of principal and accrued interest on default claims
received from any Guarantor;
(c) any other revenues and recoveries of principal and
interest, other payments and reimbursements of principal and accrued
interest received with respect to any participation interests in FFELP
Loans, any other collection of cash with respect to such FFELP Loans
(including, but not limited to, Interest Subsidy Payments and Special
Allowance Payments) received and all other cash collections, tax
refunds and other cash proceeds of the Pledged Collateral;
15
(d) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment
of such participation interests in FFELP Loans, whether pursuant to the
contract related to such participation interests in FFELP Loans or
otherwise;
(e) all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch
cards, data processing software and related property and rights)
maintained with respect to participation interests in FFELP Loans
otherwise in respect of the pledged collateral; and
(f) all proceeds of the foregoing (including, but not by
way of limitation, all cash proceeds, accounts, accounts receivable,
general intangibles, notes, drafts, acceptances, chattel paper, checks,
deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind, and other forms of obligations and
receivables or other liquidated property which at any time constitute
all or part or are included in the proceeds of any of the foregoing
property).
Lender agrees that from time to time, at its expense, it will properly
execute and deliver all further instruments and documents (including, without
limitation, UCC-1 financing statements and custodian agreements with the
Servicer), and take all further action that Participant or Facility Agent may
reasonably request in order to perfect, protect or more fully evidence
Participant's or Facility Agent's interest in the Pledged Collateral or to
enable Participant to exercise or enforce any of its rights hereunder.
SECTION 5.16. INFORMATION AND REPORTING. Lender shall furnish to
Participant: (a) upon execution of this Agreement, Lender's most recent audited
financial statement prepared in accordance with generally accepted accounting
principles and duly certified by nationally recognized independent certified
public accountants selected by Lender, as well as Lender's most recent unaudited
financial statement and balance sheet; (b) as soon as available and in any event
within 90 days after the end of each fiscal year of the Lender, an updated
audited financial statement prepared in accordance with generally accepted
accounting principles and duly certified by nationally recognized independent
certified public accountants selected by Lender; and (c) such other financial
information as Participant may reasonably request from time to time. Lender
shall verify and reconcile Eligible Loan disbursements and cancellations of
Eligible Loans covered by the Participation Certificate, in such manner as
Participant may reasonably request from time to time. Lender shall furnish to
Participant a certificate of good standing and a certified copy of resolutions
of Lender's board of directors approving and authorizing execution and
performance of this Agreement and all ancillary documents with respect thereto
in a form reasonably satisfactory to Participant.
16
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by officers duly authorized as of the day first above
written.
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
UNION BANK AND TRUST COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Senior Vice
President
17
SCHEDULE A TO PARTICIPATION AGREEMENT
FORM OF LOAN PURCHASE AGREEMENT
SCHEDULE B TO PARTICIPATION AGREEMENT
FORM OF PARTICIPATION CERTIFICATE
PARTICIPATION CERTIFICATE
Pursuant to that certain Participation Agreement (the "Agreement")
dated February 1, 2002, by and between NELnet Student Loan Warehouse
Corporation-1 (the "Participant") and Union Bank and Trust Company (the
"Lender"), Lender hereby issues and delivers this Participation Certificate to
evidence Participant's participation interests in student loans guaranteed under
the Higher Education Act of 1965, as amended, which are identified by the
schedule marked as Schedule "A," attached hereto and incorporated herein by this
reference, which may be amended or supplemented from time to time, which loans
or interests therein are owned by Lender and are serviced by _______________ and
designated a separate account, in accordance with the terms of the Agreement.
This Participation Certificate shall be governed, in all respects, by the
Agreement, the terms of which are incorporated herein by this reference as if
fully stated herein.
UNION BANK AND TRUST COMPANY
By ________________________________
Name ______________________________
Title _____________________________
Accepted this _______ day of _________, 20______.
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
By ________________________________
Name ______________________________
Title _____________________________
SCHEDULE A TO PARTICIPATION CERTIFICATE
SCHEDULE OF LOANS
SCHEDULE B TO PARTICIPATION AGREEMENT
FORM OF PARTICIPATION CERTIFICATE
PARTICIPATION CERTIFICATE
Pursuant to that certain Participation Agreement (the "Agreement")
dated February 1, 2002, by and between NELnet Student Loan Warehouse
Corporation-1 (the "Participant") and Union Bank and Trust Company (the
"Lender"), Lender hereby issues and delivers this Participation Certificate to
evidence Participant's participation interests in student loans guaranteed under
the Higher Education Act of 1965, as amended, which are identified by the
schedule marked as Schedule "A," attached hereto and incorporated herein by this
reference, which may be amended or supplemented from time to time, which loans
or interests therein are owned by Lender and are serviced by Nelnet Loan
Services, Inc and designated a separate account, in accordance with the terms of
the Agreement. This Participation Certificate shall be governed, in all
respects, by the Agreement, the terms of which are incorporated herein by this
reference as if fully stated herein.
UNION BANK AND TRUST COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Senior Vice
President
Accepted this 26th day of February, 2002.
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
EXHIBIT I
CONDITIONS TO INITIAL ADVANCE
1. Executed copies of this Agreement, the Valuation Agent Agreement, the
Indemnification Agreement, each Student Loan Purchase Agreement and
Participation Agreement pursuant to which Student Loans are to be sold to the
Borrower, each Servicing Agreement pursuant to such Student Loans are to be
serviced, each Custodian Agreement pursuant to such Student Loans are to be held
and each Trustee Guarantee Agreement.
2. UCC-1 Financing Statements (naming each Seller as debtor and Issuer as
secured party, and naming Issuer as debtor and Trustee as secured party).
3. Officers' Certificates of the Borrower, NELnet, the Valuation Agent,
the Lender, the Alternate Lender, the Facility Agent, the Trustee, each
Servicer, each Custodian and each Seller (including, in the case of the Borrower
and NELnet, articles of incorporation, by-laws, board resolutions, good standing
and incumbency).
4. Opinions of Counsel to the Borrower, NELnet, the Trustee and each
Seller in forms acceptable to the Facility Agent.
5. A schedule of all Financed Loans as of the Closing Date.
6. All fees due and payable to the Lender, the Alternate Lender and the
Facility Agent on the Closing Date.
7. Such other information, certificates, documents and actions as the
Lender, the Alternate Lender and the Facility Agent may reasonably request.
8. Search report results dated a date reasonably near the Closing Date
listing all effective financing statements which name the Borrower or any Seller
(under its present name or any previous names) in any jurisdictions where
filings are to be made under paragraph 2 above (or similar filings would have
been made in the past five years).
9. Financing Statement terminations on Form UCC-3, if necessary, to
release any liens.
10. Evidence of establishment of Cash Reserve Account and Collection
Account.
11. Valuation Reports.
