Exhibit 10.16
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WAREHOUSE NOTE PURCHASE AND SECURITY AGREEMENT
among
NELNET EDUCATION LOAN FUNDING, INC.,
as Borrower,
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee,
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Eligible Lender Trustee,
QUINCY CAPITAL CORPORATION,
as Bank of America Conduit Lender,
BANK OF AMERICA, N.A.,
as Bank of America Alternate Lender,
BANK OF AMERICA, N.A.,
as Bank of America Facility Agent,
GEMINI SECURITIZATION CORP.,
as Deutsche Bank Conduit Lender,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Deutsche Bank Alternate Lender,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Deutsche Bank Facility Agent,
▇▇▇▇▇▇ CAPITAL CORPORATION,
as Societe Generale Conduit Lender,
SOCIETE GENERALE,
as Societe Generale Alternate Lender,
SOCIETE GENERALE,
as Societe Generale Facility Agent,
and
BANK OF AMERICA, N.A.,
as Administrative Agent
Dated as of May 1, 2003
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms.................................................................... 2
Section 1.02. Other Terms.............................................................................. 29
Section 1.03. Computation of Time Periods.............................................................. 29
Section 1.04. Calculation of Yield Rate and Certain Fees............................................... 29
ARTICLE II
THE FACILITY
Section 2.01. Issuance and Purchase of Notes........................................................... 29
Section 2.02. The Initial Note Purchase and Subsequent Note Purchases.................................. 30
Section 2.03. Increase, Reduction or Termination of the Facility Amount and Maximum Financing Amount... 31
Section 2.04. Collection Account....................................................................... 32
Section 2.05. Transfers from Collection Account........................................................ 32
Section 2.06. Reserve Account.......................................................................... 36
Section 2.07. Transfers from the Reserve Account....................................................... 36
Section 2.08. Management of Collection Account and Reserve Account..................................... 36
Section 2.09. Pledged Collateral Assignment of the Transaction Documents............................... 37
Section 2.10. Grant of a Security Interest............................................................. 37
Section 2.11. Evidence of Debt......................................................................... 38
Section 2.12. Payments by the Borrower................................................................. 38
Section 2.13. Payment of Stamp Taxes, Etc.............................................................. 39
Section 2.14. Sharing of Payments, Etc................................................................. 39
Section 2.15. Yield Protection......................................................................... 39
Section 2.16. Extension of Termination Date............................................................ 41
Section 2.17. Servicer Advances........................................................................ 41
Section 2.18. Prefunding of Advances................................................................... 41
ARTICLE III
THE NOTES
Section 3.01. Form of Notes Generally.................................................................. 42
Section 3.02. Securities Legend........................................................................ 43
Section 3.03. Priority................................................................................. 43
Section 3.04. Execution, Delivery and Dating........................................................... 44
Section 3.05. Registration, Registration of Transfer and Exchange, Transfer Restrictions............... 44
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.............................................. 45
Section 3.07. Persons Deemed Owners.................................................................... 46
Section 3.08. Cancellation............................................................................. 46
Section 3.09. Limited Obligations...................................................................... 46
Section 3.10. Assignment by the Bank of America Conduit Lender to its related Alternate Lenders........ 47
ARTICLE IV
CONDITIONS TO NOTE PURCHASES
Section 4.01. Conditions Precedent to Initial Issuance................................................. 47
Section 4.02. Conditions Precedent to All Note Purchases............................................... 48
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. General Representations and Warranties of the Borrower................................... 49
Section 5.02. Representations of the Borrower Regarding the Trustee's Security Interest................ 52
Section 5.03. Representations of the Eligible Lender Trustee........................................... 53
ARTICLE VI
GENERAL COVENANTS OF THE BORROWER
Section 6.01. General Covenants........................................................................ 53
Section 6.02. Acquisition, Financing, Collection and Assignment of Student Loans....................... 59
Section 6.03. Enforcement of Financed Loans............................................................ 59
Section 6.04. Enforcement of Servicing Agreements and Subservicing Agreements.......................... 60
Section 6.05. Enforcement of Student Loan Purchase Agreements.......................................... 60
Section 6.06. Administration and Collection of Financed Loans.......................................... 61
Section 6.07. Amendment of Form of Student Loan Purchase Agreement..................................... 61
Section 6.08. Custodian................................................................................ 61
Section 6.09. Prepayments and Refinancing.............................................................. 61
Section 6.10. Periodic Reporting....................................................................... 62
Section 6.11. UCC Matters; Protection and Perfection of Pledged Collateral; Delivery of Documents...... 62
Section 6.12. Obligations of the Borrower With Respect to Pledged Collateral........................... 63
Section 6.13. Collateral Call.......................................................................... 64
Section 6.14. Covenants Regarding the Trustee's Security Interest...................................... 64
Section 6.15. Financial Covenants...................................................................... 64
Section 6.16. Amendment of Articles of Incorporation................................................... 64
Section 6.17. Enforcement and Amendment of Guarantee Agreements........................................ 64
ARTICLE VII
TERMINATION EVENTS........................................................................................ 65
ARTICLE VIII
TRUSTEE AND ELIGIBLE LENDER TRUSTEE
Section 8.01. Acceptance of Trust...................................................................... 68
Section 8.02. Trustee's Right to Reliance.............................................................. 69
Section 8.03. Compensation of Trustee.................................................................. 69
Section 8.04. Resignation of Trustee................................................................... 69
Section 8.05. Removal of Trustee....................................................................... 70
Section 8.06. Successor Trustee........................................................................ 70
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Section 8.07. Manner of Vesting Title in Trustee....................................................... 71
Section 8.08. Custodian Agreement...................................................................... 71
Section 8.09. Acceptance of Duties of Eligible Lender Trustee.......................................... 71
Section 8.10. Eligible Lender Trustee Covenants with Respect to "Eligible Lender" Status............... 71
Section 8.11. Compensation of Eligible Lender Trustee.................................................. 72
Section 8.12. Resignation and Removal of Eligible Lender Trustee....................................... 72
Section 8.13. Eligible Lender Trustee's Status as an "Eligible Lender"................................. 72
Section 8.14. Enforcement and Amendment of Guarantee Agreements........................................ 72
ARTICLE IX
INDEMNIFICATION........................................................................................... 73
ARTICLE X
ADMINISTRATIVE AGENT AND FACILITY AGENTS
Section 10.01. Authorization and Action of Administrative Agent......................................... 74
Section 10.02. Authorization and Action of Facility Agents.............................................. 75
Section 10.03. Agency Termination....................................................................... 76
Section 10.04. Administrative Agent's and Facility Agent's Reliance, Etc................................ 76
Section 10.05. Administrative Agent, Facility Agents and Affiliates..................................... 77
Section 10.06. Note Purchase Decision................................................................... 77
Section 10.07. Successor Administrative Agent........................................................... 77
Section 10.08. Successor Facility Agents................................................................ 78
ARTICLE XI
MISCELLANEOUS
Section 11.01. Amendments and Waivers................................................................... 78
Section 11.02. Notices, Etc............................................................................. 78
Section 11.03. No Waiver; Remedies...................................................................... 79
Section 11.04. Binding Effect; Assignability............................................................ 79
Section 11.05. Survival................................................................................. 79
Section 11.06. Governing Law; Severability.............................................................. 79
Section 11.07. Submission to Jurisdiction; Waiver of Jury and Bond...................................... 80
Section 11.08. Costs, Expenses and Taxes................................................................ 81
Section 11.09. Recourse Against Certain Parties......................................................... 81
Section 11.10. Execution in Counterparts; Severability; Integration..................................... 82
Section 11.11. Confidentiality.......................................................................... 82
Section 11.12. Section Titles........................................................................... 83
Section 11.13. Entire Agreement......................................................................... 83
Section 11.14. No Petition; Subordination............................................................... 83
EXHIBIT A FORM OF STUDENT LOAN PURCHASE AGREEMENT
EXHIBIT B FORM OF VALUATION AGENT AGREEMENT
EXHIBIT C FORM OF NOTE PURCHASE REQUEST
EXHIBIT D FORM OF MONTHLY REPORT
EXHIBIT E COPIES OF CUSTODIAN AGREEMENTS
EXHIBIT F FORM OF PARTICIPATION AGREEMENT
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EXHIBIT G CONDITIONS TO INITIAL NOTE PURCHASE
EXHIBIT H FORM OF SENIOR NOTE
EXHIBIT I FORM OF SUBORDINATE NOTE
EXHIBIT J PREMIUM SCHEDULE
EXHIBIT K BORROWER INCENTIVE PAYMENT PROGRAMS
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WAREHOUSE NOTE PURCHASE AND SECURITY AGREEMENT
THIS WAREHOUSE NOTE PURCHASE AND SECURITY AGREEMENT (this "Agreement")
is made as of May 1, 2003, among NELNET EDUCATION LOAN FUNDING, INC., a
corporation duly organized under the laws of the State of Nebraska, as the
borrower hereunder (the "Borrower"), ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, as the trustee hereunder (the
"Trustee"), ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, as the eligible lender trustee hereunder (the "Eligible Lender
Trustee"), QUINCY CAPITAL CORPORATION, a Delaware corporation, as a conduit
lender hereunder (the "Bank of America Conduit Lender"), BANK OF AMERICA, N.A.,
a national banking association, as an alternate lender hereunder (the "Bank of
America Alternate Lender"), BANK OF AMERICA, N.A., a national banking
association, as the agent of the Bank of America Conduit Lender and the Bank of
America Alternate Lender hereunder and the herein defined Bank of America
Program Support Providers (the "Bank of America Facility Agent"), GEMINI
SECURITIZATION CORP., a Delaware corporation, as a conduit lender hereunder (the
"Deutsche Bank Conduit Lender"), DEUTSCHE BANK AG, NEW YORK BRANCH, a German
banking corporation acting through its New York Branch, as an alternate lender
hereunder (the "Deutsche Bank Alternate Lender"), DEUTSCHE BANK AG, NEW YORK
BRANCH, a German banking corporation acting through its New York Branch, as the
agent of the Deutsche Bank Conduit Lender and the Deutsche Bank Alternate Lender
hereunder and the herein defined Deutsche Bank Program Support Providers (the
"Deutsche Bank Facility Agent"), ▇▇▇▇▇▇ CAPITAL CORPORATION, a Delaware
corporation, as a conduit lender hereunder (the "Societe Generale Conduit
Lender"), SOCIETE GENERALE, a banking corporation organized under the laws of
France acting through its New York Branch, as an alternate lender hereunder (the
"Societe Generale Alternate Lender"), SOCIETE GENERALE, a banking corporation
organized under the laws of France acting through its New York Branch, as the
agent of the Societe Generale Conduit Lender and the Societe Generale Alternate
Lender hereunder and the herein defined Societe Generale Program Support
Providers (the "Societe Generale Facility Agent"), and BANK OF AMERICA, N.A., a
national banking association, as the administrative agent of the herein defined
Conduit Lenders, Alternate Lenders and Facility Agents (in such capacity, the
"Administrative Agent").
PRELIMINARY STATEMENTS
WHEREAS, the Bank of America Conduit Lender, the Deutsche Bank Conduit
Lender and the Societe Generale Conduit Lender (collectively, the "Conduit
Lenders") are special purpose corporations engaged in the business of issuing
promissory notes and obtaining funding (directly or indirectly) in the domestic
commercial paper market and using the proceeds from such funding to acquire
interests in financial assets from various sellers from time to time or to make
loans to certain entities or purchase notes of 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) and to transfer or otherwise
finance certain Eligible Loans previously purchased by the Borrower in
accordance with various Student Loan Purchase Agreements with
proceeds from other borrowings of the Borrower (such purchases and transfers
constituting the "Transactions"); and
WHEREAS, the Borrower desires to fund the Transactions through the
issuance of Notes (as hereinafter defined) and the sale of such Notes to the
Conduit Lenders and the Bank of America Alternate Lender, the Deutsche Bank
Alternate Lender and the Societe Generale Alternate Lender (collectively, the
"Alternate Lenders") on the terms and conditions set forth herein; and
WHEREAS, the Conduit Lenders may, from time to time, assign all or a
part of such Notes or assign interests therein or commitments to purchase such
Notes to certain Program Support Providers (as hereinafter defined) pursuant to
the terms of the Program Support Agreements; and
WHEREAS, each of the Bank of America Facility Agent, the Deutsche Bank
Facility Agent and the Societe Generale Facility Agent is willing to act as the
agent on behalf of its related Conduit Lender, Alternate Lenders and the Program
Support Providers pursuant to this Agreement and the corresponding Program
Support Agreements.
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).
"Administrative Agent" means Bank of America, N.A., a national banking
association, and its successors and assigns, in its capacity as agent of the
Conduit Lenders, the Facility Agents and the Alternate Lenders hereunder.
"Adverse Claim" means a lien, security interest, charge, encumbrance or
other right or claim or restriction in favor of any Person (including any UCC
financing statement or similar instrument filed against the assets of a 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 Administrative Agent, each Conduit Lender,
each Facility Agent, each Alternate Lender, each Program Support Provider and
any assignee or participant of any Conduit Lender, any Facility Agent, any
Alternate Lender or any Program Support Provider.
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"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 constitute
Eligible Loans purchased on or prior to the last Valuation Date, (i) the
outstanding Principal Balance of such Eligible Loans (determined as of the last
day of the immediately preceding calendar month) multiplied by the lesser of (A)
the Maximum Note Purchase Percentage determined on the most recent Valuation
Date and (B) the Loan Valuation Percentage determined on the most recent
Valuation Date, plus, without duplication, (ii) 100% of any accrued interest
thereon, and all accrued and unpaid Special Allowance Payments and Interest
Subsidy Payments, if any, thereon as of the last day of the immediately
preceding calendar month and less (iii) all Unguaranteed Amounts on such
Eligible Loans as of the last day of the immediately preceding calendar month;
(b) with respect to assets in the Pledged Collateral which constitute Eligible
Loans purchased subsequent to the last Valuation Date, as of such date of
determination, (i) the outstanding Principal Balance of such Eligible Loans
(determined as of the later of the last day of the immediately preceding
calendar month and the applicable cutoff date) multiplied by the Maximum Note
Purchase Percentage, plus, without duplication, (ii) 100% of any accrued
interest thereon, and all accrued and unpaid Special Allowance Payments and
Interest Subsidy Payments, if any, thereon as of the later of the last day of
the immediately preceding calendar month and the applicable cutoff date and less
(iii) all Unguaranteed Amounts on such Eligible Loans as of the later of the
last day of the immediately preceding calendar month and the applicable cutoff
date; and (c) with respect to assets in the Pledged Collateral which constitute
Permitted Investments and other cash balances, if any, on deposit in the
Collection Note Purchase Subaccount and the Reserve Account, the principal
balance thereof together with all interest accrued thereon as of the end of the
prior calendar month.
"Aggregate Note Balance" means the aggregate principal amount of all
Notes Outstanding at the date of determination after giving effect to all
distributions of principal and Note Purchases on such date of determination.
"Agreement" means this Warehouse Note Purchase and Security Agreement,
as the same may be amended, restated, supplemented or otherwise modified from
time to time hereafter.
"Alternate Lender" means each of the Bank of America Alternate Lender,
the Deutsche Bank Alternate Lender and the Societe Generale Alternate Lender.
"Alternate Lender Percentage" means, at any time, a fraction, expressed
as a percentage, the numerator of which is the portion of the outstanding
principal amount of the Notes of the Bank of America Facility Group funded by
the Bank of America Alternate Lenders and the denominator of which is the
outstanding principal amount of the Notes of the Bank of America Facility Group
at such time.
3
"Asset Coverage Ratio" means, as of the date of determination, the
ratio of (a) the Aggregate Market Value of the assets in the Pledged Collateral
as of such date to (b) the Liabilities as of such date (provided that any
Liabilities other than the Aggregate Note Balance shall be determined as of the
last day of the immediately preceding calendar month) and rounding to the
nearest second decimal place.
"Assignment Amount" means, with respect to a Bank of America Alternate
Lender at the time of any assignment pursuant to Section 3.10 hereof, an amount
equal to the least of (a) such Bank of America Alternate Lender's pro rata share
of the aggregate principal amount of the Notes requested by the Bank of America
Conduit Lender to be assigned at such time plus the applicable Interest
Component; (b) such Alternate Lender's unused Assignment Commitment (minus the
unrecovered principal amount of such Bank of America Alternate Lender's
investments pursuant to the Program Support Agreement to which it is a party);
and (c) the sum of such Bank of America Alternate Lender's pro rata share of the
Conduit Lender Percentage of the Aggregate Market Value (calculated using solely
the Maximum Note Purchase Percentage and not the Loan Valuation Percentage) as
of the most recent date of determination plus the applicable Interest Component.
"Assignment Commitment" means, with respect to a Bank of America
Alternate Lender, such Bank of America Alternate Lender's pro rata share (based
upon its Commitment over all Commitments of Bank of America Alternate Lenders in
the Bank of America Facility Group) of the Bank of America Facility Group's Pro
Rata Share of the Facility Amount.
"Authorized Officer of the Borrower" means the Borrower's president,
chief financial officer or any vice president or assistant vice president.
"Bank of America Alternate Lender" means Bank of America, N.A., a
national banking association, each Person who accepts an assignment of Bank of
America, N.A.'s rights and obligations hereunder pursuant to Section 11.04
hereof, and the successors and assigns of any of them. The Bank of America
Alternate Lender may include one or more Persons following an assignment
pursuant to Section 11.04 hereof, and if more than one Person, each Person who
is a Bank of America Alternate Lender will have the rights and obligations with
respect to Note Purchases in the respective percentages specified in the
agreement(s) governing such assignment(s).
"Bank of America Conduit Lender" means Quincy Capital Corporation, a
Delaware corporation, and its successors and assigns.
"Bank of America Facility Agent" means Bank of America, N.A., a
national banking association, and its successors and assigns.
"Bank of America Facility Group" means the Bank of America Conduit
Lender, the Bank of America Facility Agent, the Bank of America Alternate Lender
and each Bank of America Program Support Provider.
"Bank of America Program Support Provider" means any Program Support
Provider which is a party to a Program Support Agreement with (or benefiting)
the Bank of America
4
Facility Agent, the Bank of America Conduit Lender and/or the Bank of America
Alternate Lender.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended from time to time, and any successor statute.
"Benefit Plan" means any employee benefit plan as defined in Section
3(3) of ERISA in respect of which the 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 Education Loan Funding, Inc., a Nebraska
corporation, and its successors and assigns.
"Business Day" means a day of the year other than a Saturday or a
Sunday on which (a) banks are not authorized or required to close in New York
City or the city where the principal office of the Trustee is located (presently
Minneapolis, Minnesota), (b) the office of the Bank of America Facility Agent is
open for business, (c) the office of the Deutsche Bank Facility Agent is open
for business and (d) the office of the Societe Generale Facility Agent is open
for business; provided, however, if the term "Business Day" is used in
connection with the LIBOR Rate, means any day of the year on which dealings in
dollar deposits are carried on in the London interbank market.
"Carrying Costs" means, collectively, the Senior Carrying Costs and the
Subordinate Carrying Costs.
"Closing Date" means May 16, 2003.
"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 Note Purchase Subaccount" means a subaccount established
within the Collection Account pursuant to Section 2.04 hereof.
"Collection Period" means each period from the 6th Business Day
preceding a Remittance Date to and including the 6th Business Day preceding the
subsequent Remittance Date; provided, however, that the initial Collection
Period shall be the period from the Closing Date to and including the 6th
Business Day preceding the first Remittance Date.
"Collections" means (a) all revenue and recoveries of principal and
interest and other proceeds, payments and reimbursements of principal and
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,
Guarantee payments, Interest Subsidy Payments, Special Allowance Payments,
finance charges and payments representing the repurchase of any Financed Loan or
rebate of premium thereon pursuant to a Student Loan Purchase Agreement)
received pursuant to Section 2.04 hereof; and (b) all other cash collections and
other cash proceeds of the Pledged Collateral.
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"Commitment" means the obligation of each Facility Group to fund Note
Purchases.
"Conduit Lender" means each of the Bank of America Conduit Lender, the
Deutsche Bank Conduit Lender and the Societe Generale Conduit Lender, and any
successors or assigns (subject to Section 11.04 hereof) that are special purpose
corporations or other entities that become parties to this Agreement and which
obtain funds to purchase financial assets (directly or indirectly) from the
issuance of CP.
"Conduit Lender Percentage" means, with respect to the Bank of America
Conduit Lender, at any time, 100%, less the Alternate Lender Percentage at such
time.
"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 from time to time in the
United States commercial paper market by means of which a Conduit Lender
(directly or indirectly) obtains financing.
"CP Rate" means, for any period for any Conduit Lender, for any portion
of the Aggregate Note Balance funded by such Conduit Lender directly or
indirectly with CP, either (i) for match-funded conduits, the rate equivalent to
the rate (or if more than one rate, the weighted average of the rates) at which
CP having a term equal to such period may be sold by any applicable placement
agent or commercial paper dealer (which shall include Dealer Fees, incremental
carrying costs incurred with respect to CP maturing on dates other than those on
which corresponding funds are received by the Conduit Lender, other borrowings
by the Conduit Lender (other than under any Program Support Agreement) and any
other costs associated with the issuance of CP), or (ii) for pool-funded
conduits, the rate equivalent to the weighted average cost (as determined by the
applicable Facility Agent and which shall include commissions of placement
agents and dealers, incremental carrying costs incurred with respect to CP
maturing on dates other than those on which corresponding funds are received by
the Conduit Lender, other borrowings by the Conduit Lender (other than under any
Program Support Agreement) and any other costs associated with the issuance of
CP) of or related to the issuance of CP that are allocated, in whole or in part,
by the Conduit Lender or the applicable Facility Agent to fund or maintain such
portion of the Aggregate Note Balance (and which may be also allocated in part
to the funding of other assets of the Conduit Lender); provided, however, that
if the rate (or rates) is a discount rate, then the rate (or if more than one
rate, the weighted average of the rates) shall be the rate resulting from
converting such discount rate (or rates) to an interest-bearing equivalent rate
per annum. On or before the fourth Business Day prior to any Remittance Date, if
interest for any portion of any Note for any related Yield Period is determined
by reference to the CP Rate, the applicable related Facility Agent shall notify
the Borrower of the applicable CP Rate for such Yield Period for the applicable
Conduit Lender. Such CP Rate shall be calculated using an estimate for the
remaining days of such Yield Period. On or before the fourth Business Day prior
to the next succeeding Remittance Date, each Facility Agent shall redetermine
the CP Rate for such Yield Period and if such redetermined rate is higher or
lower than the CP Rate initially reported to the Borrower as described above,
each such Facility Agent shall advise the Borrower
6
of the redetermined CP Rate, specifying the amount of any Yield Underpayment or
Yield Overpayment.
"Custodian" means, individually or collectively, Nelnet Loan Services,
Inc., ▇▇▇▇▇▇ ▇▇▇ Servicing L.P., ACS Education Services, Inc., Pennsylvania
Higher Education Assistance Agency, Great Lakes Educational Loan Services, Inc.
and each additional Servicer, Subservicer or bailee with which the Borrower, the
Eligible Lender Trustee and the Trustee have entered into a Custodian Agreement
with respect to the Pledged Collateral.
"Custodian Agreement" means, individually or collectively, (a) the
Custodian Agreement, dated as of May 1, 2003, among the Borrower, the Eligible
Lender Trustee, the Trustee and Nelnet Loan Services, Inc.; (b) a Custodian
Agreement among the Borrower, the Eligible Lender Trustee, the Trustee and
▇▇▇▇▇▇ Mae Servicing L.P. and approved by the Administrative Agent; (c) a
Custodian Agreement among the Borrower, the Eligible Lender Trustee, the Trustee
and ACS Education Services, Inc. and approved by the Administrative Agent; (d) a
Custodian Agreement among the Borrower, the Eligible Lender Trustee, the Trustee
and Pennsylvania Higher Education Assistance Agency and approved by the
Administrative Agent; (e) a Custodian Agreement among the Borrower, the Eligible
Lender Trustee, the Trustee and Great Lakes Educational Loan Services, Inc. and
approved by the Administrative Agent; and (f) each additional or successor
custodian agreement entered into among the Borrower, the Eligible Lender
Trustee, the Trustee and a Custodian and approved by the Administrative Agent,
each as amended and supplemented from time to time.
"Custodian Fees" means the fees, expenses and charges of the Custodian
pursuant to a Custodian Agreement, except to the extent included in Servicing
Fees.
"Dealer Fees" means a commercial paper dealer fee, payable to each
Conduit Lender, of not greater than 5 basis points per annum on the amount of CP
issued to fund Note Purchases by such Conduit Lender.
"Debt" of any Person means (a) indebtedness of such Person for borrowed
money; (b) obligations of such Person evidenced by bonds, debentures, notes,
letters of credit, interest rate and currency swaps or other similar
instruments; (c) obligations of such Person to pay the deferred purchase price
of property or services; (d) obligations of such Person as lessee under leases
which shall have been or should be, in accordance with GAAP, recorded as capital
leases; (e) obligations secured by an Adverse Claim upon property or assets
owned by such Person, even though such Person has not assumed or become liable
for the payment of such obligations; and (f) obligations of such Person under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of other Persons of the
kinds referred to in clauses (a) through (e) above.
"Defaulted Student Loan" means any Student Loan (a) as to which any
payment, or portion thereof, is more than the number of days past due from the
original due date thereof as allowed by the terms of the Higher Education Act
(which number of days, as of the Closing Date, is 270), unless such Student Loan
is in Deferment, (b) the Obligor of which is the subject of an Event of
Bankruptcy (without giving effect to any cure or 60 day continuance period) or
is
7
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 the number of days
past due from the original due date thereof as allowed by the terms of the
Higher Education Act).
"Defaulted Student Loan Ratio" means, as of any date of determination,
the ratio of all Defaulted Student Loans in the Pledged Collateral to all
Eligible Loans in the Pledged Collateral.
"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.
"Deutsche Bank Alternate Lender" means Deutsche Bank AG, New York
Branch, a German banking corporation acting through its New York Branch, each
Person who accepts an assignment of Deutsche Bank's rights and obligations
hereunder pursuant to Section 11.04 hereof, and the successors and assigns of
any of them. The Deutsche Bank Alternate Lender may include one or more Persons
following an assignment pursuant to Section 11.04 hereof, and if more than one
Person, each Person who is a Deutsche Bank Alternate Lender will have the rights
and obligations with respect to Note Purchases in the respective percentages
specified in the agreement(s) governing such assignment(s).
"Deutsche Bank Conduit Lender" means Gemini Securitization Corp., a
Delaware corporation, and its successors and assigns.
"Deutsche Bank Facility Agent" means Deutsche Bank AG, New York Branch,
a German banking corporation acting through its New York Branch, and its
successors and assigns.
"Deutsche Bank Facility Group" means the Deutsche Bank Conduit Lender,
the Deutsche Bank Facility Agent, the Deutsche Bank Alternate Lender and each
Deutsche Program Support Provider.
"Deutsche Bank Program Support Provider" means any Program Support
Provider which is a party to a Program Support Agreement with (or benefiting)
the Deutsche Bank Facility Agent, the Deutsche Bank Conduit Lender and/or the
Deutsche Bank Alternate Lender.
"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.
8
"Eligible Lender" means any "eligible lender," as defined in the Higher
Education Act, which has received an eligible lender designation from the
Department of Education or from a Guarantor with respect to Student Loans.
"Eligible Lender Trust Agreement" means the Eligible Lender Trust
Agreement, dated as of May 1, 2003, between the Borrower and the Eligible Lender
Trustee, as amended and supplemented pursuant to the terms thereof.
"Eligible Lender Trustee" means ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, 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.
"Eligible Lender Trustee Fees" means the fees, expenses and charges of
the Eligible Lender Trustee, including legal fees and expenses, as set forth in
the Eligible Lender Trust Agreement.
"Eligible Lender Trustee Guarantee Agreement" means any guarantee or
agreement issued by any Guarantor to the Eligible Lender Trustee, and any
amendment thereto entered into in accordance with the provisions thereof and
hereof.
"Eligible Loan" means a Student Loan (or a beneficial interest or
participation interest therein):
(a) which was originated in the ordinary course of
business and which is advanced directly to the school or the obligor
for the benefit of the obligor for educational purposes;
(b) which complies with all applicable provisions of the
Higher Education Act;
(c) on which the first required disbursement to the
obligor or the school has been made or is being made at the time of
purchase;
(d) which was acquired by the Borrower pursuant to a
Student Loan Purchase Agreement (either directly or through a
Participation Agreement);
(e) 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;
(f) the borrower for which is an Eligible Borrower;
(g) 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 Loan or an
unsubsidized
9
▇▇▇▇▇▇▇▇ Loan, such Student Loan qualifies the holder thereof to
receive Special Allowance Payments from the Department of Education to
the extent applicable;
(h) at the time of purchase with proceeds from a Note
Purchase, is not a Defaulted Student Loan and has not been tendered at
any time to any Guarantor for payment;
(i) that provides or, when the payment schedule with
respect thereto is determined, will provide for payments on a periodic
basis that will fully amortize the Principal Balance thereof by its
maturity, as such maturity may be modified in accordance with
applicable deferral and forbearance periods granted in accordance with
applicable laws, including the Higher Education Act and any Guarantee
Agreements, as applicable;
(j) that is denominated and payable only in United States
dollars in the United States or one of its territories;
(k) 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;
(l) which, together with the contract related thereto,
does not contravene in any material respect any laws, rules, or
regulations applicable thereto;
(m) which is assignable without the consent of, or notice
to, any related obligor;
(n) which there is only one original executed copy of the
promissory note evidencing such Student Loan;
(o) that is Guaranteed under, and the subject of, a valid
Guarantee Agreement with an eligible Guarantor, with respect to which
neither the Borrower nor the Eligible Lender Trustee is in default in
any material respect in the performance of any covenants and agreements
made in the applicable Guarantee Agreement and 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;
(p) that is the subject of a valid Servicing Agreement
with a Servicer, 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 with respect
to which all amounts due and payable to the Servicer have been paid in
full;
10
(q) that is the subject of a valid Custodian Agreement
among the Borrower, the Trustee, the Eligible Lender Trustee and the
Servicer or Subservicer holding such Student Loan;
(r) is a ▇▇▇▇▇▇▇▇ Loan, a PLUS/SLS Loan or a
Consolidation Loan under the Higher Education Act;
(s) does not carry 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 the Borrower to
charge an interest rate less than the applicable rate of interest, such
Student Loan will not bear interest at a rate lower than the applicable
rate of interest; provided, however, such Eligible Loans may
participate in the Borrower repayment incentive programs described in
Exhibit K hereto (as such Exhibit K may be amended from time to time
with the consent of the Administrative Agent is its sole discretion);
(t) is owned by the Borrower free and clear of any
Adverse Claims and in which the Trustee has a first priority perfected
security interest in the Borrower's right, title and interest therein
pursuant to this Agreement;
(u) the addition of such Student Loan to the Pledged
Collateral shall not cause the limitations set forth in Section 6.01(o)
to be violated by the Borrower; and
(v) the payment terms of which have not been altered or
amended except in accordance with the Higher Education Act.
"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.
"Eurodollar Reserve Percentage" means, for any day during any period,
the reserve percentage (expressed as a decimal, rounded upward to the next
1/100th of 1%) in effect on such day, whether or not applicable to any Lender,
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as "eurocurrency
liabilities"). The LIBOR Rate shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Bankruptcy" shall be deemed to have occurred with respect to
a Person if either:
11
(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.
"Facility Agent" means each of the Bank of America Facility Agent, the
Deutsche Bank Facility Agent and the Societe Generale Facility Agent, and any
successors or assigns.
"Facility Amount" means, initially $765,000,000 (representing
$255,000,000 for each Facility Group), as such Facility Amount may be adjusted
pursuant to Section 2.03 hereof. The Facility Amount shall at all times be equal
to 102% of the Maximum Financing Amount.
"Facility Fees" means, collectively, the Senior Facility Fees and the
Subordinate Facility Fees.
"Facility Group" means (a) the Bank of America Facility Group, (b) the
Deutsche Bank Facility Group and (c) the Societe Generale Facility Group.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Administrative Agent on such day on such transactions as determined by it.
"Federal Reimbursement Contracts" means any agreement between any
Guarantor and the Department of Education providing for the payment by the
Department of Education of
12
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, 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 (or a beneficial interest or
participation interest therein) financed with proceeds of Note Purchases under
this Agreement that were purchased by the Borrower from a Seller pursuant to a
Student Loan Purchase Agreement.
"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 Notes or
CP of a Conduit Lender, and otherwise means such other nationally recognized
statistical rating organization as may be designated by the Administrative
Agent.
"Funded Debt" means the sum of all current and non-current portions of
long-term debt, lines of credit, notes payable and bonds payable which are not
fully secured by Student Loans, participations in Student Loans or residual cash
flows on Student Loans.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"Grant" or "Granted" means to pledge, create and grant a security
interest in and with regard to property. 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 applicable Guarantor, in accordance with the terms
and conditions of the Guarantee Agreement, of the principal of and accrued
interest on such 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
Eligible Lender Trustee Guarantee Agreements, the Trustee Guarantee Agreement
and any other similar guarantee or agreement issued by a Guarantor to the
Eligible Lender 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.
13
"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 Eligible Lender Trustee
maintains in effect a Guarantee Agreement.
"Guarantor Default" means, with respect to a Guarantor, (i) a failure
by the Guarantor to make a required material payment as set forth in its
Guarantee Agreement for 5 days, (ii) a Bankruptcy Event occurs with respect to
the Guarantor or (iii) a material adverse change to the Guarantor's financial
condition
"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.
"Indemnified Amounts" has the meaning assigned to that term in Article
IX hereof, and shall also include amounts due to the Valuation Agent pursuant to
Article V of the Valuation Agent 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 Component" means, at any time of determination with respect
to the Bank of America Conduit Lender and any particular period of
determination, the aggregate interest accrued and to accrue through the next
Remittance Date for that portion of the Bank of America Conduit Lender's Note
accruing interest calculated by reference to the CP Rate at such time
(determined by the Bank of America Facility Agent in it discretion, which may be
based upon the CP Rate most recently determined by the Bank of America Facility
Agent, multiplied by 1.5).
"Interest Subsidy Payments" means the interest subsidy payments on
Student Loans authorized to be made by the Department of Education pursuant to
Section 428 of the Higher Education Act or similar payments authorized by
federal law or regulations.
"Issuance" means an issuance of Notes by the Borrower to the Registered
Owners under this Agreement.
"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.
"Lenders" means, collectively, the Conduit Lenders and the Alternate
Lenders.
14
"Liabilities'" means the sum of (a) the Aggregate Note Balance, (b) all
accrued Carrying Costs applicable thereto, (c) any accrued and unpaid fees,
including Custodian Fees, Servicing Fees, Portfolio Administration Fees, Trustee
Fees, Eligible Lender Trustee Fees and any other fees payable by the Borrower
pursuant to the Transaction Documents or any Program Support Agreement and (d)
any outstanding Servicer Advances.
"LIBOR Base Rate" means, for any period:
(a) the rate per annum (carried out to the fifth decimal
place) equal to the rate determined by the Administrative Agent to be
the offered rate that appears on the page of the Telerate Screen that
displays an average British Bankers Association Interest Settlement
Rate (such page currently being page number 3750) for deposits in
United States dollars (for delivery on the first day of such period)
with a term equivalent to such period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of
such period, or
(b) in the event the rate referenced in the preceding
subsection (a) does not appear on such page or service or such page or
service shall cease to be available, the rate per annum (carried to the
fifth decimal place) equal to the rate determined by the Administrative
Agent to be the offered rate on such other page or other service that
displays an average British Bankers Association Interest Settlement
Rate for deposits in United States dollars (for delivery on the first
day of such period) with a term equivalent to such period, determined
as of approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such period, or
(c) in the event the rates referenced in the preceding
subsections (a) and (b) are not available, the rate per annum
determined by the Administrative Agent as the rate of interest at which
Dollar deposits (for delivery on the first day of such period) in same
day funds in the approximate amount of the applicable investment to be
funded by reference to the LIBOR Rate and with a term equivalent to
such period would be offered by its London Branch to major banks in the
offshore dollar market at their request at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such period.
"LIBOR Rate" means for any period, a rate per annum determined by the
Administrative Agent pursuant to the following formula:
LIBOR Rate = LIBOR Base Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
"Liquidation Period" means the period commencing on the Termination
Date and ending on the date all of the Notes and all other amounts payable by
the Borrower under the Transaction Documents are paid in full.
"Liquidity Trigger" means the Principal Balance of the Financed Loans
removed from the Pledged Collateral during the preceding 12 calendar month
period (and not subsequently refinanced under this Agreement) over the average
Aggregate Note Balance during the preceding
15
12 calendar month period. The Liquidity Trigger is tested every May 1,
commencing May 1, 2004.
"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 Eligible Loans within the Pledged
Collateral; plus (b) 100%.
"Material Adverse Effect" means a material adverse effect on:
(a) the ability to collect on a material portion the
Pledged Collateral;
(b) the condition (financial or otherwise), business or
properties of the Borrower;
(c) the ability of the Borrower to perform its
obligations under this Agreement or any other Transaction Document; or
(d) the status, existence, perfection, priority or
enforceability of the Trustee's interest in the Pledged Collateral.
"Maturity Date" means the specified maturity of each Note, which,
unless otherwise extended by mutual agreement between the Administrative Agent
and the Borrower, shall be the first Business Day of the calendar month
following the calendar month in which such Note was purchased.
"Maximum Financing Amount" means, at any time, $750,000,000 (originally
being $250,000,000 for each Facility Group) 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 Date, the "Maximum Financing Amount" shall
mean the Aggregate Note Balance.
"Maximum Note Purchase Amount" means an amount equal to the sum of (a)
the Maximum Note Purchase Percentage multiplied by the aggregate outstanding
Principal Balance of Eligible Loans proposed to be financed, and (b) without
duplication, accrued and unpaid interest, Interest Subsidy Payments and Special
Allowance Payments on such Eligible Loans.
"Maximum Note Purchase Percentage" means (a) with respect to the
acquisition of Eligible Loans on any Note Purchase Date, the percentage
determined pursuant to Exhibit J hereto based upon the average outstanding
principal balance of the Eligible Loans to be purchased and (b) with respect to
determination of the value of Eligible Loans within the Pledged Collateral, the
percentage determined pursuant to Exhibit J hereto based upon the average
outstanding principal balance of the Eligible Loans within the Pledged
Collateral.
"Minimum Asset Coverage Requirement" means an Asset Coverage Ratio of
100.25%.
"Monthly Rebate Fee" means the monthly rebate fee payable to the
Department of Education on the Financed Loans within the Pledged Collateral.
16
"Monthly Report" means a report, in substantially the form of Exhibit D
hereto, prepared by the Portfolio Administrator and approved and furnished by
the Borrower to the Trustee, the Valuation Agent and the Administrative Agent.
"Moody's" 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 Notes or the CP of a Conduit Lender, and otherwise means such other
nationally recognized statistical rating organization as may be designated by
the Administrative Agent.
"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.
"Net Interest Margin" means, with respect to any calendar month, the
difference between the weighted average yield of the Eligible Loans within the
Pledged Collateral less the sum of (a) the Yield for that calendar month, and
(b) for that calendar month, (i) the sum of the monthly accrued (A) Servicing
Fees, (B) Trustee Fees. (C) Eligible Lender Trustee Fees, (D) Program Fees and
(E) Facility Fees, over (ii) the weighted average Aggregate Note Balance during
that month.
"Net Revenue" means the projected net income to be received from the
Eligible Loans within the Pledged Collateral after taking into account financing
costs, loan defaults and delinquencies, fees and other charges, all as set forth
in the Valuation Report Assumptions.
"Note" means each Senior Note or Subordinate Note issued by the
Borrower hereunder to a Registered Owner.
"Note Account" has the meaning specified in Section 2.11 hereof.
"Note Purchase" means a purchase, including a Rollover Note Purchase,
of the Borrower's Notes by the Lenders pursuant to Article II hereof.
"Note Purchase Date" means, with respect to any Note Purchase, the date
on which such Note Purchase is funded.
"Note Purchasers" means the Lenders and their respective Program
Support Providers, and their respective successors and assigns (subject to
Section 11.04 hereof). Each Facility Group shall purchase their Notes and
otherwise act through its Facility Agent.
"Note Register" has the meaning set forth in Section 3.05(a) hereof.
"Note Registrar" has the meaning set forth in Section 3.05(a) hereof.
"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 Conduit Lenders, the Alternate Lenders, the Program Support
Providers, the Trustee, the Eligible Lender Trustee and/or any other Person,
arising under or in connection with this Agreement or any other Transaction
17
Document or the transactions contemplated hereby or thereby and shall include,
without limitation, all liability for principal of and Carrying Costs on the
Notes, 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 applicable Guarantor and the Department
of Education.
"Official Body" means any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, or any accounting board or authority
(whether or not a part of government) which is responsible for the establishment
or interpretation of national or international accounting principles, in each
case whether foreign or domestic.
"Opinion of Counsel" means an opinion in writing of legal counsel, who
may be counsel to the Borrower, the Trustee, the Administrative Agent, any
Facility Agent or any Lender.
"Outstanding," when used with respect to Notes, means, as of the date
of determination, all Notes theretofore authenticated and delivered under this
Agreement except,
(a) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation; and
(b) Notes for whose payment or repayment money in the
necessary amount has been theretofore deposited with the Trustee for
the Registered Owners of such Notes; and
(c) Notes which have been exchanged for other Notes, or
in lieu of which other Notes have been delivered, pursuant to this
Agreement.
"Participation Agreement" means a participation agreement between the
Borrower and a Seller, substantially in the form attached as Exhibit F hereto,
for the purchase of participation interests in Eligible Loans; provided,
however, that any Participation Agreement which (a) provides for a participation
interest of less than 100% in the underlying Eligible Loans, (b) provides for a
Lender's Retained Interest (as defined in the Participation Agreement) of more
than 0% or (c) amends the definition of "Eligible Loan" or the repurchase or
indemnification provisions contained therein shall require the prior written
consent of the Administrative Agent.
"Permitted Investments" means (a) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of no more than 90 days from the date
of acquisition; (b) time deposits and certificates of deposit having maturities
of no more than 90 days from the date of acquisition, maintained with or issued
by any commercial bank having capital and surplus in excess of $500,000,000 and
having a short-term rating not less than "A-1" or the equivalent thereof from
S&P, not less than "P-1" or the equivalent thereof from Moody's and, if rated by
Fitch, not less than "F1" or the
18
equivalent thereof from Fitch; (c) repurchase obligations for underlying
securities of the types described in clauses (a) or (b) above maturing no later
than 90 days after the date of acquisition; (d) investment agreements with
entities have a rating of "AAA" from S&P, "Aaa" from Moody's and, if rated by
Fitch, "AAA" from Fitch; (e) commercial paper (other than CP) maturing within 90
days after the date of acquisition and having a rating of not less than "A-1" or
the equivalent thereof from S&P, not less than "P-1" or the equivalent thereof
from Moody's and if rated by Fitch, not less than "F1" or the equivalent thereof
from Fitch; (f) freely redeemable shares in money market funds having a rating
of "AAA-m" or "AAAM-G" from S&P, "Aaa" from Moody's and, if rated by Fitch,
"AAA" from Fitch; and (g) any other investment approved in writing by the
Administrative 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 Loan" 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 Agreement" means the Portfolio Administration
Agreement, dated as of May 1, 2003, between the Borrower and the Portfolio
Administrator, as amended and supplemented pursuant to the terms thereof.
"Portfolio Administration Fee" means, for each Collection Period, a per
annum fee payable to the Portfolio Administrator monthly in arrears equal to
0.18% on the average outstanding Principal Balance of the Eligible Loans within
the Pledged Collateral during such Collection Period.
"Portfolio Administrator" means Nelnet, Inc., a Nevada corporation, and
its successors and assigns.
"Potential Termination Event" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Termination Event.
"Prime Rate" means, for any day, a fluctuating rate per annum equal to
the higher of (a) the Federal Funds Rate for such day, plus 1.50% and (b) the
rate of interest in effect for such day as publicly announced from time to time
by the Administrative Agent as its "prime rate". The "prime rate" is a rate set
by the Administrative Agent based upon various factors including the
Administrative Agent's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in the prime
rate announced by the Administrative Agent shall take effect at the opening of
business on the day specified in the public announcement of such change.
19
"Principal Balance" means, with respect to any Student Loan and any
specified date, the original principal amount of such Student Loan, plus
capitalized interest thereon, if any, minus prior payments of principal by or on
behalf of the Obligor of such Student Loan as of such date.
"Program Fees" means, collectively, the Senior Program Fees and the
Subordinate Program Fees.
"Program Support Agreement", with respect to any Conduit Lender, means
and includes any agreement entered into by any Program Support Provider
providing for the issuance of one or more letters of credit for the account of
such Conduit Lender, the issuance of one or more surety bonds for which such
Conduit Lender is obligated to reimburse the applicable Program Support Provider
for any drawings thereunder, the sale by the Conduit Lender to any Program
Support Provider of any interest in a Note (or portions thereof or
participations therein) and/or the making of loans and/or other extensions of
liquidity or credit to the Conduit Lender in connection with the Conduit
Lender's commercial paper program, together with any letter of credit, surety
bond or other instrument issued thereunder.
"Program Support Provider" means and includes any Person now or
hereafter extending liquidity or credit or having a commitment to extend
liquidity or credit to or for the account of, or to make purchases from, a
Conduit Lender or issuing a letter of credit, surety bond or other instrument to
support any obligations arising under or in connection with the Conduit Lender's
commercial paper program.
"Program Support Termination Event" means the earliest to occur of the
following: (a) any Program Support Provider related to a Conduit Lender has its
rating lowered below "A-1" by S&P, "P-1" by Moody's or "F1" by Fitch (if rated
by Fitch), unless a replacement Program Support Provider having ratings of at
least "A-1" from S&P, "P-1" by Moody's and "F1" by Fitch (if rated by Fitch) is
substituted within 30 days of such downgrade; (b) any Program Support Provider
shall fail to honor any of its payment obligations under its Program Support
Agreement; (c) a Program Support Agreement shall cease for any reason to be in
full force and effect or be declared null and void or (d) the final maturity
date of such Program Support Agreement (unless such final maturity date is
extended pursuant to the Program Support Agreement).
"Proprietary Institution" means a for-profit vocational school,
including a proprietary institution.
"Proprietary Loan" means a loan made to or for the benefit of a student
attending a Proprietary Institution.
"Pro Rata Share" means (a) with respect to any Note Purchase at any
time and any particular Facility Group, a fraction (expressed as a percentage)
the numerator of which is the Commitment of the Facility Group, and the
denominator of which is the Maximum Financing Amount and (b) with respect to any
repayment of Notes, a fraction (expressed as a percentage) the numerator of
which is the Aggregate Note Balance attributable to such Facility Group, and the
denominator of which is the Aggregate Note Balance. As of the date of this
Agreement, the Pro Rata Share of each Facility Group is 33-1/3%.
20
"Records'" means all documents, books, records, Student Loan Notes and
other information (including without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
maintained with respect to Financed Loans or otherwise in respect of the Pledged
Collateral.
"Registered Owner" means the Person in whose name a Note is registered
in the Note Register. The Facility Agents shall be the initial Registered
Owners.
"Regulatory Change" means, relative to any Affected Party:
(a) after the date of this Agreement, any change in (or
any change in the interpretation or administration), 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 or
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 (or any implementation by 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. For avoidance of doubt, any
interpretation or implementation of Accounting Research Bulletin No. 51
by the Financial Accounting Standards Board (including Interpretation
No. 46: Consolidation of Variable Interest Entities) shall constitute
an adoption, change, request or directive, and any implementation
thereof shall be a "Regulatory Change".
"Remittance Date" means the first Business Day of each month,
commencing the first Business Day of July 2003.
"Reporting Date" means the 4th Business Day prior to each Remittance
Date.
"Requested Note Purchase Amount" means the amount of the Note Purchase
that is requested by the Borrower, not to exceed the Maximum Note Purchase
Amount.
"Requested Note Purchase Percentage" means the rate, stated as a
percentage, of the aggregate Principal Balance of the Eligible Loans to be
financed by a Note Purchase that is requested by the Borrower, not to exceed the
Maximum Note Purchase Percentage.
21
"Reserve Account" means the special account created pursuant to Section
2.06 hereof.
"Reserve Account Requirement" means, as of any date of determination,
one-quarter of one percent (0.25%) of the Aggregate Note Balance as of such
date.
"Revolving Period" means the period commencing on the Closing Date and
terminating on the Termination Date.
"Rollover Note Purchase" means a Note Purchase, the proceeds of which
are used to refinance the principal of and, to the extent permitted by Section
2.01(a) hereof, accrued and unpaid Carrying Costs on one or more maturing Notes.
"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 Notes or the CP of a
Conduit Lender, and otherwise means such other nationally recognized statistical
rating organization as may be designated by the Administrative Agent.
"Schedule of Financed Loans" means a listing of certain Financed Loans
of the Borrower delivered to and held by the Trustee pursuant to Section
6.01(c)(viii) hereof (which Schedule of Financed Loans 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 of Financed
Loans shall be the master list of all Financed Loans then compromising a part of
the Pledged Collateral pursuant to this Agreement.
"Secured Creditors" means the Trustee, the Valuation Agent and the
Affected Parties.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" means Nelnet, Inc., any wholly-owned Affiliate of Nelnet,
Inc., Union Bank and Trust Company, and, with the consent of the Administrative
Agent, any other entity which sells Eligible Loans or participation interests in
Eligible Loans to the Borrower pursuant to the terms of a Student Loan Purchase
Agreement.
"Senior Carrying Costs" means an amount equal to the sum of the
following: the accrued Yield applicable to the Senior Notes for the preceding
Yield Period; the Dealer Fees on commercial paper issued to finance the purchase
of the Senior Notes; the Senior Facility Fee; the Senior Program Fee; any past
due Yield payable on the Senior Notes; interest on any related loans or other
disbursements payable by the Lenders as a result of unreimbursed draws on or
under a Program Support Agreement supporting the purchase of the Senior Notes;
and, with respect to the Senior Notes, increased costs of the Affected Parties
resulting from Yield Protection, if any.
"Senior Facility Fee" means, with respect to each Facility Group, a
facility fee, payable monthly to the Registered Owners of the Senior Notes
purchased by or on behalf of such Facility Group, of 14 basis points per annum
(or such other amount agreed to by the Borrower and such Facility Group) on 95%
of such Facility Group's Pro Rata Share of the Facility Amount.
22
"Senior Notes" means the Nelnet Education Loan Funding, Inc. Senior
Warehouse Notes issued pursuant to this Agreement.
"Senior Parity Requirement" shall be deemed to be satisfied as of any
date of determination if (i) the Aggregate Market Value (calculated using solely
the Maximum Note Purchase Percentage and not the Loan Valuation Percentage) of
the assets in the Pledged Collateral (excluding the Reserve Account) as of such
date is at least equal to (ii) the aggregate outstanding principal balance of
the Senior Notes at such time.
"Senior Program Fee" means, with respect to each Facility Group, a
program fee, payable monthly to the Registered Owners of the Senior Notes
purchased by or on behalf of such Facility Group, of 8 basis points per annum
(or such other amount agreed to by the Borrower and such Facility Group) on the
average outstanding principal balance of the Senior Notes during the preceding
calendar month.
"Servicer" means, individually or collectively, (a) Nelnet, Inc., and
(b) any other organization with which the Borrower has entered into a Servicing
Agreement with respect to Financed Loans, with the prior written approval of the
Administrative Agent.
"Servicer Advances" means any Carrying Costs advanced by a Servicer
which is an Affiliate of the Borrower pursuant to Section 2.17 hereof.
"Servicer 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) a material adverse change in the
condition (financial or otherwise), business or properties of the Servicer or in
the ability of the Servicer to service and collect on the Student Loans; or (f)
(i) any litigation (including, without limitation, derivative actions),
arbitration proceedings or governmental proceedings (whether or not existing at
the time of the execution hereof) not disclosed in writing by the Borrower to
the Administrative 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 any 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
Master Servicing Agreement, dated as of May 1, 2003, between the Borrower and
Nelnet, Inc.; and (b) with the prior written consent of the Administrative
Agent, any other servicing agreement between the
23
Borrower and any Servicer, as any such agreement may be amended or supplemented
from time to time with the prior written consent of the Administrative 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.
"Societe Generale Alternate Lender" means Societe Generale, a banking
corporation organized under the laws of France acting through its New York
Branch, each Person who accepts an assignment of Societe Generale's rights and
obligations hereunder pursuant to Section 11.04 hereof, and the successors and
assigns of any of them. The Societe Generale Alternate Lender may include one or
more Persons following an assignment pursuant to Section 11.04 hereof, and if
more than one Person, each Person who is a Societe Generale Alternate Lender
will have the rights and obligations with respect to Note Purchases in the
respective percentages specified in the agreement(s) governing such
assignment(s).
"Societe Generale Conduit Lender" means ▇▇▇▇▇▇ Capital Corporation, a
Delaware corporation, and its successors and assigns.
"Societe Generale Facility Agent" means Societe Generale, a banking
corporation organized under the laws of France acting through its New York
Branch, and its successors and assigns.
"Societe Generale Facility Group" means the Societe Generale Conduit
Lender, the Societe Generale Facility Agent, the Societe Generale Alternate
Lender and each Societe Generale Program Support Provider.
"Societe Generale Program Support Provider" means any Program Support
Provider which is a party to a Program Support Agreement with (or benefiting)
the Societe Generale Facility Agent, the Societe Generale Conduit Lender and/or
the Societe Generale Alternate Lender.
"Solvent" means, at any time with respect to any Person, 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
24
(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 then
existing, represents the amount which can reasonably be
expected to become an actual or matured liability;
(ii) the "fair value" of an asset shall be the
amount which may be realized within a reasonable time either
through collection or sale of such asset at its regular market
value;
(iii) the "regular market value" of an asset shall
be the amount which a capable and diligent business person
could obtain for such asset from an interested buyer who is
willing to purchase such asset under ordinary selling
conditions; and
(iv) the "present fair saleable value" of an
asset means the amount which can be obtained if such asset is
sold with reasonable promptness in an arms-length transaction
in an existing and not theoretical market.
"Special Allowance Payments" means special allowance payments on
Student Loans 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.
"▇▇▇▇▇▇▇▇ 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), participation or other equivalents (however
designated) of or in a corporation, partnership, limited liability company or
equivalent entity, whether voting or non-voting, including, without limitation,
common stock, warrants, preferred stock, convertible debentures or any other
equity security, and all agreements, instruments and documents convertible, in
whole or in part, into any one or more of all of the foregoing.
"Student Loan" means a Consolidation Loan, a PLUS/SLS Loan or a
▇▇▇▇▇▇▇▇ Loan, including a Proprietary Loan.
"Student Loan Notes" means the promissory notes or other writings
evidencing the Student Loans.
"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; provided,
however, that any student loan purchase agreement which
25
amends the definition of "Eligible Loan" contained therein or the repurchase or
indemnity requirements of the Seller thereunder shall require the prior written
consent of the Administrative Agent, or (b) a Participation Agreement.
"Subordinate Carrying Costs" means an amount equal to the sum of the
following: the accrued Yield applicable to the Subordinate Notes for the
preceding Yield Period; the Dealer Fees on commercial paper issued to finance
the purchase of the Subordinate Notes; the Subordinate Facility Fee; the
Subordinate Program Fee; any past due Yield payable on the Subordinate Notes;
interest on any related loans or other disbursements payable by the Lenders as a
result of unreimbursed draws on or under a Program Support Agreement supporting
the purchase of the Subordinate Notes; and, with respect to the Subordinate
Notes, increased costs of the Affected Parties resulting from Yield Protection,
if any.
"Subordinate Facility Fee" means, with respect to each Facility Group,
a facility fee, payable monthly to the Registered Owners of the Subordinate
Notes purchased by or on behalf of such Facility Group, of 14 basis points per
annum (or such other amount agreed to by the Borrower and such Facility Group)
on 5% of each Facility Group's Pro Rata Share of the Facility Amount.
"Subordinate Notes" means the Nelnet Education Loan Funding, Inc.
Subordinate Warehouse Notes issued pursuant to this Agreement.
"Subordinate Program Fee" means, with respect to each Facility Group, a
program fee, payable monthly to the Registered Owners of the Subordinate Notes
purchased by or on behalf of such Facility Group, of 48 basis points per annum
(or such other amount agreed to by the Borrower and such Facility Group) on the
average outstanding principal balance of the Subordinate Notes during the
preceding calendar month.
"Subservicer" means, individually or collectively, (a) Nelnet Loan
Services, Inc., (b) ▇▇▇▇▇▇ ▇▇▇ Servicing L.P., (c) ACS Education Services, Inc.,
(d) Pennsylvania Higher Education Assistance Agency, (e) Great Lakes Educational
Loan Services, Inc., and (f) any other organization with which the Servicer has
entered into a Subservicing Agreement with respect to Financed Loans, with the
prior written approval of the Administrative Agent; provided, however, ▇▇▇▇▇▇
Mae Servicing L.P., ACS Education Services, Inc., Pennsylvania Higher Education
Assistance Agency and Great Lakes Educational Loan Services, Inc. shall not
subservice any Financed Loans until the Administrative Agent has approved in
writing its respective Subservicing Agreement.
"Subservicing Agreement" means, individually or collectively, (a) the
Loan Servicing Agreement, dated as of May 1, 2003, between the Servicer and
Nelnet Loan Services, Inc.; (b) a Servicing Agreement between the Servicer and
▇▇▇▇▇▇ ▇▇▇ Servicing L.P. and approved in writing by the Administrative Agent;
(c) a Servicing Agreement between ACS Education Services Inc. and the Servicer
and approved in writing by the Administrative Agent; (d) a Servicing Agreement
between Pennsylvania Higher Education Assistance Agency and the Servicer and
approved in writing by the Administrative Agent; (e) a Servicing Agreement
between Great Lakes Educational Loan Services, Inc. and the Servicer and
approved in writing by the Administrative Agent; and (f) with the prior written
consent of the Administrative Agent,
26
any other subservicing agreement between the Servicer and any Subservicer, as
any such agreement may be amended or supplemented from time to time with the
prior written consent of the Administrative Agent, under which the respective
Subservicer agrees to administer and collect the Financed Loans.
"Tangible Net Worth" means the sum of shareholders equity less all
intangibles appearing on the balance sheet or any other asset reasonably
determined by the Administrative Agent as ineligible.
"Termination Date" means the earliest to occur of (a) May 14, 2004
(unless such date is extended pursuant to Section 2.16 hereof); (b) any date
designated by the Borrower as the date for terminating the entire Maximum
Financing Amount pursuant to Section 2.03 hereof; (c) the date of the
declaration or automatic occurrence of the Termination Date pursuant to Article
VII hereof; and (d) the occurrence of the a Program Support Termination Event.
"Termination Event" has the meaning assigned to that term in Article
VII hereof.
"Transaction Documents" means, collectively, this Agreement, the
Valuation Agent Agreement, the Eligible Lender Trust Agreement, the Portfolio
Administration Agreement, all Servicing Agreements, the Subservicing 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)(1)(B) of the Higher Education Act.
"Trustee" means ▇▇▇▇▇ Fargo Bank Minnesota, National Association, 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 any guarantee or agreement issued
by any Guarantor to the Trustee, and any amendment thereto entered into in
accordance with the provisions thereof and hereof.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
"United States" means the United States of America.
"Unguaranteed Amounts" means, as of any date, that portion, if any, of
the Principal Balance plus accrued interest (including any Special Allowance
Payments or Interest Subsidy
27
Payments) of a Student Loan that is not Guaranteed or otherwise not payable
under the applicable Guarantee Agreement.
"Unused Commitment" shall have the meaning set forth in Section 2.15
hereof.
"Valuation Agent" means Banc of America Securities LLC, or any other
entity appointed as Valuation Agent by the Borrower and approved by the
Administrative Agent, which approval shall not be unreasonably withheld.
"Valuation Agent Agreement" means the Valuation Agent Agreement, dated
as of May 1, 2003, among the Borrower, the Administrative Agent and the
Valuation Agent and any other valuation agent agreement in the form attached as
Exhibit B hereto among the Borrower, the Administrative 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 Administrative Agent.
"Valuation Date" means the 20th day of each February, May, August and
November, commencing August 20, 2004.
"Valuation Report" means a report furnished by the Valuation Agent to
the Portfolio Administrator, the Administrative Agent and the Borrower pursuant
to Section 6.10(a) hereof, the form of which is attached as Exhibit A to the
Valuation Agent Agreement.
"Valuation Report Assumptions" means the cash flow and related
assumptions set forth in Exhibit C to the Valuation Agent Agreement.
"Yield" means, for each Facility Group's Notes and any Yield Period,
(a) with respect to the Senior Notes, the applicable Yield Rate multiplied by
the average outstanding amount of the average outstanding principal balance of
the Senior Notes during such Yield Period, plus any Yield Underpayment with
respect to the Senior Notes from the prior Yield Period and less any Yield
Overpayment with respect to the Senior Notes from the prior Yield Period, and
(b) with respect to the Subordinate Notes, the applicable Yield Rate multiplied
by the average outstanding amount of the average outstanding principal balance
of the Subordinate Notes during such Yield Period, plus any Yield Underpayment
with respect to the Subordinate Notes from the prior Yield Period and less any
Yield Overpayment with respect to the Subordinate Notes from the prior Yield
Period.
"Yield Period" means the period from and including a Remittance Date
(or the Closing Date in the case of the initial Yield Period) to the day
preceding the next succeeding Remittance Date.
"Yield Rate" means, with respect to any Yield Period, (a) if a Conduit
Lender funds (directly or indirectly) its portion of the Aggregate Note Balance
with CP, the CP Rate, (b) if an Alternate Lender or a Conduit Lender (if funding
its investment other than with CP) funds its portion of the Aggregate Note
Balance (except as set forth in clause (c) or (d) of this definition), the one
month LIBOR Rate plus 1.00%, (c) on any day after a Termination Event or a
Potential Termination Event has occurred and shall be continuing, the Prime Rate
plus 2.00% and (d) for the initial rate period funded by an Alternate Lender or
by a Conduit Lender (if funding its
28
investment other than with CP) or at any time when LIBOR Rate is unavailable or
cannot be determined, the Prime Rate.
"Yield Overpayment" means, with respect to any Yield Period, the
excess, if any, of (i) the amount of interest for such Yield Period determined
based on the CP Rate as initially determined by the applicable Facility Agent
pursuant to the definition of "CP Rate," over (ii) the amount of interest for
such Yield Period determined based upon the CP Rate as redetermined by the
applicable Facility Agent prior to the next Remittance Date pursuant to the
definition of "CP Rate."
"Yield Protection" means any Lender's reasonable increased costs for
taxes, reserves, breakage costs, changes in capital requirements and certain
reasonable expenses imposed on such Lender (which may be due to regulatory or
accounting changes, including FASB Interpretation No. 46: Consolidation of
Variable Interest Entities) as provided in the Sections 2.02(d), 2.15 and
11.08(b) hereof.
"Yield Underpayment" means, with respect to any Yield Period, the
excess, if any, of (i) the amount of interest for such Yield Period determined
based upon the CP Rate as redetermined by the applicable Facility Agent prior to
the next Remittance Date pursuant to the definition of "CP Rate," over (ii) the
amount of interest for such Yield Period determined based on the CP Rate as
initially determined by the applicable Facility Agent pursuant to the definition
of "CP Rate."
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."
SECTION 1.04. CALCULATION OF YIELD RATE AND CERTAIN FEES. The Yield
Rate on the Notes and all fees payable to the Lenders, the Note Purchasers or
the Registered Owners pursuant to this Agreement are calculated based on the
actual number of days divided by 360.
ARTICLE II
THE FACILITY
SECTION 2.01. ISSUANCE AND PURCHASE OF NOTES.
(a) On the terms and conditions hereinafter set forth,
each Alternate Lender agrees to purchase, and each Conduit Lender may,
in its sole discretion, purchase Notes issued by the Borrower in
proportion to their respective Pro Rata Shares from time to time up to
an aggregate principal amount outstanding at any one time not to exceed
the Maximum Financing Amount in effect at the time of such Note
Purchase; provided that no Facility Group shall be required to purchase
Notes in a principal amount of less than
29
$500,000 and integral multiples of $250,000 in excess thereof, nor in
an amount in excess of such Facility Group's Commitment. An amount
equal to ninety five percent (95%) of each Requested Note Purchase
Amount shall be funded through the sale of Senior Notes to the Lenders
and an amount equal to five percent (5%) of each Requested Note
Purchase Amount shall be funded through the sale of Subordinate Notes
to the Lenders, with each Facility Group purchasing its Pro Rata Share
of the Requested Note Purchase Amount pursuant to its Senior Note and
its Subordinate Note, respectively. Within the limits set forth in this
Section and the other terms and conditions of this Agreement, during
the Revolving Period, the Borrower may issue, prepay and reissue Notes
under this Section. In addition, the aggregate principal amount of any
Note Purchase, which is not a Rollover Note Purchase, shall not exceed
the Maximum Note Purchase Amount, and the aggregate principal amount of
any Rollover Note Purchase shall not exceed the aggregate principal
amount of and, to the extent permitted by this subsection (a), accrued
and unpaid Carrying Costs on the Notes being refinanced with such
Rollover Note Purchase. Prior to the Termination Date and subject to
the Maximum Financing Amount, the Borrower shall have the right to
request that the aggregate principal amount of a Rollover Note Purchase
shall include the accrued and unpaid Carrying Costs on the Notes being
refinanced with the Rollover Note Purchase. All Notes issued hereunder
shall be denominated in and be payable in United States dollars. All
then Outstanding Notes and other Obligations hereunder shall be due and
payable on May 14, 2004 (unless such date is extended pursuant to
Section 2.16 hereof) or such earlier date as provided in Article VII
hereof.
(b) Each Lender's obligations under this Section are
several and the failure of any Conduit Lender or any Alternate Lender
to make available its Pro Rata Share of any requested Note Purchase
shall not relieve any other Note Purchaser of its obligations hereunder
or obligate any other Note Purchaser to honor the obligations of any
defaulting Lenders. Notwithstanding anything contained in this
Agreement to the contrary, no Facility Group shall be obligated or
committed to fund any portion of any Note Purchase in excess of its Pro
Rata Share thereof or in an aggregate principal amount in excess of its
Commitment. On the Closing Date, the Commitment of each Facility Group
and each Alternative Lender is $250,000,000, as such Commitment amount
may be adjusted pursuant to Section 2.03 hereof.
(c) Each Note shall be issued in the name of a Registered
Owner.
(d) Each Note Purchase shall be purchased at 100% of the
principal amount thereof.
SECTION 2.02. THE INITIAL NOTE PURCHASE AND SUBSEQUENT NOTE PURCHASES.
(a) Any Note Purchase made by the Lenders during the
Revolving Period will be made on any Business Day at the request of the
Borrower, subject to and in accordance with the terms and conditions of
Section 2.01 hereof and this Section; provided, however, that the
Borrower may only request three (3) Note Purchases in any calendar week
(unless otherwise agreed by the Borrower and each Facility Agent).
After the Revolving Period, the Conduit Lenders and the Alternate
Lenders shall make only
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Rollover Note Purchases on a Remittance Date (unless otherwise agreed
by the Borrower and each 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 Notes.
(b) Subject to the satisfaction of the conditions
precedent set forth in this Agreement, the Borrower may request a Note
Purchase hereunder by giving written notice to each Facility Agent,
with a copy to the Trustee, in the form of Exhibit C hereto not later
than 12:00 noon, New York City/Charlotte, North Carolina time, on the
Business Day prior to the proposed Note Purchase Date. Each such notice
shall specify (i) the aggregate amount of such Note Purchase, which
shall be in an amount equal to or greater than $500,000 and any
integral multiple of $250,000 with respect to each Facility Group, (ii)
the Note Purchase Date and (iii) the Requested Note Purchase
Percentage, if applicable to the Note Purchase, and the Requested Note
Purchase Amount. On the Note Purchase Date and no later than 2:00 p.m.,
New York City/Charlotte, North Carolina time, each Alternate Lender
shall and each Conduit 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, its respective Pro
Rata Share of the Requested Note Purchase Amount by payment to the
account which the Borrower has designated in writing.
(c) Except as otherwise provided in Article IX hereof or
elsewhere herein, principal and accrued Carrying Costs on the Notes
shall be payable solely from the Pledged Collateral and from payments
made or owing pursuant to the "Collateral Calls" made in accordance
with Section 6.13 hereof. Any principal and Carrying Costs due or
accrued on the Notes on any Remittance Date will be payable to the
Registered Owner for each Facility Group based on its share of
principal and Carrying Costs payable no later than 1:00 p.m. (New York
City/Charlotte, North Carolina time) on such Remittance Date in
accordance with Sections 2.05(b) and Section 2.12 hereof and may be
prepaid in whole or in part on any Business Day upon two (2) Business
Day's prior written notice to each Facility Agent indicating the amount
of such prepayment and the Business Day on which such prepayment shall
be made.
(d) Each Note Purchase request shall be irrevocable and
binding on the Borrower, and the Borrower shall indemnify each Lender
against any loss or expense incurred by such Lender, either directly or
indirectly (including, in the case of a Conduit Lender, through the
applicable Program Support Agreement) as a result of any failure by the
Borrower to complete such Note Purchase, including any loss (including
loss of profit) or expense incurred by any Facility Agent or any
Lender, either directly or indirectly (including, in the case of a
Conduit Lender, pursuant to the applicable Program Support Agreement)
by reason of the liquidation or reemployment of funds acquired by such
Lender (or the applicable Program Support Provider(s)) (including funds
obtained by issuing commercial paper or promissory notes or obtaining
deposits or loans from third parties) in order to fund such Note
Purchase. Any such amounts shall constitute "Yield Protection"
hereunder.
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SECTION 2.03. INCREASE, REDUCTION OR TERMINATION OF THE FACILITY AMOUNT
AND MAXIMUM FINANCING AMOUNT. The Borrower may request that the Facility Amount
and the Maximum Financing Amount be increased by requesting one or more of the
Facility Groups to increase its Commitment. Any such increase in the Commitment
by a Facility Group shall be in the sole discretion of the Facility Agent for
such Facility Group. Upon receipt of written evidence that a Facility Group has
agreed to increase its Commitment, the Maximum Financing Amount shall be
increased by the increase in such Facility Group's Commitment. The Borrower may,
upon at least two (2) Business Days' written notice to the Administrative Agent
and each Facility Agent terminate in whole or reduce in part the portion of the
Maximum Financing Amount that exceeds the Aggregate Note Balance. Any such
reduction in the Maximum Financing Amount shall be allocated among the Facility
Groups as determined by the Borrower. The Borrower shall pay all outstanding
principal and Carrying Costs on the Notes owned by any Lender upon the
termination of the Commitment of its Facility Group. The Facility Amount shall,
at all times, be an amount equal to 102% of the Maximum Financing Amount.
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 Eligible Lender Trustee,
the student loan depositaries or co-depositaries, the Custodians, the Sellers,
the Servicers or the Subservicers, 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 the Eligible Lender Trustee and each Servicer,
Subservicer, 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 Note Purchases deposited to the Collection Account shall be deposited into a
separate account established within the Collection Account (the "Collection Note
Purchase Subaccount") and used to finance the purchase of Eligible Loans or
repay Notes pursuant to Sections 2.05(d) and 2.18 hereof. 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 or prior to each Reporting 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 Collection Period,
and cause the Portfolio Administrator to forward such Monthly Report to
the Trustee, the Administrative Agent and the Valuation Agent.
(b) The Trustee, on each Remittance Date, shall apply the
moneys received by the Trustee during the immediately preceding
Collection Period and held in the Collection Account as directed by the
Borrower (or if the Borrower fails to provide such direction, as
provided by the Administrative Agent) pursuant to the Monthly Report,
on
32
which the Trustee may conclusively rely, on such Remittance Date (or as
otherwise provided in Article VII hereof), in the following priority:
(i) pay to the Department of Education an amount
equal to any unpaid Monthly Rebate Fee for the immediately
preceding Collection Period plus any Monthly Rebate Fees not
previously paid, but only to the extent the Department of
Education has not deducted or netted the amount from the
Interest Subsidy Payments or Special Allowance Payments;
(ii) pay to any Servicer, on a pro rata basis, an
amount equal to its unreimbursed Servicer Advances due and
owing;
(iii) pay to each Servicer and Custodian, as
appropriate and on a pro rata basis, an amount equal to the
Servicing Fee and Custodian Fee which is due and owing as of
the close of business on the last day of the immediately
preceding Collection Period;
(iv) pay to the Trustee and the Eligible Lender
Trustee, as appropriate and on a pro rata basis, an amount
equal to the Trustee Fee and the Eligible Lender Trustee Fee
which is due and owing as of the close of business on the last
day of the immediately preceding Collection Period and all
expenses incurred by the Trustee and the Eligible Lender
Trustee in connection with the enforcement of this Agreement;
(v) pay to the Registered Owners of the Senior
Notes, on a pro rata basis, all Senior Carrying Costs (other
than any Yield Protection with respect to the Senior Notes)
which are accrued and unpaid as of the Remittance Date (which
may be based upon estimates of the CP Rates provided by each
of the Facility Agents as provided in the definition of "CP
Rate"); provided, however, that Yield payable under this
clause shall be calculated at a Yield Rate equal to the CP
Rate or the one-month LIBOR Rate (if Yield is payable based on
the LIBOR Rate or the Prime Rate) (as applicable);
(vi) if the Senior Parity Requirement is
satisfied, pay to the Registered Owners of the Subordinate
Notes, on a pro rata basis, all Subordinate Carrying Costs
(other than any Yield Protection with respect to the
Subordinate Notes) which are accrued and unpaid as of the
Remittance Date (which may be based upon estimates of the CP
Rates provided by each of the Facility Agents as provided in
the definition of "CP Rate"); provided, however, that Yield
payable under this clause shall be calculated at a Yield Rate
equal to the CP Rate or the one-month LIBOR Rate (if Yield is
payable based on the LIBOR Rate or the Prime Rate) (as
applicable);
(vii) to the Administrative Agent for the account
of the applicable Note Purchasers, to reduce the aggregate
outstanding principal balance of the Senior Notes to the
extent necessary such that after giving effect to such payment
the Senior Parity Requirement is satisfied;
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(viii) to the extent not paid in clause (vi) above,
pay to the Registered Owners of the Subordinate Notes, on a
pro rata basis, all Subordinate Carrying Costs (other than any
Yield Protection with respect to the Subordinate Notes) which
are accrued and unpaid as of the Remittance Date (which may be
based upon estimates of the CP Rates provided by each of the
Facility Agents as provided in the definition of "CP Rate");
provided, however, that Yield payable under this clause shall
be calculated at a Yield Rate equal to the CP Rate or the
one-month LIBOR Rate (if Yield is payable based on the LIBOR
Rate or the Prime Rate) (as applicable);
(ix) prior to the commencement of the Liquidation
Period, deposit into the Reserve Account any amount required
to cause the amount on deposit in the Reserve Account to equal
the Reserve Account Requirement;
(x) prior to the commencement of the Liquidation
Period, to either (as specified by the Borrower) (A) prepay,
on a pro rata basis, the Notes or (B) fund the purchase of
additional Eligible Loans, in each case, until the Asset
Coverage Ratio is at least equal to the Minimum Asset Coverage
Requirement (after giving effect to such applications and all
subsequent applications pursuant to this subsection (b));
(xi) after the commencement of the Liquidation
Period, if consented to in writing by each Facility Agent, pay
to the Portfolio Administrator the Portfolio Administration
Fee which is due and owing as of the close of business on the
last day of the immediately preceding Collection Period;
(xii) after the commencement of the Liquidation
Period, if consented to in writing by each Facility Agent, pay
as directed by the Borrower, an amount equal to the estimated
taxes owed by the Borrower that are payable prior to the next
Remittance Date and not previously paid, which relate to the
net income of the Borrower realized on the Eligible Loans
within the Pledged Collateral and other assets in the Pledged
Collateral; and
(xiii) after the commencement of the Liquidation
Period, to the Administrative Agent for the account of the
Note Purchasers, to reduce the Aggregate Note Balance on a pro
rata basis in the following priority:
(A) first, to reduce the Senior Notes
until the outstanding principal amount thereof is
zero;
(B) second, to reduce the Subordinate
Notes until the outstanding principal amount thereof
is zero;
(xiv) to the extent not paid under clause (v)
above, pay to the Registered Owners of the Senior Notes, on a
pro rata basis, all Senior Carrying Costs (other than any
Yield Protection with respect to the Senior Notes) which are
accrued and unpaid as of the Remittance Date (which may be
based upon estimates of the CP
34
Rates provided by each of the Facility Agents as provided in
the definition of "CP Rate") (but without giving effect to the
proviso to such clause (v));
(xv) to the extent not paid under clauses (vi) or
(viii) above, pay to the Registered Owners of the Subordinate
Notes, on a pro rata basis, all Subordinate Carrying Costs
(other than any Yield Protection with respect to the
Subordinate Notes) which are accrued and unpaid as of the
Remittance Date (which may be based upon estimates of the CP
Rates provided by each of the Facility Agents as provided in
the definition of "CP Rate") (but without giving effect to the
provisos to such clauses (vi) and (viii));
(xvi) pay to the Trustee, the Eligible Lender
Trustee, the Administrative Agent, the Valuation Agent, the
Conduit Lenders, the Facility Agents, the Alternate Lenders,
the Program Support Providers and any Affected Party, on a pro
rata basis if necessary, any Indemnified Amounts and any Yield
Protection (with any Yield Protection with respect to the
Senior Notes being paid prior to any Yield Protection with
respect to the Subordinate Notes) due and owing pursuant to
this Agreement as of such Remittance Date;
(xvii) if not paid under clause (xi) above, pay to
the Portfolio Administrator the Portfolio Administration Fee
which is due and owing as of the close of business on the last
day of the immediately preceding Collection Period;
(xviii) pay any other Obligations which are accrued
and unpaid as of the close of business on the last day of the
immediately preceding Collection Period to the Person owed
such Obligation;
(xix) if not paid under clause (xiii) above, pay
as directed by the Borrower, an amount equal to the estimated
taxes owed by the Borrower that are payable prior to the next
Remittance Date and not previously paid, which relate to the
net income of the Borrower realized on the Eligible Loans
within the Pledged Collateral and other assets in the Pledged
Collateral; and
(xx) transfer any remaining amounts to the
Borrower.
(c) Any moneys allocated to the payment of Trustee Fees,
Eligible Lender Trustee Fees, Portfolio Administration Fees, Servicing
Fees, Custodian Fees, principal and accrued Carrying Costs on the
Notes, Indemnified Amounts and other Obligations pursuant to this
Section shall 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 (or, if the Borrower fails to
provide such direction, at the written direction of the Administrative
Agent), and the Trustee may conclusively rely upon such written
instructions without any duty to determine or examine the same.
(d) Any Note proceeds deposited to the Collection Note
Purchase Subaccount shall be disbursed pursuant to a written direction
of the Borrower to the Trustee for the purpose of purchasing or
financing Eligible Loans or repaying Notes.
35
(e) Any amounts in the Collection Account used to redeem
Notes shall, unless otherwise provided, be used to redeem Senior Notes
on a pro rata basis with ninety-five percent (95%) of the redemption
amount and used to redeem Subordinate Notes on a pro rata basis with
five percent (5%) of the redemption amount.
SECTION 2.06. RESERVE ACCOUNT. On or prior to the date hereof, the
Borrower shall establish and maintain, or cause to be established and
maintained, the Reserve Account. The 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 Reserve Account Requirement
shall be deposited into the Reserve Account by the Borrower from proceeds of
each Note Purchase and additional amounts shall be deposited to the Reserve
Account pursuant to Section 2.05(b)(ix) hereof. Funds on deposit in the 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
Reserve Account as described in Section 2.07 hereof. If amounts available in the
Collection Account are insufficient to restore the Reserve Account to the
Reserve Account Requirement on the immediately succeeding Remittance Date, the
Borrower shall satisfy such deficiency from other sources.
SECTION 2.07. TRANSFERS FROM THE RESERVE ACCOUNT. To the extent there
are insufficient moneys in the Collection Account to pay the amounts set forth
in clauses (b)(i) through (vi) of Section 2.05 hereof in accordance with the
provisions of Section 2.05 hereof on any Remittance Date, the Trustee shall
transfer moneys held by the Trustee in the Reserve Account, to the extent
available for distribution on the specified day, to pay the amounts set forth in
clauses (b)(i) through (vi) of Section 2.05 hereof in the priority set forth in
Section 2.05 hereof. Unless a Termination Event has occurred and is continuing,
any amounts on deposit in the Reserve Account in excess of the Reserve Account
Requirement may, at the written direction of the Borrower, be transferred to the
Collection Account or use to prepay, on a pro rata basis, the Notes.
SECTION 2.08. MANAGEMENT OF COLLECTION ACCOUNT AND RESERVE ACCOUNT.
(a) All funds held in the Collection Account and the
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 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 Reserve Account;
provided, however, that from and after the Termination Date, the
Administrative Agent shall have the sole right to restrict the
maturities of any investments held in the Collection Account and/or the
Reserve Account and to direct the withdrawal of any such investments
for the purposes of paying the Obligations, including any unpaid
principal and Carrying Costs on the Notes. All investment earnings (net
of losses) on such Permitted Investments shall be credited to the
Collection Account or the Reserve Account, as the case may be.
(b) The Collection Account and the Reserve Account shall
be established with a securities intermediary (the "Securities
Intermediary") who shall agree with the Trustee (and ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as Securities Intermediary,
36
hereby agrees with the Trustee) that (i) the Collection Account and the
Reserve Account shall be securities accounts of the Trustee, (ii) all
property credited to the Collection Account or the 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 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 subsection (a) of this Section, 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 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 Minnesota. Each term used
in this Section 2.08(b) and in Section 2.08(c) hereof and defined in
the Minnesota Uniform Commercial Code (the "Minnesota UCC") shall have
the meaning set forth in the Minnesota UCC.
(c) No Permitted Investment in the form of an instrument
or certificated security as defined in the Minnesota 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 Minnesota 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 (and the Eligible Lender Trustee, in its capacity as
titleholder to the Financed Loans) 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 (and the
Eligible Lender Trustee's, in its capacity as titleholder to the Financed Loans)
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 a Termination Event, the sole right to enforce the Borrower's rights
and remedies under the Transaction Documents with respect to the Pledged
Collateral for the benefit of the Secured Creditors, but without any obligation
on the part of the Trustee or any other Secured Creditor or any of their
respective Affiliates, to perform any of the obligations of the 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 (and the Eligible
Lender Trustee, in its capacity as titleholder to the Financed Loans) 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 and the
Eligible Lender Trustee's right, title and interest in all accounts, general
intangibles, payment intangibles, instruments, investment property, documents,
chattel paper, goods, moneys,
37
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 or participation interests in Financed Loans);
(b) all revenues and recoveries of principal from
Financed Loans, including all Interest Subsidy Payments, Special
Allowance Payments, borrower payments and reimbursements of principal
and accrued interest on default claims received and to be 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
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 the
foregoing items; and
(g) all proceeds of any of the foregoing.
SECTION 2.11. EVIDENCE OF DEBT. Each Facility Agent shall maintain a
Note Account (the "Note Account") on its books in which shall be recorded (a)
all Note Purchases owed to each related Lender in its related Facility Group by
the Borrower pursuant to this Agreement, (b) the outstanding principal amount of
Note Purchases then funded by or on behalf of its related Facility Group, (c)
all payments of principal and Carrying Costs made by the Borrower on all such
Note Purchases, and (d) all appropriate debits and credits with respect to its
related Facility Group as provided in this Agreement including, without
limitation, all fees, charges, expenses and interest. All entries in each
Facility Agent's Note Account shall be made in accordance with such Lender's
customary accounting practices as in effect from time to time. The entries in
the Note Account shall be conclusive and binding for all purposes, absent
manifest error. Any failure to so record or any errors in doing so shall not,
however, limit or otherwise affect the obligation of the Borrower to pay any
amount owing with respect to the Notes or any of the other Obligations.
SECTION 2.12. 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 a Conduit Lender, an Alternate Lender or a Program
Support Provider, as the case may be, shall be made to an account designated by
such Conduit Lender, Alternate Lender or Program Support Provider, in United
States dollars. Such payments shall be made in immediately available funds so as
to be
38
received by such Conduit Lender, Alternate Lender or Program Support Provider no
later than 1:00 p.m., New York City/Charlotte, North Carolina time, on the date
specified herein. Payments shall be applied in the order of priority specified
in Section 2.05(b) hereof. Any payment which is received later than 1:00 p.m.,
New York City/Charlotte, North Carolina time, shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue.
SECTION 2.13. 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
Eligible Lender Trustee, the Administrative Agent, the Conduit Lenders, the
Facility Agents, the Alternate Lenders, the Affected Parties and the Program
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.
SECTION 2.14. SHARING OF PAYMENTS, ETC. If, other than as expressly
provided elsewhere herein, any Note Purchaser shall obtain on account of the
Notes owned by it any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its Pro Rata Share
(or other share contemplated hereunder), such Note Purchaser shall immediately
(a) notify the Administrative Agent of such fact, and (b) purchase from the
other Note Purchasers such participations made by them as shall be necessary to
cause such purchasing Note Purchaser to share the excess payment pro rata (based
on the Pro Rata Share of each Note Purchaser) with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from the purchasing Note Purchaser, such purchase shall to that extent
be rescinded and each other Note Purchaser shall repay to the purchasing Note
Purchaser the purchase price paid therefor, together with an amount equal to
such paying Note Purchaser's ratable share (according to the proportion of (i)
the amount of such paying Note Purchaser's required repayment to (ii) the total
amount so recovered from the purchasing Note Purchaser) of any interest or other
amount paid or payable by the purchasing Note Purchaser in respect of the total
amount so recovered The Borrower agrees that any Note Purchaser so purchasing a
participation from another Note Purchaser may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Note Purchaser was the direct
creditor of the Borrower in the amount of such participation. The Administrative
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each
case notify each Agent following any such purchases or repayments.
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):
(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
39
respect to its unused "Commitment" under the Program 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 Note Purchases or in
respect of its Unused Commitment (except for changes in the
rate of tax on the overall net income or gross receipts of
such Affected Party imposed by the United States of America,
by the jurisdiction in which such Affected Party's principal
executive office is located and, if such Affected Party's
principal executive office is not in the United States of
America, by the jurisdiction where such Affected Party's
principal office in the United States is located);
(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 or expense
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 Program Support Agreement or any
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 Program 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
40
its obligations hereunder or under the Program
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 during such prior
period.
(b) Each Affected Party will promptly notify the
Borrower, the Trustee and the Administrative 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.
(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 Administrative 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
Administrative Agent.
SECTION 2.16. EXTENSION OF TERMINATION DATE. The Termination Date with
respect to each Facility Group may be extended beyond May 14, 2004 by a written
agreement among the Borrower, such Facility Agent and the Administrative Agent,
with notice to the Trustee, the Eligible Lender Trustee, ▇▇▇▇▇'▇ and S&P. In the
event this Agreement is renewed, no renewal fee will be charged on each renewal
prior to the third anniversary of the date of this Agreement.
SECTION 2.17. SERVICER ADVANCES. In the event that, on the Remittance
Date relating to any Collection Period, the amount on deposit in the Collection
Account which is allocable to the payment of Carrying Costs due and payable on
such Remittance Date is not sufficient to pay such Carrying Costs, any Servicer
which is an Affiliate of the Borrower may make an advance in an amount equal to
such insufficiency to the extent it believes such Servicer Advance will be
recoverable.
SECTION 2.18. PREFUNDING OF ADVANCES. In order to allow the Lenders to
raise funds in economical denominations and less frequently than daily, the
Borrower may request the Lenders
41
to purchase Notes in order to pre-fund an amount (up to its Pro Rata Share of
the Maximum Financing Amount) to be deposited into the Collection Note Purchase
Subaccount. The Borrower shall follow the same procedures for any such
pre-funding as for any other note purchase under Section 2.02 hereof. The
proceeds from such pre-funding shall be deposited into the Collection Note
Purchase Subaccount of the Collection Account and the Borrower may draw against
such pre-funding amount on any Business Day (provided a Termination Date has not
occurred) to finance Eligible Loans pursuant to Section 2.05(d) hereof. Upon the
occurrence of a Termination Event or a Potential Termination Event, the
Administrative Agent may direct amounts on deposit in the Collection Note
Purchase Account be used to redeem Notes.
ARTICLE III
THE NOTES
SECTION 3.01. FORM OF NOTES GENERALLY.
(a) The Senior Notes shall be in substantially the form
set forth in Exhibit H hereto in each case with such appropriate
insertions, omissions, substitutions and other variations as are
required or permitted by this Agreement, and may have such letters,
numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be
determined by the officers executing such Senior Notes, as evidenced by
their execution of the Senior Notes. The Subordinate Notes shall be in
substantially the form set forth in Exhibit I hereto in each case with
such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Agreement, and may have
such letters, numbers or other marks of identification and such legends
or endorsements placed thereon as may, consistently herewith, be
determined by the officers executing such Subordinate Notes, as
evidenced by their execution of the Subordinate Notes.
(b) The Notes shall be printed.
(c) The Notes shall be issuable only in registered form
and with a maximum aggregate principal amount that, when aggregated
with the maximum aggregate principal amounts of each other Outstanding
Note, will equal the Maximum Financing Amount. One Senior Note in a
maximum aggregate principal amount equal to ninety-five percent (95%)
of the Commitment of each Facility Group shall be registered in the
name of the Facility Agent for such Facility Group, and one Subordinate
Note in a maximum aggregate principal amount equal to five (5%) of the
Commitment of each Facility Group shall be registered in the name of
the Facility Agent for such Facility Group. Note Purchases by an
Facility Group shall increase the Outstanding principal amount of the
Senior Note or Subordinate Note, as appropriate, of such Facility Group
pursuant to Section 2.01 hereof. Payments of principal on a Senior Note
or Subordinate Note, as appropriate, of a Facility Group shall decrease
the principal amount of such Senior Note or Subordinate Note of such
Facility Group.
(d) All Notes shall be substantially identical except as
to maximum denomination and except as may otherwise be provided in or
pursuant to this Section.
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SECTION 3.02. SECURITIES LEGEND. Each Note issued hereunder will
contain the following legend limiting sales to "Qualified Institutional Buyers"
within the meaning of Rule 144A under the Securities Act:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS
BEEN OFFERED AND SOLD PRIVATELY. THE REGISTERED OWNER HEREOF
ACKNOWLEDGES THAT THESE SECURITIES ARE "RESTRICTED SECURITIES" THAT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREES FOR THE
BENEFIT OF THE ISSUER AND ITS AFFILIATES THAT THESE SECURITIES MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO A
PERMITTED ASSIGNEE WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A
OR (B) TO A PERMITTED ASSIGNEE PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (C) TO A PERMITTED ASSIGNEE PURSUANT TO ANY OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SECTION 5 OF THE
SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION.
SECTION 3.03. PRIORITY.
(a) Except as specifically provided herein, the payment
of the principal of and Carrying Costs on the Subordinate Notes is
fully subordinated to the payment of the principal of and Carrying
Costs on the Senior Notes.
(b) Subject to subsection (a) of this Section, all Senior
Notes issued under this Agreement shall be in all respects equally and
ratably entitled to the benefits hereof and secured by the Pledged
Collateral without preference, priority or distinction on account of
the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Agreement. Payments of
Carrying Costs on the Senior Notes shall be made pro rata among all
Outstanding Senior Notes based on the amount of Carrying Costs owed on
such Senior Notes, without preference or priority of any kind. Payments
of principal on the Senior Notes shall be made pro rata among all
Outstanding Senior Notes, without preference or priority of any kind.
(c) Subject to subsection (a) of this Section, all
Subordinate Notes issued under this Agreement shall be in all respects
equally and ratably entitled to the benefits hereof and secured by the
Pledged Collateral without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all
in accordance
43
with the terms and provisions of this Agreement. Payments of Carrying
Costs on the Subordinate Notes shall be made pro rata among all
Outstanding Subordinate Notes based on the amount of Carrying Costs
owed on such Subordinate Notes, without preference or priority of any
kind. Payments of principal on the Subordinate Notes shall be made pro
rata among all Outstanding Subordinate Notes, without preference or
priority of any kind.
SECTION 3.04. EXECUTION, DELIVERY AND DATING.
(a) The Notes shall be executed on behalf of the Borrower
by any of the Authorized Officers of the Borrower. The signature of any
of these officers on the Notes may be manual or facsimile.
(b) The Notes bearing the manual or facsimile signatures
of individuals who were at any time Authorized Officers of the Borrower
shall bind the Borrower, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication
and delivery of such Notes or did not hold such offices at the date of
such Notes.
(c) Each Note shall be dated the date of its execution.
SECTION 3.05. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE,
TRANSFER RESTRICTIONS.
(a) The Borrower shall cause to be kept a register (the
"Note Register") in which, subject to such reasonable regulations as it
may prescribe, the Borrower shall provide for the registration of Notes
and for the transfers of the Notes. The Trustee shall serve as "Note
Registrar" for the purpose of registering Notes and transfers of the
Notes as herein provided.
(b) Upon surrender for registration of transfer of any
Note at the office or agency of the Borrower to be maintained as
provided in Section 5.01(i) hereof, the Borrower shall execute and
deliver in the name of the designated transferee or transferees, one or
more new Notes of any authorized denominations and of a like tenor and
aggregate principal amount.
(c) At the option of the Registered Owner, Notes may be
exchanged for other Notes of the same series and of like tenor in a
maximum principal amount consistent with Section 3.01 (c) hereof, upon
surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Borrower shall
execute and deliver the Notes which the Registered Owner making the
exchange is entitled to receive.
(d) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Borrower,
evidencing the same debt, and entitled to the same benefits under this
Agreement, as the Notes surrendered upon such registration of transfer
or exchange.
44
(e) Every Note presented or surrendered for registration
of transfer or for exchange shall (if so required by the Borrower or
the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Borrower and the
Note Registrar duly executed, by the Registered Owner thereof or his
attorney duly authorized in writing with such signature guaranteed by a
commercial bank or trust company, or by a member firm of a national
securities exchange, and such other documents as the Trustee may
require. The Borrower shall notify the Trustee, as the Note Registrar,
of each transfer or exchange of Notes.
(f) No service charge shall be made for any registration
of transfer or exchange of Notes, but the Borrower or the Trustee may
require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Notes.
(g) No Registered Owner of a Note shall transfer its Note
unless such transfer is made (i) in accordance with (A) Rule 144A under
the Securities Act, (B) an exemption from registration provided by Rule
144 under the Securities Act (if available) or any other exemption from
the registration requirements under Section 5 of the Securities Act,
provided the Borrower is provided an Opinion of Counsel that such
transfer is so exempt, and (C) the registration and qualification
requirements (or any applicable exemptions therefrom) under applicable
state securities laws and (ii) pursuant to Section 11.04 hereof. The
Trustee, as Note Registrar, shall not have any duty to verify that any
transfer of the Notes was made in compliance to this subsection (g).
(h) Each Registered Owner of the Notes, by its acceptance
thereof, will be deemed to have acknowledged, represented and agreed
with the Borrower, the Trustee and the Note Registrar that it (i) is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act, (ii) is aware that the sale is being made in reliance
on an exemption from registration under the Securities Act and (iii) is
acquiring the Notes for its own account or for the account of a
qualified institutional buyer.
(i) The Notes may not be sold or transferred to, and each
purchaser by its purchase of the Notes shall be deemed to have
represented and covenanted that it is not acquiring the Notes for or on
behalf of, and will not transfer the Notes to, any pension or welfare
plan as defined in Section 3 of ERISA, any plan as defined in Section
4975 of the Code, or any entity whose underlying assets are deemed to
include plan assets by reason of a plan's investment in such entity.
(j) Any transfer, resale, pledge or other transfer of the
Notes contrary to the restrictions set forth above shall be deemed void
ab initio by the Borrower and Note Registrar.
SECTION 3.06. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If any
mutilated Note is surrendered to the Trustee, the Borrower shall execute and
deliver in exchange therefor a new Note of the same series and of like tenor and
maximum principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Borrower (a) evidence to the Borrower's
satisfaction of the destruction, loss or theft of any Note and (b) such security
or
45
indemnity as may be required by them to hold the Borrower and any of its agents,
including the Trustee, harmless, then, in the absence of notice to the Borrower
that such Note has been acquired by a bona fide purchaser, the Borrower shall
execute and deliver, in lieu of any such destroyed, lost or stolen Note, a new
Note of the same series and of like tenor and principal amount and maximum
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Borrower in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Borrower may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Note Registrar) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Borrower, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 3.07. PERSONS DEEMED OWNERS. Prior to due presentment of a Note
for registration of transfer, the Borrower, the Trustee and any agent of the
Borrower or the Trustee may treat the Person in whose name such Note is
registered as the absolute owner of such Note for the purpose of receiving
payment of principal of and Carrying Costs on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and none of the
Borrower, the Trustee or any agent of the Borrower or the Trustee shall be
affected by notice to the contrary.
SECTION 3.08. CANCELLATION. Subject to Section 3.04(b) hereof, all
Notes surrendered for payment, prepayment in whole, registration of transfer or
exchange shall, if surrendered to any Person other than the Borrower, be
delivered to the Borrower and shall be promptly cancelled by the Borrower.
Subject to Section 3.04(b) hereof, the Borrower may at any time cancel any Notes
previously delivered hereunder which the Borrower may have acquired in any
manner whatsoever, and may cancel any Notes previously executed hereunder which
the Borrower has not issued and sold. No Notes shall be executed and delivered
in lieu of or in exchange for any Notes cancelled as provided in this Section,
except as expressly permitted by this Agreement. All cancelled Notes held by the
Borrower shall be held or destroyed by the Borrower in accordance with its
standard retention or disposal policy as in effect at the time.
SECTION 3.09. LIMITED OBLIGATIONS. Notwithstanding any other provision
hereof, the Notes issued by the Borrower hereunder shall be special, limited
obligations of the Borrower
46
payable solely from the Pledged Collateral pursuant to this Agreement, and does
not constitute a general obligation of the Borrower.
SECTION 3.10. ASSIGNMENT BY THE BANK OF AMERICA CONDUIT LENDER TO ITS
RELATED ALTERNATE LENDERS.
(a) ASSIGNMENT AMOUNTS. If the Bank of America Facility
Agent on behalf of the Bank of America Conduit Lender so elects, the
Bank of America Conduit Lender shall assign, effective on the
Assignment Date referred to below, all or such portions as may be
elected by the Bank of America Conduit Lender of its interest in its
Notes at such time to its related Bank of America Alternate Lenders;
provided, however, that no such assignment shall take place pursuant to
this Section at a time when an Event of Bankruptcy with respect to the
Bank of America Conduit Lender exists. No further documentation or
action on the part of the Bank of America Conduit Lender shall be
required to exercise the rights set forth in the immediately preceding
sentence, other than the giving of the notice by the Bank of America
Facility Agent on behalf of the Bank of America Conduit Lender referred
to above and the delivery by the Bank of America Facility Agent of a
copy of such notice to each related Bank of America Alternate Lender
(the date of the receipt by the Bank of America Facility Agent of any
such notice being the "Assignment Date"). Each Bank of America
Alternate Lender in the Bank of America Facility Group hereby agrees,
unconditionally and irrevocably and under all circumstances, without
setoff, counterclaim or defense of any kind, to pay the full amount of
its Assignment Amount on such Assignment Date to the Bank of America
Conduit Lender in immediately available funds to an account designated
by the Bank of America Facility Agent. Upon payment of its Assignment
Amount, each Bank of America Alternate Lender shall acquire an interest
in the Note equal to its pro rata share (based on the outstanding
portions of the Note funded by it) of the Alternate Lender Percentage
thereof.
(b) RECOVERY OF NET INVESTMENT. In the event that the
aggregate of the Assignment Amounts paid by the Bank of America
Alternate Lenders pursuant to subsection (a) of this Section on any
Assignment Date occurring is less than the principal balance of the
Notes of the Bank of America Bank of America Conduit Lender on such
Assignment Date, then to the extent payments are thereafter received by
the Bank of America Facility Agent hereunder in respect of such Note in
excess of the aggregate of the unrecovered Assignment Amounts funded by
the Bank of America Alternate Lenders, such excess shall be remitted by
the Bank of America Facility Agent to the Bank of America Conduit
Lender.
ARTICLE IV
CONDITIONS TO NOTE PURCHASES
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL ISSUANCE. The initial
Issuance of Notes hereunder is subject to the condition precedent that the
Administrative Agent shall have received on or before the Note Purchase Date the
documents and opinions listed in Exhibit G hereto, in form and substance
satisfactory to the Administrative Agent.
47
SECTION 4.02. CONDITIONS PRECEDENT TO ALL NOTE PURCHASES. Each Note
Purchase (including the initial Note Purchase) shall be subject to the further
conditions precedent that:
(a) The Eligible Loans are (i) purchased pursuant to a
Student Loan Purchase Agreement in the form of Exhibit A or Exhibit F
hereto and a schedule of the Eligible Loans to be financed and copies
of all schedules, opinions, financing statements, releases and other
documents required to be delivered by the applicable Seller are
delivered to the Trustee and, if requested by the Administrative Agent,
to the Administrative Agent, or (ii) transferred by the Borrower from
another financing of the Borrower and a schedule of the Eligible Loans
to be transferred and copies of all schedules, opinions, financing
statements, releases and other documents required to be delivered by
the Borrower are delivered to the Trustee and, if requested by the
Administrative Agent, to the Administrative Agent;
(b) On or prior to the Business Day prior to the Note
Purchase Date, the Borrower shall have delivered to the Administrative
Agent and the Trustee (i) 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
Administrative Agent only if requested by the Administrative Agent) and
(ii) a request for a Note Purchase in the form and at the time required
in Section 2.02(b) hereof;
(c) on the Note Purchase Date, the following statements
shall be true, and the Borrower by accepting the amount of such Note
Purchase shall be deemed to have certified that:
(i) the representations and warranties contained
in Article V 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 Issuance, which constitutes a
Termination Event or a Potential Termination Event;
(iii) on and as of such day, the amount of such
Issuance will not exceed the Maximum Note Purchase Amount and,
after giving effect to such Issuance, the Aggregate Note
Balance will not exceed the Maximum Financing Amount;
(iv) there has been no Material Adverse Effect
with respect to the Pledged Collateral;
(v) no law or regulation shall prohibit, and no
order, judgment or decree of any Official Body shall prohibit
or enjoin, the making of such Note Purchases in accordance
with the provisions hereof; and
48
(vi) the amount of money equal to any shortfall
in the Reserve Account Requirement on such date is deposited
in the Reserve Account on such date from the proceeds of such
Issuance; and
(d) on the Note Purchase Date, the Senior Notes are rated
"AAA" by Standard & Poor's Ratings Services and the Subordinate Notes
are rated "A" by Standard & Poor's Ratings Services.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. GENERAL REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
The Borrower represents and warrants for the benefit of the Trustee and the
Secured Creditors as follows on the Closing Date, on the date of each Issuance
and on each Reporting Date:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nebraska
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 Note Purchases, are within the
Borrower's organizational powers, (i) have been duly authorized by all
necessary organizational action, (ii) do not contravene (A) the
Borrower's articles of incorporation or bylaws; (B) any law, rule or
regulation applicable to the Borrower; (C) any contractual restriction
binding on or affecting the Borrower or its property; or (D) any order,
writ, judgment, award, injunction or decree binding on or affecting the
Borrower or its property, (iii) do not result in a breach of or
constitute a default under any indenture, agreement, lease or other
instrument to which the Borrower is a party, and (iv) 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.
The Notes have been duly and validly authorized and when executed and
paid for in accordance with the terms of this Agreement, will be duly
and validly issued and Outstanding, and will be entitled to the
benefits of this Agreement.
(c) No authorization, consent, license or approval or
other action by, and no notice to or filing with, any Official Body 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.
49
(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 principles of equity, whether such
enforceability is considered in a proceeding in equity or at law.
(e) There is no pending or, to the knowledge of the
Borrower, threatened, action or proceeding affecting the Borrower
before any Official Body that may have a Material Adverse Effect. Since
December 31, 2002, there has been no Material Adverse Effect.
(f) No proceeds of any Note Purchases will be used by the
Borrower (i) to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (ii) to acquire any equity security of a
class which is registered pursuant to Section 12 of the Exchange Act or
(iii) for any other purpose that violates applicable law, including
Regulation U of the Federal Reserve Board.
(g) The Pledged Collateral shall, at all times, be owned
by the Borrower (or with respect to the Financed Loans, by and through
the Eligible Lender Trustee as its Eligible Lender) free and clear of
any Adverse Claim, 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) 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 or on behalf of the Borrower to the Affected Parties in
connection with this Agreement (including the Monthly Report) is or
will be inaccurate in any material respect as of the date it is or
shall be dated or (except as otherwise disclosed 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.
(i) 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 11.02 hereof or such other location as the Borrower shall have
given notice of to the Administrative Agent pursuant to Section 6.10
hereof.
(j) 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. Within the last five (5) years, other
than the change of its name from NEBHELP, INC. to Nelnet Education Loan
Funding, Inc., the Borrower has not changed its name, merged with or
into or consolidated with any other Person or been the subject of any
proceeding under the Bankruptcy Code.
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(k) The Borrower is Solvent at the time of (and
immediately after) each "Note Purchase" and each purchase of Eligible
Loans made by the Borrower. The Borrower has given reasonably
equivalent value to the applicable Seller in consideration for the
transfer to it of the Financed Loans from such Seller, and each such
transfer shall not have been made for or on account of an antecedent
debt owed by such Seller to it and no such transfer is or may be
voidable under any section of the Bankruptcy Code.
(1) 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. The Borrower is not a
"holding company," or a subsidiary or affiliate of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935.
(m) The Borrower has directed (or caused to be directed)
all Servicers and Subservicers to transmit Collections on the Financed
Loans and the other Pledged Collateral to the Trustee for deposit to
the Collection Account.
(n) 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 and it hereby makes each such
representation and warranty to, and for the benefit of, the Secured
Creditors as if the same were set forth in full herein.
(o) Each Student Loan to be financed with the proceeds of
any Note Purchase constitutes an Eligible Loan as of the date of such
Note Purchase and is purchased, or was previously purchased by the
Borrower, from a Seller pursuant to a Student Loan Purchase Agreement.
Each Financed Loan represented as an Eligible Loan in a Monthly Report
or included in the calculation of Asset Coverage Ratio in fact
satisfies at such time the definition of "Eligible Loan."
(p) The Borrower is not in violation of, or default
under, any law, rule, regulation, order, writ, judgment, award,
injunction or decree binding upon it or affecting the Borrower or its
property or any indenture, agreement, lease or instrument.
(q) The Borrower has incurred no Debt and has no other
obligation or liability, other than normal trade payables, which is not
a limited obligation of the Borrower, payable solely from a discrete
and specific pool of collateral (which does not include any of the
Pledged Collateral).
(r) The sale of the Notes pursuant to this Agreement will
not require the registration of the Notes under the Securities Act of
1933, as amended.
(s) The Notes will be characterized as debt for federal
income tax purposes. The Borrower has (i) timely filed all tax returns
(federal, state and local) required to be filed, (ii) paid or made
adequate provision for the payment of all taxes, assessments and other
governmental charges and (iii) accounted for the sale of the Financed
Loans under the Student Loan Purchase Agreements in its books and
financial statements consistent with GAAP.
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(t) No steps have been taken by any Person to terminate
any Benefit Plan the assets of which are not sufficient to satisfy all
of its benefit liabilities (as determined under Title IV of ERISA), no
contribution failure has occurred with respect to any Benefit Plan
sufficient to give rise to a lien under Section 302(f) of ERISA, and
each Benefit Plan has been administered in all material respects in
compliance with its terms and applicable provision of ERISA and the
Code.
(u) Each agreement (each, an "Other Debt Agreement") to
which the Borrower is a party and pursuant to which the Borrower issues
debt securities contains (or, in the case of certain debt securities
issued prior to the date hereof which are insured by a financial
guaranty insurance company, the applicable insurance documents contain)
(i) a provision whereby each creditor under such Other Debt Agreement
(or insurer, in the circumstances described above) covenants and agrees
not to institute against or join any other person or entity in
instituting against Borrower any bankruptcy or other similar
proceedings under the laws of the United States or any state, and (ii)
contains a provision whereby each creditor under such Other Debt
Agreement (or insurer, in the circumstances described above) (A) agrees
that the obligations of the Borrower thereunder are limited recourse
obligations payable solely out of the specific collateral pledged to
secure such obligations (the "Other Assets") and (B) disclaims any
rights to any collateral other than the Other Assets and acknowledges
that to the extent regardless of such disclaimer that it has an
interest in any other collateral (including the Pledged Collateral)
(the "Other Collateral"), such interest is expressly subordinated to
the indefeasible payment in full of the obligations of the Borrower
(including the Obligations of the Borrower under the Transaction
Documents) which, under the terms of the relevant documents related to
such Other Collateral, are entitled to be paid from, entitled to the
benefit of, or otherwise secured by such Other Collateral.
(v) The Borrower shall comply with all of the terms and
provisions of its Articles of Incorporation.
SECTION 5.02. 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 Nebraska) 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 Eligible Lender
Trustee as its Eligible Lender, owns and has good and marketable title
to the Financed Loans free and clear of any Adverse Claim.
52
(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, a
Subservicing 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
Nebraska and, for purposes of Article 9 of the UCC, the Borrower is
located in the State of Nebraska.
SECTION 5.03. REPRESENTATIONS OF THE ELIGIBLE LENDER TRUSTEE. The
Eligible Lender Trustee hereby represents and warrants for the benefit of the
Trustee and the Secured Creditors as follows:
(a) It is a national banking association duly organized
and validly existing in good standing under the laws of the United
States. It has all requisite corporate power and authority to execute
and deliver this Agreement.
(b) It is an "eligible lender" as such term is defined in
Section 435(d) of the Higher Education Act.
ARTICLE VI
GENERAL COVENANTS OF THE BORROWER
SECTION 6.01. 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.
(b) SALES, LIENS, ETC. Except as otherwise provided
herein, the Borrower will not (nor will it permit the Eligible Lender
Trustee to) 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.
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(c) GENERAL REPORTING REQUIREMENTS. The Borrower will
provide to the Administrative 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 and
Nelnet, Inc., a copy of the balance sheet of the Borrower and
Nelnet Inc. 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 available and in any event within
45 days after the end of each fiscal quarter of the Borrower
and Nelnet, Inc., a copy of an unaudited balance sheet of the
Borrower and Nelnet, Inc. and the related statements of
income, beneficial interest holders' (or securityholders')
equity and cash flows for such fiscal quarter, each prepared
in accordance with GAAP consistently applied;
(iii) as soon as possible and in any event within
three days after the occurrence of each Termination Event and
each Potential Termination Event, a statement of the Borrower
setting forth details of such Termination Event or Potential
Termination Event and the action which the Borrower has taken
and proposes to take with respect thereto;
(iv) promptly following receipt thereof, to the
extent requested by the Administrative 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;
(v) promptly following the Administrative
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 Administrative Agent may from time to time
reasonably request;
(vi) 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;
(vii) with respect to each Servicer and
Subservicer 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 or Subservicer, certified by an independent certified
public accounting firm, (B) on an annual basis within 30 days
after receipt thereof, copies of SAS 70 reports for such
Servicer or Subservicer, or, if not available, the annual
compliance audit for each Servicer and Subservicer required by
54
Section 428(b)(l)(4) of the Higher Education Act and (C) to
the extent not included in the financial information provided
pursuant to clauses (A) and (B) above, such Servicer's or
Subservicer's net dollar loss for the year due to servicing
errors;
(viii) upon request, a Schedule of Financed Loans;
(ix) 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;
(x) 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 or with
respect to the termination of any Benefit Plan 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;
(xi) immediately upon becoming aware of a
Servicer Default, the default by a Subservicer under a
Subservicing Agreement or a Material Adverse Effect, written
notice thereof;
(xii) 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 or Subservicer;
(xiii) 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, (B) the ability of a Subservicer to
perform its obligations under its Subservicing Agreement, or
(C) 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;
(xiv) upon request, copies of the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act in order to permit compliance with Rule 144A in
connection with assignments of Notes; and
(xv) promptly, notice of any change in the
accountants or accounting policy of the Borrower or Nelnet,
Inc.
55
(d) AUDITS. The Administrative Agent shall have the right
at any time to cause the books of the Borrower or Nelnet, Inc. to be
audited by a firm of nationally recognized independent certified public
accountants acceptable to the Borrower. The Borrower shall, at any time
and from time to time during regular business hours, as requested by
the Administrative Agent permit the Administrative Agent, or its agents
or representatives, (i) to examine and make copies of and take
abstracts from all books, records and documents (including computer
tapes and disks) relating to the Pledged Collateral and (ii) to visit
the offices and properties of the Borrower for the purpose of examining
such materials described in clause (i) above, and to discuss matters
relating to the Pledged Collateral or the Borrower's performance
hereunder and under the other Transaction Documents with any of the
officers, directors, employees or independent public accountants of the
Borrower having knowledge of such matters. All reasonable expenses
incurred by the Administrative Agent in conducting such audits or
inspections and any audits or inspections under Section 2(d) of the
Portfolio Administration Agreement shall be paid as an Obligation of
the Borrower pursuant to Section 2.05(b)(xvi) hereof.
(e) 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. The Borrower
shall not form or create any subsidiary without the consent of the
Administrative Agent.
(f) NATURE OF BUSINESS. The Borrower will engage in no
business other than (i) purchases, sales and financings 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 Administrative
Agent.
(g) 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 first priority perfected
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; (C) filing amendments, releases
and terminations with respect to filed financing statements, as
necessary; and (D) 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 first priority security interest of the Trustee, for the benefit of
the Secured Creditors, in the Financed Loans and other Pledged
Collateral related thereto.
(h) MAINTENANCE OF SEPARATE EXISTENCE. The Borrower will
do all things necessary to maintain its existence as a Nebraska
corporation separate and apart from all Affiliates of the Borrower,
including, without limitation, (i) practicing and adhering to
56
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.
(i) 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.
(j) DEBT; NO PETITION.
(i) The Borrower will not incur any Debt other
than Debt arising hereunder and other Debt for which payment
is a limited recourse obligation of
57
the Borrower, payable solely from a discrete and specific pool
of collateral (which does not include any of the Pledged
Collateral).
(ii) The Borrower will not incur any Debt or
agree to any obligation, other than trade payables in the
ordinary course of business unless (A) each creditor (or the
applicable insurer, in the case of certain Debt incurred prior
to the Closing Date) with respect to such Debt or each Person
to whom the Borrower may be obligated agrees not to institute
(or join any other Person in instituting) any bankruptcy
proceedings against the Borrower until one year and one day
after all of the Borrower's Debt shall have been repaid and
(B) the representation of the Borrower in Section 5.01 (u) is
true and correct at the time the related documentation is
executed and at all times thereafter.
(k) EXTENSION OR AMENDMENT OF TRANSACTION DOCUMENTS.
Without the written consent of each Facility Agent, the Borrower will
not (nor will it permit any of its agents to):
(i) cancel, terminate, extend, amend, modify or
waive (or consent to or approve any of the foregoing) any
provision of any Transaction Document;
(ii) cancel, terminate, extend, amend, modify or
waive (or consent to or approve any of the foregoing) any
provision of any Student Loan Purchase Agreement, any
Servicing Agreement, any Subservicing 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 or by a Servicer or a Subservicer, 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 or a Subservicer 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.
(1) 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.
(m) SERVICERS. The Borrower will not permit any Person
other than a Servicer or a Subservicer to collect, service or
administer the Financed Loans.
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(n) 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.
(o) COMPOSITION OF THE ELIGIBLE LOANS WITHIN THE PLEDGED
COLLATERAL. The aggregate principal amount of Unsubsidized ▇▇▇▇▇▇▇▇
Loans, Proprietary Loans and other Student Loans made to Eligible
Borrowers attending 2-year schools composing the Eligible Loans within
the Pledged Collateral shall not exceed the following percentages of
the total aggregate principal amount of all Eligible Loans within the
Pledged Collateral:
TYPE OF STUDENT LOAN PERCENTAGE
Unsubsidized ▇▇▇▇▇▇▇▇ Loans (in a 40%
non-repayment status)
Proprietary Loans 15%
SECTION 6.02. ACQUISITION, FINANCING, COLLECTION AND ASSIGNMENT OF
STUDENT LOANS. The Borrower shall acquire or finance only Eligible Loans (or
beneficial interests therein) with proceeds of the Note Purchases and shall
diligently cause to be collected all principal and interest payments on all the
Financed Loans and all sums to which the Borrower or Trustee is entitled
pursuant to any Student Loan Purchase Agreement, and all grants, subsidies,
donations, Interest Subsidy Payments, 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, Subservicer, Trustee and Eligible Lender Trustee, every effort to
collect the Borrower's or such Seller's, Servicer's, Subservicer's, Trustee's or
Eligible Lender Trustee's claims for payment from the Department of Education or
any Guarantor, as soon as possible, of all payments related to the 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 or finance any Eligible Loan (including a participation interest
therein) 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 90 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 6.03. 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
59
connection therewith, including the prompt payment of all principal and interest
payments and all other amounts due the Borrower, the Eligible Lender Trustee and
Trustee, as applicable thereunder. The Borrower shall not permit the release of
the obligations of any Obligor 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 Administrative Agent, which
approval shall not be unreasonably withheld). Nothing in this Agreement shall be
construed to prevent the Borrower, the Eligible Lender Trustee or Trustee, as
applicable, from settling a default or curing a delinquency on any Financed Loan
on such terms as shall be permitted by law.
SECTION 6.04. ENFORCEMENT OF SERVICING AGREEMENTS AND SUBSERVICING
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 and Subservicing
Agreements, including the prompt payment of all principal and interest payments
and all other amounts due the Borrower, the Eligible Lender Trustee or Trustee,
as applicable, thereunder, including all grants, subsidies, donations, Interest
Subsidy Payments, 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 any Subservicer
under any Subservicing Agreements 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 Eligible Lender Trustee and the
Trustee under or with respect to each Servicing Agreement and each Subservicing
Agreement. The Borrower shall not consent or agree to or permit any amendment or
modification of any Servicing Agreement or Subservicing Agreements which will in
any manner materially adversely affect the rights or security of the Trustee,
the Eligible Lender Trustee or the Secured Creditors (with respect to the rights
of the Secured Creditors, without the approval of the Administrative 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 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 Administrative Agent shall not be effective with
respect to the servicing of Financed Loans; provided, however, that the
Administrative Agent shall respond as promptly as may be practicable after
receipt by the Administrative Agent of a request of the Borrower for the
Administrative Agent's consent to any modification, amendment or supplement of,
or any waiver with respect to, any provision of any Servicing Agreement or
Subservicing Agreements. Upon the occurrence of a Servicer Default, the Borrower
shall replace the Servicer subject to such Servicer Default if instructed to do
so by the Administrative Agent.
SECTION 6.05. 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
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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, the Eligible
Lender Trustee and 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,
the Eligible Lender Trustee or the Secured Creditors (with respect to the rights
of the Secured Creditors, without the approval of the Administrative Agent,
which approval shall not be unreasonably withheld); provided, however, that the
Administrative Agent shall respond as promptly as may be practicable after
receipt by the Administrative Agent of a request of the Borrower for the
Administrative Agent's consent to any modification, amendment or supplement of,
or any waiver with respect to, any provision of any Student Loan Purchase
Agreement. Upon a determination that a Financed Loan sold pursuant to a Student
Loan Purchase Agreement was not an Eligible Loan at the point it was represented
to be as such, the Borrower shall require the Seller thereof to repurchase such
Financed Loan from the Borrower pursuant to its Student Loan Purchase Agreement.
SECTION 6.06. ADMINISTRATION AND COLLECTION OF FINANCED LOANS. All
Financed Loans shall be administered and collected either by the Borrower or by
a Servicer or a Subservicer 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 Eligible
Lender Trustee Guarantee Agreements, the Trustee Guarantee Agreements and any
other guarantee agreement issued by any Guarantor to the Eligible Lender Trustee
or the Trustee.
SECTION 6.07. AMENDMENT OF FORM OF STUDENT LOAN PURCHASE AGREEMENT. The
Borrower shall notify the Trustee, the Eligible Lender Trustee and the
Administrative 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 Administrative Agent has consented in writing thereto
(which consent shall not be unreasonably withheld). Prior to the execution of
each new Student Loan Purchase Agreement, the Borrower shall notify each
Facility Agent and deliver to them copies of all opinions, closing documents,
UCC filings and other documents in connection therewith.
SECTION 6.08. 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.
SECTION 6.09. PREPAYMENTS AND REFINANCING. The Borrower or its
Affiliates have entered into, and intend to enter into in the future, upon two
(2) Business Days' prior written notice to the Trustee, the Eligible Lender
Trustee and each 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.
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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 (i) 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 subject to no other lien, claim or encumbrance
in an amount equal to, all Notes 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 Carrying Costs thereon and Yield
Protection with respect thereto) and (ii) delivery to the Trustee, the
Administrative Agent and each Facility Agent of an officer's certificate
certifying compliance with this Section (including a revised schedule of
Financed Loans), the Trustee shall release such Financed Loans from the Pledged
Collateral by executing a release in the form provided by the Borrower and such
Financed Loans shall no longer be security for the Notes. Notwithstanding
anything to the contrary contained herein, without the prior written consent of
the Administrative Agent, in no event shall any such payments or release occur
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, a Termination Event (or a Potential Termination Event) or the
requirements giving rise to a collateral call under Section 6.13 hereof or any
other provision of this Agreement would exist or result therefrom.
SECTION 6.10. PERIODIC REPORTING.
(a) Not later than each Valuation Date, the Borrower will
cause the Valuation Agent to deliver to the Portfolio Administrator,
each Facility Agent and the Administrative Agent, a Valuation Report
setting forth, among other things, the Aggregate Market Value, the
Liabilities, the Loan Valuation Percentage and the Asset Coverage
Ratio, all as of the last day of the immediately preceding calendar
month.
(b) The Borrower will cause the Portfolio Administrator
to deliver to the Trustee, the Valuation Agent and the Administrative
Agent, not later than each Monthly Reporting Date, the Monthly Report.
(c) The Borrower will cause to be provided to the
Administrative Agent and the Valuation Agent, (i) not later than the
third Business Day prior to each Valuation 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
Valuation Date, (A) the balances in the Collection Account (including a
breakout of principal and interest received with respect to the
Financed Loans) and the Reserve Account; and (B) the Liabilities, all
as of the last day of the immediately preceding calendar month.
SECTION 6.11. 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 5.01(i) hereof or, upon 30
days' prior written notice to the Trustee and the Administrative Agent, at such
other locations within the United States where all actions necessary, or
reasonably requested by the Administrative Agent, to protect and perfect the
interest of the Borrower and the Secured Creditors in the Pledged Collateral
have been taken and
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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 Administrative Agent such executed financing statements
necessary, or as the Administrative Agent may request, to reflect such name
change or use, together with such other documents and instruments as the
Administrative Agent may request in connection therewith. The Borrower will not
change its jurisdiction of incorporation. 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 necessary, or that the
Administrative Agent may reasonably request, in order to perfect, protect or
more fully evidence the Trustee's first priority perfected security 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: (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
Administrative Agent may request); and (b) ▇▇▇▇ its master data processing
records evidencing such Pledged Collateral with a legend acceptable to the
Administrative 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 Administrative 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 Administrative 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 Administrative Agent or such
Secured Creditor incurred in connection therewith shall be payable by the
Borrower upon the Administrative Agent's or such Secured Creditor's demand
therefor. For purposes of enabling the Administrative 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 and the
Eligible Lender Trustee hereby authorize, and irrevocably grant a power of
attorney to, the Administrative Agent, the Secured Creditors, the Trustee and
their respective successors and assigns to take any and all steps in the
Borrower's and the Eligible Lender Trustee's name and on behalf of the Borrower
and/or the Eligible Lender Trustee necessary or desirable, in the determination
of the Administrative 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
and/or the Eligible Lender Trustee's name on checks and other instruments
representing Collections and enforcing such Financed Loans and other Pledged
Collateral.
SECTION 6.12. 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
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connection with the Pledged Collateral. In no event shall any Secured Creditor
have any obligation or liability with respect to any Financed Loans or other
instrument document or agreement included in the Pledged Collateral, nor shall
any of them be obligated to perform any of the obligations of the Borrower or
any of its Affiliates thereunder. The Borrower will timely and fully comply in
all respects with each Transaction Document.
SECTION 6.13. COLLATERAL CALL. The Borrower shall maintain at all times
the Minimum Asset Coverage Requirement. If the Borrower is notified by the
Administrative Agent, the Valuation Agent (with a copy to the Trustee) or is
otherwise aware 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, on the Remittance Date following notification or knowledge of such
condition, or such other date as agreed to by the Administrative Agent in
writing, in the Collection Account or the Pledged Collateral, as applicable, the
amount necessary to meet the Minimum Asset Coverage Requirement.
SECTION 6.14. COVENANTS REGARDING THE TRUSTEE'S SECURITY INTEREST. The
Borrower and the Trustee hereby covenant for the benefit of the Secured
Creditors as follows:
(a) The Trustee shall not waive any of the
representations and warranties set forth in Section 5.02 hereof.
(b) The Borrower shall take all steps necessary, and
shall cause each Servicer and each Subservicer to take all steps
necessary and appropriate, to maintain the Trustee's first priority
perfected security interest in the Financed Loans.
SECTION 6.15. FINANCIAL COVENANTS.
(a) TANGIBLE NET WORTH COVENANT. The consolidated
Tangible Net Worth of Nelnet, Inc., determined as of the last day of
each fiscal quarter, commencing with the fiscal quarter ending on March
31, 2003, shall not be less than (a) $80,000,000 plus (b) 75% of
Nelnet, Inc.'s positive net income earned after March 31, 2003.
(b) FUNDED DEBT TO WORTH COVENANT. The ratio of Nelnet,
Inc.'s Funded Debt to its Tangible Net Worth shall not be more than
3:1.
SECTION 6.16. AMENDMENT OF ARTICLES OF INCORPORATION. The Borrower
shall notify the Administrative Agent in writing of any proposed material
amendments to the Borrower's Articles of Incorporation. No such amendment shall
become effective unless and until the Administrative Agent has consented in
writing thereto (which consent shall not be unreasonably withheld).
SECTION 6.17. ENFORCEMENT AND AMENDMENT OF GUARANTEE AGREEMENTS. So
long as any Notes are Outstanding and Financed Loans are guaranteed by a
Guarantee Agency, the Borrower will (a) from and after the date on which the
Eligible Lender Trustee on its behalf shall have entered into any Guarantee
Agreement covering Financed Loans, cause the Eligible Lender Trustee to maintain
such Guarantee Agreement and diligently enforce the Eligible Lender Trustee's
rights thereunder; (b) cause the Eligible Lender Trustee to enter into such
other similar
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or supplemental agreements as shall be required to maintain benefits for all
Financed Loans covered thereby; and (c) not voluntarily consent to or permit any
rescission of or consent to any amendment to or otherwise take any action under
or in connection with any such Guarantee Agreement or any similar or
supplemental agreement which in any manner will materially adversely affect the
rights of the Secured Creditors from time to time of the Notes hereunder.
ARTICLE VII
TERMINATION EVENTS
If any of the following events (each a "Termination Event") 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, warranty, certification or
statement made or deemed to be made by the Borrower, the Eligible
Lender Trustee, any Seller or any Servicer under or in connection with
this Agreement or any other Transaction Document, or other information,
report or document delivered pursuant hereto or thereto shall prove to
have been incorrect in any material respect when made, deemed made or
delivered; or
(c) the Borrower, the Eligible Lender Trustee, any Seller
or any Servicer shall default in the performance or observance of any
term, covenant or undertaking (other than those set for in subsections
(a), (b) or (l) of this Section) to be performed or observed herein or
in any other Transaction Document on its part and any such failure
shall remain unremedied (if such default can be remedied) for ten (10)
days after written notice thereof shall have been received by the
Borrower; provided, however, such ten (10) day cure period shall not
apple to defaults under Sections 6.01(b), (f), (j), (k) or (m) or
Section 6.11 hereof; or
(d) an Event of Bankruptcy shall have occurred with
respect to the Borrower, any Seller, any Servicer or any Affiliate
thereof; provided, however, the foregoing event shall not be a
"Termination Event" with respect to a Servicer hereunder if such
Servicer is not an Affiliate of Nelnet, Inc. and within 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
(e) 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
(f) a Servicer 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 each Facility Agent within
60 days of such event; provided, however, the foregoing event shall not
be a
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"Termination Event" hereunder if such Servicer Default arises under a
Servicing Agreement with a Servicer that is not an Affiliate of Nelnet,
Inc. and within 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
(g) the Asset Coverage Ratio shall be less than the
Minimum Asset Coverage Ratio; or
(h) the three-month average of the Net Interest Margin
shall be less than 0.50%; or
(i) the three-month average of the Net Interest Margin
solely with respect to Consolidation Loans and Eligible Loans which are
eligible to receive Special Allowance Payments pursuant to Section
438(b)(2)(B) of the Higher Education Act shall be less than 0.75%; or
(j) the three-month average of the Defaulted Student Loan
Ratio is greater than 15.0%; or
(k) the Liquidity Trigger shall be less than 75%; or
(l) a Guarantor Default occurs and the Department of
Education does not assume the obligations of the Guarantor in a timely
manner; or
(m) the Borrower fails to comply with the financial
covenants set forth in Section 6.15 hereof; or
(n) the Borrower shall be in default under an agreement
with respect to indebtedness other than the Notes in excess of
$1,000,000; or
(o) there shall have occurred any material adverse change
in the operations of the Borrower or any Seller or in the ability of
any Servicer to service and collect the Financed Loans since the most
recent fiscal quarter-end, or any other material adverse effect shall
have occurred (including any Material Adverse Effect); provided,
however, the foregoing event shall not be a "Termination Event"
hereunder if such default arises under a Servicing Agreement with a
Servicer that is not an Affiliate of Nelnet, Inc. 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
(p) there shall be a change of control with respect to
the Borrower or any Seller or any Servicer which is an Affiliate of the
Borrower; or
(q) any material adverse change in federal legislation
that materially impairs the marketability or value of the Financed
Loans in the Administrative Agent's reasonable opinion, including
pricing and guarantee; or;
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(r) the aggregate principal amount of the Subordinate
Notes Outstanding exceeds 5% of the total aggregate principal amount of
the Notes Outstanding;
(s) the Borrower, a Seller or a Servicer shall fail to
make a payment or deposit when required pursuant to this Agreement and
such failure shall remain unremedied for three Business Days;
(t) any Person shall institute steps to terminate any
Benefit Plan if the assets of such Benefit Plan are insufficient to
satisfy all of its benefit liabilities (as determined under Title IV of
ERISA), or a contribution failure occurs with respect to any Benefit
Plan which is sufficient to give rise to a lien under Section 302(f) of
ERISA;
(u) any material provision of this Agreement or any other
Transaction Document to which the Borrower, any Seller or any Servicer
is a party shall cease to be in full force and effect or the Borrower,
any Seller or any Servicer shall so state in writing; or
(v) the Borrower shall fail to provide for the deposits
required by Sections 2.06 or 6.13 hereof;
then, and in any such event, any Facility Agent may, by notice to the Borrower,
the Trustee and each other Facility Agent, declare that a Termination Date shall
have occurred (except that, in the case of any event described in subsection (e)
above, the Termination Date shall be deemed to have occurred automatically),
whereupon all of the Obligations due and owing to the Affected Party shall
become immediately due and payable. Upon any such declaration or automatic
occurrence, the Trustee (for the benefit of 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 rights shall be
cumulative; provided, however, the Trustee shall only sell the Pledged
Collateral in order to repay the Aggregate Note Balance and any other
Obligations if directed to do so by the Facility Agents representing Lenders
which own at least a majority in aggregate principal amount of the Notes. The
rights and remedies of a secured party which may be exercised by the Trustee
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 may deem commercially reasonable. Any sale or transfer by
the Trustee 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
Eligible Lender Trustee to sell the Pledged Collateral to an Eligible Lender on
an "as is" basis, without representation or warranty of any kind. The proceeds
of any such sale shall be deposited to the Collection Account and shall be
distributed pursuant to Section 2.05(b) hereof. 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
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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 a Termination Event
only upon an authorized corporate trust officer of the Trustee being notified,
in writing, by the Borrower, the Administrative 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 VIII
TRUSTEE AND ELIGIBLE LENDER TRUSTEE
SECTION 8.01. ACCEPTANCE OF TRUST. The Trustee hereby accepts the
trusts imposed upon it by this Agreement, and agrees to perform said trusts, but
only upon and subject to the following terms and conditions:
(a) Until a Termination Event has occurred,
(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) Upon the occurrence of a Termination Event, the
Trustee, in exercising the rights and powers vested in it by this
Agreement, shall use the same degree of care and skill in their
exercise as a prudent corporate indenture trustee would exercise or use
under the circumstances in the conduct of his own affairs, and shall
not be liable for any error of judgment, or for any act done or step
taken or omitted by it, in good faith, unless it shall be proved that
such error of judgment or act was the result of the Trustee's
negligence or willful misconduct.
(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.
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SECTION 8.02. TRUSTEE'S RIGHT TO RELIANCE. The Trustee shall be
protected in acting upon any notice, resolution, request, consent, order,
certificate, report, servicer's report appraisal, opinion or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee may consult with experts and with
counsel (who may be counsel for the Borrower, the Eligible Lender Trustee, the
Administrative 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 Eligible Lender Trustee,
the Portfolio Administrator, the Administrative 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 Administrative 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 8.03. COMPENSATION OF TRUSTEE. The Borrower shall pay to the
Trustee from time to time pursuant to Section 2.05(b)(iv) hereof reasonable
compensation for all services rendered by it hereunder, as set forth in the
letter agreement dated April 7, 2003, 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 and it officers, agents, directors and employees harmless against any
and all 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
Administrative Agent.
SECTION 8.04. RESIGNATION OF TRUSTEE. The Trustee and any successor to
the Trustee may resign and be discharged from the trust created by this
Agreement by giving to the Borrower, the Portfolio Administrator, the Eligible
Lender Trustee and the Administrative 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 8.06 hereof
(and is qualified to be the Trustee under the requirements of Section 8.06
hereof). If no successor Trustee has
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been appointed by the date specified or within a period of 90 days from the
receipt of the notice by the Borrower, the Portfolio Administrator, the Eligible
Lender Trustee and the Administrative Agent, whichever period is the longer, the
Trustee may (a) appoint a temporary successor Trustee having the qualifications
provided in Section 8.06 hereof; or (b) request a court of competent
jurisdiction to (i) require the Borrower to appoint a successor, as provided in
Section 8.06 hereof, within three days of the receipt of citation or notice by
the court; or (ii) appoint a Trustee having the qualifications provided in
Section 8.06 hereof. In no event may the resignation of the Trustee be effective
until a qualified successor Trustee shall have been selected and appointed. In
the event a temporary successor Trustee is appointed pursuant to (a) above, the
Borrower may remove such temporary successor Trustee and appoint a successor
thereto pursuant to Section 8.06 hereof.
SECTION 8.05. REMOVAL OF TRUSTEE. The Trustee or any successor Trustee
may be removed (a) by the Borrower for cause or upon the sale or other
disposition by the Trustee of its trust functions or (b) by the Borrower without
cause so long as no Termination Event 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 and all action
necessary to assign the security interests granted to the Trustee hereunder have
been transferred to the successor Trustee.
SECTION 8.06. SUCCESSOR TRUSTEE. In case at any time the Trustee or any
successor Trustee shall resign or 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 Administrative Agent, the Portfolio Administrator and the Eligible Lender
Trustee.
In addition, any bank or trust company into which the Trustee or its
successor may be converted, merged or with which it may be consolidated, or to
which it may sell or transfer its corporate trust business as a whole shall be
the successor of the Trustee and Note Registrar hereunder with the same rights,
powers, duties and obligations and subject to the same restrictions, limitations
and liabilities as its predecessor, all without the execution or filing of any
papers or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
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 under the law to exercise
corporate trust powers, be subject to supervision or examination by a federal or
state authority and be acceptable to the Administrative Agent.
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SECTION 8.07. MANNER OF VESTING TITLE IN TRUSTEE. Any successor Trustee
appointed hereunder shall execute, acknowledge, and deliver to its predecessor
Trustee, and also to the Borrower, the Eligible Lender Trustee and the
Administrative 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, shall 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 8.08. CUSTODIAN AGREEMENT. The Trustee acknowledges the receipt
of copies of the Custodian Agreements attached as Exhibit E hereto.
SECTION 8.09. ACCEPTANCE OF DUTIES OF ELIGIBLE LENDER TRUSTEE. The
Eligible Lender Trustee hereby agrees to hold legal title to the Financed Loans
on behalf of the Borrower, and to perform its duties as Eligible Lender of such
Financed Loans, including under the Eligible Lender Trust Agreement, this
Agreement and the other Transaction Documents.
SECTION 8.10. ELIGIBLE LENDER TRUSTEE COVENANTS WITH RESPECT TO
"ELIGIBLE LENDER" STATUS. The Eligible Lender Trustee covenants as follows:
(a) the Eligible Lender 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 Eligible Lender Trustee
remains Eligible Lender Trustee under this Agreement and the Eligible
Lender Trust Agreement; provided, however, that the Eligible Lender
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 or Subservicer; and
(b) the Eligible Lender 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.
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(c) the Eligible Lender Trustee shall take such actions
with respect to being "Eligible Lender Trustee" as shall be reasonably
requested by the Trustee or the Administrative Agent.
SECTION 8.11. COMPENSATION OF ELIGIBLE LENDER TRUSTEE. The Eligible
Lender Trustee shall be compensated as provided in the Eligible Lender Trust
Agreement. The Eligible Lender 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
Administrative Agent.
SECTION 8.12. RESIGNATION AND REMOVAL OF ELIGIBLE LENDER TRUSTEE. The
Eligible Lender Trustee and any successor to the Eligible Lender Trustee may
resign and be discharged from its obligations with respect to the Financed Loans
and this Agreement and may be removed by the Borrower with cause at any time, or
without cause so long as no Event of Default exists or has existed within the
last 90 days, pursuant to the terms and provisions of the Eligible Lender Trust
Agreement. In case at any time the Eligible Lender Trustee or any successor
Eligible Lender Trustee shall resign or be removed, 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 as Eligible Lender Trustee
hereunder, a successor Eligible Lender Trustee (who may be the Trustee) may be
appointed by the Borrower pursuant to the Eligible Lender Trust Agreement.
SECTION 8.13. ELIGIBLE LENDER TRUSTEE'S STATUS AS AN "ELIGIBLE LENDER".
For the purposes of this Agreement, all documents, agreements, understandings
and arrangements relating to this Agreement that are executed by the Eligible
Lender Trustee have been executed by the Eligible Lender 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 Eligible
Lender 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 Eligible Lender Trustee is willing to accept the status of "eligible lender"
hereunder as an accommodation to the Borrower, and the Borrower hereby agrees
that, pursuant to Article IX hereof, it will indemnify and hold harmless the
Eligible Lender Trustee and its officers, directors, employees and agents for
any and all liability which may be incurred because of Eligible Lender Trustee's
status as an "eligible lender" or because of the Eligible Lender 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 or
Subservicer. The Borrower agrees that it will not seek recourse or commence any
action against the Eligible Lender 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.
SECTION 8.14. ENFORCEMENT AND AMENDMENT OF GUARANTEE AGREEMENTS. So
long as any Notes are Outstanding and Financed Loans are guaranteed by a
Guarantee Agency, the Trustee and the Eligible Lender Trustee will each (a) from
and after the date on which it shall have entered into any Guarantee Agreement
covering Financed Loans, maintain such Guarantee Agreement and diligently
enforce its rights thereunder; (b) enter into such other similar or supplemental
agreements as shall be required to maintain benefits for all Financed Loans
covered thereby; and (c) not voluntarily consent to or permit any rescission of
or consent to any amendment to or otherwise take any action under or in
connection with any such Guarantee
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Agreement or any similar or supplemental agreement which in any manner will
materially adversely affect the rights of the Secured Creditors from time to
time of the Notes hereunder.
ARTICLE IX
INDEMNIFICATION
Without limiting any other rights which the Trustee, the Eligible
Lender Trustee, the Administrative Agent, the Conduit Lenders, the Facility
Agents, the Alternate Lenders, the Affected Parties, the Program Support
Providers or any of their respective Affiliates may have hereunder or under
applicable law, the Borrower hereby agrees to indemnify the Trustee, the
Eligible Lender Trustee, the Administrative Agent, the Conduit Lenders, the
Facility Agents, the Alternate Lenders, the Affected Parties, the Program
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, together with any
amounts due to the Valuation Agent pursuant to Article V of the Valuation Agent
Agreement, 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 Program Support Agreements 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 Eligible Lender
Trustee, the Administrative Agent, the Conduit Lenders, the Facility Agents, the
Alternate Lenders, the Affected Parties, the Program 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, any Seller, any Servicer or any Subservicer 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, any Subservicer, any Seller 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, any Seller, any Servicer
or any Subservicer to comply with any term, provision or covenant
contained in this Agreement or any other Transaction Document, or with
any applicable law, rule or regulation with respect to any Pledged
Collateral, or the nonconformity of any Financed Loan or any other
Pledged Collateral with any such applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the
Trustee for the benefit of the Secured Creditors or to transfer to the
Trustee, a first priority perfected security interest in any of the
Pledged Collateral, free and clear of any Adverse Claim;
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(e) 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 Seller, Servicer or Subservicer 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);
(f) the failure to pay when due any taxes, including
without limitation, sales, excise or personal property taxes payable in
connection with the Pledged Collateral or otherwise;
(g) the commingling by the Borrower or any of its
Affiliates of Collections at any time with other funds;
(h) any investigation, litigation or proceeding expressly
related to this Agreement, any Program Support Agreement or any other
Transaction Document or the use of proceeds of Note Purchases or the
Pledged Collateral or in respect of any Financed Loan;
(i) 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;
(j) 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
(k) either the Borrower or Nelnet, Inc. characterizes the
transactions contemplated hereby as other than debt for purposes of the
Code.
Any amounts subject to the indemnification provisions of this Article
are special limited obligations of the Borrower payable solely from the Pledged
Collateral pursuant to Section 2.05(b)(xvi) hereof and shall be paid by the
Borrower to the Trustee, the Eligible Lender Trustee, the Administrative Agent,
the Conduit Lenders, the Facility Agents, the Alternate Lenders, the Affected
Parties, the Program 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, on the Remittance Date following written demand
therefor.
ARTICLE X
ADMINISTRATIVE AGENT AND FACILITY AGENTS
SECTION 10.01. AUTHORIZATION AND ACTION OF ADMINISTRATIVE AGENT. The
Conduit Lenders, the Facility Agents and the Alternate Lenders hereby accept the
appointment of and authorize the Administrative Agent to take such action as
agent on their behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof, together with such
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powers as are reasonably incidental thereto. The Administrative 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.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Transaction Document, the Administrative Agent shall
not have any duties or responsibilities, except those expressly set forth in
this Agreement, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Transaction Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "Administrative Agent" in this Agreement with reference to
the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties. The Administrative Agent may execute any of its
duties under this Agreement or any other Transaction Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care. The Administrative Agent
agrees to give to the Facility Agents 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
Facility Agents) given to it by the Borrower, the Portfolio Administrator, any
Seller, any Servicer, any Subservicer, the Valuation Agent, the Trustee or the
Eligible Lender Trustee, pursuant to the terms of this Agreement. Except for
actions which the Administrative Agent is expressly required to take pursuant to
this Agreement, as the case may be, the Administrative Agent shall not be
required to take any action which exposes the Administrative Agent to personal
liability or which is contrary to applicable law unless the Administrative Agent
shall receive further assurances to its satisfaction from the Facility Agents
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 10.02. AUTHORIZATION AND ACTION OF FACILITY AGENTS. Each
Conduit Lender and Alternate Lender hereby accept the appointment of and
authorize its related Facility Agent to take such action as agent on their
behalf and to exercise such powers as are delegated to such Facility Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. Each 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. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Transaction Document, no
Facility Agent shall have any duties or responsibilities, except those expressly
set forth in this Agreement, nor shall any Facility Agent have or be deemed to
have any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Transaction Document or otherwise exist against
any Facility Agent. Without limiting the generality of the foregoing sentence,
the use of the term "Facility Agent" in this Agreement with reference to any
Facility Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Each
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Facility Agent may execute any of its duties under this Agreement or any other
Transaction Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. No Facility Agent shall be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects with reasonable care. Each
Facility Agent agrees to give to its related Conduit Lender and Alternate
Lenders 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 such Conduit Lender or the Alternate
Lender) given to it by the Administrative Agent, the Borrower, the Portfolio
Administrator, any Seller, any Servicer, any Subservicer, the Valuation Agent,
the Trustee or the Eligible Lender Trustee, pursuant to the terms of this
Agreement. Except for actions which each Facility Agent is expressly required to
take pursuant to this Agreement, as the case may be, such Facility Agent shall
not be required to take any action which exposes such Facility Agent to personal
liability or which is contrary to applicable law unless such Facility Agent
shall receive further assurances to its satisfaction from its related Conduit
Lender and 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 10.03. AGENCY TERMINATION. Subject to Sections 10.07 and 10.08
hereof, the appointment and authority of the Administrative Agent and the
Facility Agents hereunder shall terminate upon the payment by the Borrower of
all Obligations hereunder.
SECTION 10.04. ADMINISTRATIVE AGENT'S AND FACILITY AGENT'S RELIANCE,
ETC. None of the Administrative Agent, any Facility Agent or any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it as Administrative Agent or 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 Administrative Agent and each 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 any Conduit Lender, any Facility Agent,
any Alternate Lender or any Program Support Provider and shall not be
responsible to any Conduit Lender, any Facility Agent, any Alternate Lender or
any Program Support Provider for any statements, warranties or representations
made by the Borrower, the Trustee, the Eligible Lender Trustee, any Seller, any
Servicer, any Subservicer, any Guarantor or the Valuation Agent in connection
with this Agreement or any other Transaction Document; (c) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement or any other Transaction
Document on the part of the Borrower, the Trustee, the Eligible Lender Trustee,
any Servicer, any Subservicer, any Seller, any Guarantor or the Valuation Agent
or to inspect the property (including the books and records) of the Borrower,
the Trustee, the Eligible Lender Trustee, any Servicer, any Subservicer, any
Seller, any Guarantor or the Valuation Agent; (d) shall not be responsible to
any Conduit Lender, any Facility Agent, any Alternate Lender or any Program
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
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may be by telex) believed by it in good faith to be genuine and signed or sent
by the proper party or parties.
SECTION 10.05. ADMINISTRATIVE AGENT, FACILITY AGENTS AND AFFILIATES.
The Administrative Agent, the Facility Agents and their Affiliates may generally
engage in any kind of business with the Borrower, the Trustee, the Eligible
Lender Trustee, any Servicer, any Subservicer, any Guarantor, any Seller, any of
their respective Affiliates and any Person who may do business with or own
securities of the Borrower, the Trustee, the Eligible Lender Trustee, any
Servicer, any Subservicer, any Guarantor, any Seller or any of their respective
Affiliates, all as if such entities were not the Administrative Agent or a
Facility Agent and without any duty to account therefor to any Conduit Lender,
any Facility Agent, any Alternate Lender or any Program Support Provider.
SECTION 10.06. NOTE PURCHASE DECISION. The Conduit Lenders and the
Alternate Lenders acknowledge that each has, independently and without reliance
upon the Administrative Agent, and based on such documents and information as it
has deemed appropriate, made its own evaluation and decision to enter into this
Agreement and to make Note Purchases hereunder. The Conduit Lenders and the
Alternate Lenders also acknowledge that each will, independently and without
reliance upon the Administrative Agent, the Facility Agent or any of their
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. Furthermore, each of the Lenders and Facility Agents acknowledges and
agrees that although it may have received modeling and other structural
information (including cash flow analysis) from the Administrative Agent, the
Administrative Agent assumes no responsibility for the accuracy or completeness
of such information and such information is not intended to be relied upon as a
prediction of performance or for any other reason.
SECTION 10.07. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent
may resign at any time by giving five days' written notice thereof to each
Conduit Lender, each Facility Agent, each Alternate Lender, the Borrower, the
Portfolio Administrator, the Trustee and the Eligible Lender Trustee. Upon any
such resignation, the Conduit Lenders, the Facility Agents and the Alternate
Lenders shall have the right to appoint a successor Administrative Agent
approved by the Borrower (which approval will not be unreasonably withheld or
delayed). If no successor Administrative Agent shall have been so appointed and
shall have accepted such appointment, within sixty days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Conduit Lenders, the Facility Agents
and the Alternate Lenders, appoint a successor Administrative Agent. If the
successor Administrative Agent is not an Affiliate of the resigning
Administrative Agent or an Alternate Lender, such successor Administrative 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 Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all of the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Administrative Agent's
resignation hereunder as Administrative
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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 Administrative Agent
under this Agreement.
SECTION 10.08. SUCCESSOR FACILITY AGENTS. Any Facility Agent may resign
at any time by giving five days' written notice thereof to its related Conduit
Lender and Alternate Lender, the Borrower, the Portfolio Administrator, the
Trustee and the Eligible Lender Trustee. Upon any such resignation, the related
Conduit Lender and Alternate Lender shall have the right to appoint a successor
Facility Agent approved by the Borrower (which approval will not be 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 related Conduit Lender and 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 a 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 a 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 XI
MISCELLANEOUS
SECTION 11.01. AMENDMENTS AND WAIVERS. No amendment or modification of
any provision of this Agreement shall be effective without the written agreement
of the Borrower, the Facility Agents, the Administrative Agent and, to the
extent affected thereby, the Eligible Lender Trustee and the Trustee and without
having provided S&P and ▇▇▇▇▇'▇ with prior written notice of such amendment, 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 Administrative Agent. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 11.02. 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.
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SECTION 11.03. NO WAIVER; REMEDIES. No failure on the part of the
Trustee, the Eligible Lender Trustee, the Administrative Agent, any 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 11.04. BINDING EFFECT; ASSIGNABILITY. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Administrative Agent,
the Conduit Lenders, the Facility Agents, the Alternate Lenders, the Program
Support Providers, the Trustee, the Eligible Lender Trustee and their respective
successors and permitted assigns. This Agreement and the rights and obligations
of the Conduit Lenders, the Facility Agents, the Alternate Lenders and the
Program Support Providers hereunder and interests herein shall be assignable in
whole or in part (including by way of the sale of participation interests
therein) by the Conduit Lenders, the Facility Agents, the Alternate Lenders, the
Program Support Providers and their successors and assigns; provided, however,
that the Conduit Lenders, the Facility Agents, the Alternate Lenders and the
Program Support Providers shall not transfer or assign its interests in the
Notes if immediately after such transfer or assignment, the Subordinate Notes
would be owned by more than 100 persons as described in Section 1.7704-1(h) of
the Treasury Regulations and as described in Section 3(c)(1) of the Investment
Company Act of 1940, as amended. The Borrower may not assign any of its rights
and obligations hereunder or any interest herein without the prior written
consent of the Administrative Agent, the Facility Agents and S&P. The parties to
each assignment or participation made pursuant to this Section shall execute and
deliver to the Borrower and the Administrative Agent for their acceptance and
recording in their respective books and records, an assignment or a
participation agreement or other transfer instrument reasonably satisfactory in
form and substance to the Borrower and the Administrative Agent. 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 Conduit Lenders, the
Facility Agents, the Alternate Lenders and the Program Support Providers shall
each notify the Borrower of any assignment or participation thereof made
pursuant to this Section. For the avoidance of doubt, the parties hereto
acknowledge and agree that any Conduit Lender my assign it rights and
obligations hereunder and under the Notes to any other commercial paper conduit
administered by its Facility Agent or its affiliates without the consent of the
Borrower or any other Person.
SECTION 11.05. SURVIVAL. The rights and remedies with respect to any
breach of a representation and warranty made by the Borrower pursuant to Article
V hereof and the indemnification and payment provisions of Articles VIII and IX
hereof and Sections 2.14, 11.08, 11.09 and 11.14 hereof shall be continuing and
shall survive the termination of this Agreement and, with respect to the
Trustee's and the Eligible Lender Trustee's rights under Articles VIII and IX
hereof, the removal or resignation of the Trustee or the Eligible Lender
Trustee.
SECTION 11.06. 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
79
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 11.07. SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. THE
BORROWER, THE CONDUIT LENDERS, THE FACILITY AGENTS, THE ALTERNATE LENDERS AND
THE ADMINISTRATIVE 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
CONDUIT LENDERS, THE FACILITY AGENTS, THE ALTERNATE LENDERS AND THE
ADMINISTRATIVE 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 CONDUIT LENDERS, THE FACILITY AGENTS, THE ALTERNATE
LENDERS AND THE ADMINISTRATIVE 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 CONDUIT LENDERS, THE FACILITY AGENTS, THE ALTERNATE LENDERS OR
THE ADMINISTRATIVE AGENT. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE
RIGHT OF THE CONDUIT LENDERS, THE FACILITY AGENTS, THE ALTERNATE LENDERS OR THE
ADMINISTRATIVE AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR AFFECT THE RIGHT OF THE CONDUIT LENDERS, THE FACILITY AGENTS, THE ALTERNATE
LENDERS OR THE ADMINISTRATIVE 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.
80
SECTION 11.08. COSTS, EXPENSES AND TAXES.
(a) In addition to the rights of indemnification granted
under Article IX 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 Eligible Lender Trustee,
the Administrative Agent, the Conduit Lenders, the Facility Agents, the
Alternate Lenders or the Program Support 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, any
Program Support Agreement or any other Transaction Document, including,
without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Trustee, the Eligible Lender Trustee, the
Administrative Agent, the Conduit Lenders, the Facility Agents, the
Alternate Lenders or the Program Support Providers with respect thereto
and with respect to advising the Trustee, the Eligible Lender Trustee,
the Administrative Agent, the Conduit Lenders, the Facility Agents, the
Alternate Lenders and the Program Support 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 Eligible Lender Trustee, the
Administrative Agent, the Conduit Lenders, the Facility Agents, the
Alternate Lenders or the Program Support Providers in connection with
the enforcement of this Agreement, any Program Support Agreement and
the other Transaction Documents.
(b) The Borrower shall pay the applicable Facility Agent
for the account of the Lenders, as applicable, on demand, such amount
or amounts as shall compensate the Lenders for any loss (including loss
of profit), cost or expense incurred by the Lenders (as reasonably
determined by the Lenders) as a result of payments with respect to the
Notes other than on a Remittance Date, such compensation to be (i)
limited to an amount equal to any loss or expense suffered by the
Lenders during the period from the date of receipt of such repayment to
(but excluding) the following Remittance Date and (ii) net of the
income, if any, received by the recipient of such reductions from
investing the proceeds of such reductions. The determination by the
applicable Facility Agent of the amount of any such loss or expense
shall be set forth in a written notice to the Borrower in reasonable
detail and shall be conclusive, absent manifest error.
SECTION 11.09. 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 Eligible Lender Trustee, the Administrative Agent, the Conduit Lenders, the
Facility Agents, the Alternate Lenders or the Program 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 Eligible Lender Trustee, the
Administrative Agent, the Conduit Lenders, the Facility Agents, the Alternate
Lenders or the Program Support Providers or any incorporator, affiliate,
stockholder, officer, employee or director of the Trustee, the Eligible Lender
Trustee, the Administrative Agent, the Conduit Lenders, the Facility Agents, the
Alternate Lenders or the Program 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 Eligible Lender Trustee,
81
the Administrative Agent, the Conduit Lenders, the Facility Agents, the
Alternate Lenders and the Program Support Providers contained in this Agreement
and all of the other agreements, instruments and documents entered into by the
Trustee, the Eligible Lender Trustee, the Administrative Agent, the Conduit
Lenders, the Facility Agents, the Alternate Lenders or the Program Support
Providers pursuant hereto or in connection herewith are, in each case, solely
the corporate obligations of the Trustee, the Eligible Lender Trustee, the
Administrative Agent, the Conduit Lenders, the Facility Agents, the Alternate
Lenders or the Program Support Providers, as applicable, and that no personal
liability whatsoever shall attach to or be incurred by any administrator of the
Trustee, the Eligible Lender Trustee, the Administrative Agent, the Conduit
Lenders, the Facility Agents, the Alternate Lenders or the Program Support
Providers or any incorporator, stockholder, affiliate, officer, employee or
director of the Trustee, the Eligible Lender Trustee, the Administrative Agent,
the Conduit Lenders, the Facility Agents, the Alternate Lenders or the Program
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 Eligible Lender Trustee, the Administrative Agent, the Conduit
Lenders, the Facility Agents, the Alternate Lenders or the Program 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 Eligible
Lender Trustee, the Administrative Agent, the Conduit Lenders, the Facility
Agents, the Alternate Lenders or the Program Support Providers and each
incorporator, stockholder, affiliate, officer, employee or director of the
Trustee, the Eligible Lender Trustee, the Administrative Agent, the Conduit
Lenders, the Facility Agents, the Alternate Lenders or the Program Support
Providers or of any such administrator, or any of them, for breaches by the
Trustee, the Eligible Lender Trustee, the Administrative Agent, the Conduit
Lenders, the Facility Agents, the Alternate Lenders or the Program 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 and, with respect to the rights of the Trustee
and the Eligible Lender Trustee, the resignation or removal of the Trustee or
the Eligible Lender Trustee.
SECTION 11.10. 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 11.11. CONFIDENTIALITY. The Trustee, the Eligible Lender
Trustee, the Administrative Agent, the Conduit Lenders, the Facility Agents, the
Alternate Lenders and the Program 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
82
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 Eligible Lender
Trustee, the Administrative Agent, the Conduit Lenders, the Facility Agents, the
Alternate Lenders and the Program 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 any Program Support Provider for the
Conduit Lenders, any potential Program Support Provider for the Conduit Lenders,
or any assignee or participant or potential assignee or participant of any
Program Support Provider for the Conduit Lenders, 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 Eligible Lender Trustee, the Administrative Agent, the Conduit
Lenders, the Facility Agents, the Alternate Lenders or the Program 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 Eligible Lender Trustee, the Administrative Agent, the
Conduit Lenders, the Facility Agents, the Alternate Lenders and the Program
Support Providers, any such liquidity or program support provider or assignee or
participant is required by law, regulation, decree or order to make such
disclosure; (f) in connection with the enforcement hereof or of any of the other
Transaction Documents or any Program Support Agreement; (g) to any rating agency
rating the commercial paper notes of the Conduit Lenders; 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 Eligible Lender Trustee, the Administrative Agent,
the Conduit Lenders, the Facility Agents, the Alternate Lenders or the Program
Support Providers, or any of their respective employees, directors, officers,
advisors, accountants, auditors, or legal counsel to preserve the
confidentiality thereof.
SECTION 11.12. 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 11.13. 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 11.14. NO PETITION; SUBORDINATION
(a) Each of the Borrower, the Trustee, the Eligible
Lender Trustee, the Facility Agent and the Lenders hereby covenants and
agrees with respect to each Conduit Lender that prior to the date which
is one year and one day after the payment in full of all
83
outstanding indebtedness of such Conduit Lender, it will not institute
against or join any other person or entity in instituting against such
Conduit 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.
(b) Each of the Conduit Lenders, the Facility Agents, the
Alternate Lenders, the Administrative Agent, the Trustee and the
Eligible Lender 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 Notes, it will not institute against or join any other
person or entity in instituting against the Borrower 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. Each of the Conduit Lenders, the Facility
Agents, the Alternate Lenders, the Administrative Agent, the Trustee
and the Eligible Lender Trustee hereby covenants and agrees that to the
extent the Borrower enters into other financing transactions pursuant
to which it pledges or otherwise conveys any of its assets (or
interests therein) (other than Pledged Collateral) to another Person or
Persons in connection therewith ("Other Assets"), then any interest,
claim or benefit in such Other Assets is and shall be expressly
subordinated to the indefeasible payment in full of all obligations and
liabilities of the Borrower which, under the terms of the relevant
documents relating to the financing of such Other Assets, are entitled
to be paid from, entitled to the benefits of, or otherwise secured by
such Other Assets, including the payment of post-petition interest on
such other obligations and liabilities. This Agreement shall be deemed
a subordination agreement within the meaning of Section 510(a) of the
Bankruptcy Code.
(c) Notwithstanding anything to the contrary contained in
this Agreement, the obligations of each Conduit Lender under this
Agreement and all other Transaction Documents are solely the corporate
obligations of such Conduit Lender and shall be payable solely to the
extent of funds received from the Borrower in accordance herewith or
from any party to any Transaction Document in accordance with the terms
thereof in excess of funds necessary to pay matured and maturing CP and
other indebtedness of such Conduit Lender.
84
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 EDUCATION LOAN FUNDING,
INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
c/o Nelnet, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
THE BANK OF AMERICA CONDUIT
LENDER:
QUINCY CAPITAL CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Quincy Capital Corporation
c/o AMACAR Group, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THE BANK OF AMERICA FACILITY
AGENT:
BANK OF AMERICA, N.A.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: VICE PRESIDENT
85
Bank of America, N.A.
The Hearst Tower
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Banc of America
Securities, LLC, Global
Structured Finance; Portfolio
Management
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
THE BANK OF AMERICA ALTERNATE
LENDER:
BANK OF AMERICA, N.A.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: VICE PRESIDENT
Bank of America, N.A.
The Hearst Tower
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Banc of America
Securities, LLC, Global
Structured Finance; Portfolio
Management
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
THE DEUTSCHE BANK CONDUIT
LENDER:
GEMINI SECURITIZATION CORP.
By /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Treasurer
c/o Deutsche Bank AG New York
Branch
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
86
THE DEUTSCHE BANK FACILITY
AGENT:
DEUTSCHE BANK AG, NEW YORK
BRANCH
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Managing
Director
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, Vice
President
Deutsche Bank AG New York
Branch
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
THE DEUTSCHE BANK ALTERNATE
LENDER:
DEUTSCHE BANK AG, NEW YORK
BRANCH
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Managing
Director
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, Vice
President
Deutsche Bank AG New York
Branch
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
87
THE SOCIETE GENERALE CONDUIT
LENDER:
▇▇▇▇▇▇ CAPITAL CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
c/o Societe Generale
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Securitization
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Societe Generale
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
THE SOCIETE GENERALE FACILITY
AGENT:
SOCIETE GENERALE
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
88
Societe Generale
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Securitization
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Societe Generale
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
THE SOCIETE GENERALE ALTERNATE
LENDER:
SOCIETE GENERALE
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
Societe Generale
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Securitization
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Societe Generale
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
89
THE TRUSTEE:
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Corporate Trust Officer
▇▇▇▇▇ Fargo Bank Minnesota,
National Association
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attn: Corporate Trust
Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
THE ELIGIBLE LENDER TRUSTEE:
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Corporate Trust Officer
▇▇▇▇▇ Fargo Bank Minnesota,
National Association
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attn: Corporate Trust
Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
THE ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: VICE PRESIDENT
90
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 1st day of May, 2003, by and between Nelnet Education
Loan Funding, Inc., f/k/a NEBHELP, INC., a Nebraska corporation (the
"Corporation") acting by and through ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, not individually but as Eligible Lender Trustee (the "Trustee")
under the Warehouse Agreement or Eligible Lender Trust Agreement, as applicable
from time to time (as defined herein), and NHELP-I, Inc., a Nevada corporation,
organized and existing under the laws of the State of Nevada, and having its
principal offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, in the city of Lincoln,
County of Lancaster, State of Nebraska (the "Seller").
W I T N E S S E T H :
WHEREAS, the Corporation, by and through the Trustee, desires to
purchase from the Seller, by and through Seller's eligible lender trustee
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 Warehouse Agreement or Eligible Lender Trust Agreement from time to time,
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; and
WHEREAS, the Corporation expects to finance from time to time its
purchase and ownership of the FFELP Loans purchased hereunder through the
funding made available under the Warehouse Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
Section 1. DEFINITIONS.
"Administrative Agent" means Bank of America, N.A., as Administrative
Agent under the Warehouse Agreement, and any successor or assign in such
capacity.
"Borrower" means the student or parent obligor under an Eligible Loan.
"Corporation" means Nelnet Education Loan Funding, Inc., f/k/a NEBHELP,
INC., a Nebraska corporation, and any successor or assign.
"Eligible Lender Trust Agreement" means the Eligible Lender Trust
Agreement dated as of May 1, 2003, between the Trustee and the Corporation.
"Eligible Loan" means a FFELP Loan authorized to be acquired by the
Corporation by and through the Trustee which (i) is 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
1
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;
(iii) complies with each representation and warranty with respect thereto
contained herein (including Section 3(a)); and (iv) meets the other criteria set
forth in the Loan Purchase Regulations, is eligible for purchase under the terms
of the Warehouse Agreement and is an "Eligible Loan" as defined under the terms
of the Warehouse Agreement.
"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 guaranteed by any Guarantee
Agency and 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.
"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 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 Eligible Loans.
"Guaranteed Loans" means FFELP Loans that are Guaranteed.
2
"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.
"Interest Subsidy Payments" means interest subsidy payments authorized
to be made by 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 the Administrative Agent and any other persons required under the
terms of the Warehouse 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).
"MPN Loan" means a FFELP Loan evidenced by a Master Note.
"Program" means the Corporation's Eligible Loan acquisition program.
"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 NHELP-I, Inc., a Nevada corporation, and any successor
or assign, which is an "eligible lender" under the criteria established by the
Higher Education Act that has received an eligible lender designation by 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 or, if Seller is not designated as an eligible lender
under the Higher Education Act, Seller
3
holds beneficial ownership of FFELP Loans through its eligible lender trustee,
which is an eligible lender under the Higher Education Act.
"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 ▇▇▇▇▇ Fargo Bank Minnesota, National Association,
acting in its capacity as Trustee under the Warehouse Agreement or Eligible
Lender Trust Agreement, as applicable, and not in its individual capacity.
"Warehouse Agreement" means the Warehouse Note Purchase and Security
Agreement dated as of May 1, 2003, as the same may be amended or supplemented in
accordance with its terms, by and among the Trustee as Trustee and Eligible
Lender Trustee, the Corporation as Borrower, Bank of America, N.A. as
Administrative Agent, Bank of America as Alternate Lender and Bank of America
Facility Agent, Quincy Capital Corporation as Bank of America Conduit Lender,
Gemini Securitization Corp. as Deutsche Bank Conduit Lender, Deutsche Bank AG,
New York Branch as Deutsche Bank Alternate Lender and Deutsche Bank Facility
Agent, ▇▇▇▇▇▇ Capital Corporation as Societe Generale Conduit Lender and Societe
Generale Alternate Lender and Societe Generale as Societe Generale Facility
Agent.
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 Warehouse Agreement or Eligible Lender Trust Agreement, as
applicable, 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 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 (in the forms set forth
4
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 and accrued and unpaid interest thereon
on the Loan Purchase Date with proceeds from the obligations issued
pursuant to the Warehouse 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, if any,
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 percentage of the principal balance of said FFELP Loan then
outstanding as was originally paid by the Corporation therefor.
5
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
date hereof (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 and the
Administrative Agent. 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
the date hereof and any applicable Loan Purchase Date shall be subject to each
of the following conditions precedent:
(a) All representations, warranties and statements by or
on behalf of the Seller contained in this Loan Purchase Agreement shall
be true as of the date hereof and 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 Administrative Agent shall
receive an opinion of the Seller's counsel, dated as of the date hereof
covering each sale of FFELP Loans, in form and substance satisfactory
to the Corporation, the Administrative Agent and the Trustee to the
effect that (i) this Loan 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
6
been duly authorized, executed and delivered by the Seller, (iii) with
respect to all Guaranteed Loans being acquired, the applicable
Guarantee Agreement has been duly authorized, executed and delivered by
the Seller, (iv) 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, (v) 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, (vi) 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 corporate 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, (vii) 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, (viii) this
Loan Purchase Agreement shall constitute a security agreement under
Nebraska law and shall be effective to create, in favor of the
Corporation, a valid perfected security interest in the FFELP Loans
subject to no prior liens, (ix) 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,(x) 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, and (xi) such other opinions as may be
reasonably requested by the Corporation, the Administrative Agent or
the Trustee.
(f) Delivery by the Seller to the Corporation on or
before the date hereof 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
7
hereto; UCC-1 Financing Statements evidencing the transfer from the
Seller to the Corporation and the Trustee on behalf of the Corporation,
and UCC lien searches sufficiently in advance of the date hereof 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
Warehouse 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 hereof in form and substance satisfactory to the
Corporation, Administrative Agent, the Trustee and ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as trustee, with respect to the
Warehouse Agreement, and a certificate dated as of the date hereof in
the form attached as Annex A to the true sale/non-consolidation opinion
of ▇▇▇▇▇ ▇▇▇▇ LLP dated May 16, 2003.
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. 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.
8
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 (including Section 3 (a) hereof) 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,
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 Administrative Agent by paying to the
Corporation (or ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Trustee
under the Warehouse Agreement, if required by the Administrative Agent) the then
outstanding principal balance of such FFELP Loan or purported FFELP Loan
multiplied by the percentage used to calculate the purchase price specified 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
(including Interest Subsidy Payments) and applicable Special Allowance Payments
and Interest Subsidy 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 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.
9
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 Warehouse 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.
This indemnity obligation shall survive the termination of this Agreement or
removal of the Trustee.
Section 11. SPECIAL PROVISIONS RELATING TO MPN LOANS.
(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
10
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 and other
Eligible 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 other Eligible Loans and shall not be deemed to contradict the
express intent of the Seller and the Corporation that the transfer of
MPN Loans and other Eligible Loans under this Loan Purchase Agreement
is an absolute assignment of such MPN Loans and other Eligible Loans
and is not a transfer of such MPN Loans and other Eligible Loans as
security for a debt.
Section 12. OTHER PROVISIONS.
(a) The Seller shall, at its expense, furnish to the
Corporation and the Administrative Agent such additional information
concerning the Seller's student loan portfolio as the Corporation or
the Administrative Agent 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, the Administrative Agent 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 Administrative 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 Education Loan Funding, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the Trustee at:
▇▇▇▇▇ Fargo Bank Minnesota, National Association
Corporate Trust Services
6th & Marquette, ▇▇▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
if to the Administrative Agent:
Bank of America, N.A.
The Hearst Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Banc of America Securities, LLC
Global Structured Finance; Portfolio Management
12
If to the Seller, addressed in the manner as set forth in the first
paragraph of this Loan Purchase Agreement.
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 may not be amended
without prior written consent of the Administrative Agent and prior
written notice to each rating service then rating the Notes at the
request of the Borrower.
(l) 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 Administrative Agent.
(m) 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.
(n) 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.
(o) The parties hereto acknowledge that the Trustee, the
Administrative Agent and other parties to the Warehouse 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.
(p) 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
13
Trustee and other parties to the Warehouse Agreement in connection with
the financing of Eligible Loans (as defined in the Warehouse
Agreement), and upon assignment by the Corporation to the Trustee with
respect to the Warehouse Agreement or ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, as Trustee, its provisions may be enforced not
only by the parties to this Loan Purchase Agreement but by the Trustee
and other parties to the Warehouse Agreement. The foregoing creates a
permissive right on behalf of the Trustee, not in the Trustee's
individual capacity but solely as trustee under the Warehouse Agreement
or Eligible Lender Trust Agreement, as applicable, and the Trustee
shall not be under any duties or obligations hereunder.
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 ▇▇▇▇▇ Fargo
Bank Minnesota, National Association, as Trustee shall be for the
benefit of and run directly to, ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as 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 ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Trustee, and
▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Trustee shall not
be under any duties or obligations hereunder.
If there is a Termination Event (as defined in the Warehouse
Agreement) under the Warehouse Agreement and ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as Trustee forecloses on its security
interest on the Eligible Loans, then ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, as Trustee shall assume all duties and
obligations of the Corporation hereunder.
Section 13. SECURITY INTEREST. The parties to this Loan Purchase
Agreement intend that the conveyance of the Seller's right, title and interest
in and to the FFELP Loans sold pursuant to this Loan Purchase 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 Loan Purchase 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 Loan Purchase Agreement shall constitute a loan and not a purchase and
sale, the parties hereto intend that this Loan Purchase 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 (and the Trustee) 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
14
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 Loan Purchase
Agreement) received or deemed to have been received and all other cash
collections, tax refunds and other cash proceeds of the Pledged
Collateral;
(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,
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).
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 Administrative Agent
may reasonably request in order to perfect, protect or more fully evidence the
Corporation's, the Trustee's or the Administrative 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
15
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 or the Administrative Agent 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 or the Administrative Agent may reasonably request from time
to time. Seller shall furnish to the Corporation and the Administrative Agent 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 and the Administrative Agent.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
16
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
NHELP-I, Inc. Nelnet Education Loan Funding, Inc., f/k/a
NEBHELP. INC.
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
--------------------------- ---------------------------
Title: Secretary Title: President
17
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 Education Loan
Funding, Inc., f/k/a NEBHELP, INC. (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, 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 terms, conditions and agreements
contained in the Loan Purchase Agreement shall
18
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 Education Loan Funding, Inc., f/k/a
NEBHELP, INC.
By:_______________________________ By: _____________________________________
Title: ___________________________ Title: __________________________________
19
EXHIBIT B TO LOAN PURCHASE AGREEMENT
SELLER'S CLOSING CERTIFICATE
(DO NOT COMPLETE) (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 Education Loan Funding,
Inc., f/k/a NEBHELP, INC. (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 am MPN Loan
Disclosure and Loan information statement
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)
20
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 ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Eligible Lender Trustee (the "Trustee") under a Warehouse Note
Purchase and Security Agreement among the Trustee, Nelnet Education Loan
Funding, Inc., f/k/a NEBHELP, INC. (the "Corporation") as Borrower, Bank of
America, N.A. as Facility Agent, Bank of America as Alternate Lender and Bank of
America Facility Agent, Quincy Capital Corporation as Bank of America Conduit
Lender, Gemini Securitization Corp. as Deutsche Bank Conduit Lender, Deutsche
Bank AG, New York Branch as Deutsche Bank Alternate Lender and Deutsche Bank
Facility Agent, ▇▇▇▇▇▇ Capital Corporation as Societe Generale Conduit Lender
and Societe Generale as Societe Generale Alternate Lender and Societe Generale
Facility Agent. 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
21
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 Education Loan Funding, Inc., f/k/a NEBHELP, INC. (the "Corporation")
does hereby grant, sell, assign, transfer and convey to ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, solely in its capacity as Eligible Lender
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 the related
Pledged Collateral with respect to 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: ____________________________________________
22
EXHIBIT E TO LOAN PURCHASE AGREEMENT
REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS OF SELLER
A. All 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
Seller, the Trustee or the Corporation as assignee thereof. The Seller shall
have taken all reasonable actions to assure that no Borrower under 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 applicable Loan Purchase Date, be more than 90
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.
Notwithstanding any provision of the Higher Education Act that permits Sellers
to charge an interest rate less than the applicable rate of interest, no FFELP
Loan purchased hereunder shall bear 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
23
interests of any description. The Corporation has a valid and perfected first
priority ownership or security interest in the Pledged Collateral.
G. Each FFELP Loan is Guaranteed; such Guarantee 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 Guarantee Agency have been or will be
paid in full by the Seller, and none of the FFELP Loans has at any time been
tendered to any Guarantee Agency for payment.
H. There are no circumstances or conditions with respect to any
FFELP Loan, the Borrower thereunder or the credit worthiness 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, 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, or conflict with any law, rule or regulation to which the
Seller is subject; the Seller 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
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, subject to (i) applicable bankruptcy, insolvency, moratorium, or
other similar laws affecting the rights of creditors and (ii) general principles
of equity, whether such enforceability is considered in a proceeding in equity
or at law, and does 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, 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.
24
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 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 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.
P. 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.
Q. 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.
R. Each student loan transferred to the Corporation under the
Loan Purchase Agreement is a FFELP Loan which constitutes an Eligible Loan.
S. 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.
T. 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.
U. 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.
V. The transfer, assignment and conveyance of the Eligible Loans
by the Seller pursuant to this Loan Purchase Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction. The Seller is not transferring the Eligible Loans with an actual
intent to hinder, delay or defraud any of its creditors. The Seller is solvent,
will not
25
be rendered insolvent by the transfer of the Eligible Loans hereunder nor is
aware of any pending insolvency of the Seller.
26
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 COMPLETED)
27
EXHIBIT B
FORM OF VALUATION AGENT AGREEMENT
EXHIBIT B
================================================================================
VALUATION AGENT AGREEMENT
among
BANC OF AMERICA SECURITIES LLC,
as the Valuation Agent,
NELNET EDUCATION LOAN FUNDING, INC.,
as the Borrower,
and
BANK OF AMERICA, N.A.,
as Administrative Agent
Dated as of May 1, 2003
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms.................................... 2
Section 1.02. Computation of Time Periods.............................. 4
ARTICLE II
VALUATION AGENT; TERM OF AGREEMENT
Section 2.01. Appointment and Acceptance............................... 4
Section 2.02. Performance by Other Parties............................. 4
Section 2.03. Resignation and Discharge................................ 4
Section 2.04. Term of Agreement........................................ 5
ARTICLE III
CALCULATIONS
Section 3.01. 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.................................. 11
Section 6.06. Assignment by the Conduit Lenders........................ 11
Section 6.07. Submission to Jurisdiction; Waiver of Jury and Bond...... 11
Section 6.08. No Petition.............................................. 12
Section 6.09. Limited Recourse Nature of Transactions.................. 12
Section 6.10. Execution in Counterparts................................ 13
Section 6.11. Severability............................................. 13
Section 6.12. Section Titles........................................... 13
Section 6.13. Entire Agreement......................................... 13
EXHIBIT A FORM OF VALUATION REPORT
EXHIBIT B INITIAL LOAN SERVICING FEES
EXHIBIT C VALUATION REPORT ASSUMPTIONS
THIS VALUATION AGENT AGREEMENT (this "Valuation Agent Agreement") is
made as of May 1, 2003 by and among BANC OF AMERICA SECURITIES LLC, a limited
liability company duly organized under the laws of the State of Delaware (the
"Valuation Agent"), NELNET EDUCATION LOAN FUNDING, INC., a corporation duly
organized under the laws of the State of Nebraska (the "Borrower"), and BANK OF
AMERICA, N.A., a national banking association, as the as the administrative
agent of hereindefined Conduit Lenders, Alternate Lenders, Liquidity Facility
Providers and Credit Support Providers (in such capacity, the "Administrative
Agent").
PRELIMINARY STATEMENTS
WHEREAS, Quincy Capital Corporation, Gemini Securitization Corp. and
▇▇▇▇▇▇ Capital Corporation (collectively, the "Conduit Borrowers"), Bank of
America, N.A., Deutsche Bank AG, New York Branch and Societe Generale
(collectively, the "Facility Agents"), Bank of America, N.A., Deutsche Bank AG,
New York Branch and Societe Generale (collectively, the "Alternate Lenders"),
the Borrower, the Administrative Agent, ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as eligible lender trustee, and ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, as trustee (the "Trustee"), have entered into a Warehouse
Note Purchase and Security Agreement, dated as of May 1, 2003 (the "Warehouse
Note Purchase and Security Agreement"), pursuant to which the Alternate Lenders
have agreed and the Conduit Lenders may agree to purchase notes issued by the
Borrower from time to time (the "Notes") 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 Warehouse Note Purchase
and Security Agreement, the "Financed Loans"); and
WHEREAS, the Warehouse Note Purchase and Security 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 Conduit Lenders, the Alternate Lenders, the Liquidity Facility Providers and
the Credit Support Providers, a security interest in the Financed Loans, all
revenue and recoveries from the Financed Loans and any other collections, funds
and accrued earnings held thereon held in the various funds and accounts created
under the Warehouse Note Purchase and Security Agreement (collectively, the
"Pledged Collateral"); and
WHEREAS, the maximum amount of funds the Conduit Lenders, the Alternate
Lenders, 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 Warehouse Note Purchase and Security 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). Terms not defined
herein shall have the meanings ascribed to such terms in the Warehouse Note
Purchase and Security Agreement.
"Borrower Incentive Program" means any interest rate reduction program
applicable to any Financed Loans.
"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 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.
"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.
"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.
"Loan Valuation Percentage" as determined by the Valuation Agent means:
(a) (i) the present value of the Net Revenue (using the Portfolio
Characteristics, the Discount Rate 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
Financed Loans after taking into account financing costs, loan defaults and
delinquencies, fees and other charges, all as set forth in the Valuation Report
Assumptions.
2
"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 or Subservicer), prior to each Valuation
Date. Such reports shall set forth all of the particular characteristics of the
Financed Loans necessary in order that the Valuation Agent shall be able to
perform the calculations required hereunder or under the Warehouse Note Purchase
and Security 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 Date" means the 20th day of each February, May, August and
November, commencing August 20,2004.
"Valuation Report" means the report prepared by the Valuation Agent and
delivered to the Portfolio Administrator, each Facility Agent, the
Administrative Agent and the Borrower pursuant to Section 6.10(a) of the
Warehouse Note Purchase and Security Agreement, in the form attached as Exhibit
A hereto.
"Valuation Report Assumptions" means the cash flow and related
assumptions set forth in Exhibit C 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
Administrative Agent hereby appoint Bane of America Securities LLC as Valuation
Agent under this Valuation Agent Agreement in connection with the Warehouse Note
Purchase and Security Agreement and Bane of America Securities LLC hereby
accepts such appointment.
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 Warehouse Note Purchase and
Security 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 Administrative Agent and the Trustee.
3
(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 Administrative Agent,
by an instrument signed by the Borrower and filed with the Valuation
Agent, the Administrative Agent and the Trustee. Upon the occurrence of
an Event of Default (as defined in the Warehouse Note Purchase and
Security Agreement), the Administrative 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 Administrative Agent, which shall not be
unreasonably withheld, or by the Administrative 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
Warehouse Note Purchase and Security Agreement or any other Transaction Document
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 Warehouse Note Purchase and Security
Agreement has not been satisfied. If a successor Valuation Agent is to be
appointed hereunder, the Administrative Agent and the Borrower shall agree on
the appropriate fee payable thereto to be payable at the same level of priority
under the Warehouse Note Purchase and Security Agreement as Trustee Fees.
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 May 14, 2004, unless extended to such later date as mutually agreed
to in writing by the Borrower, the Administrative Agent and the Valuation Agent.
ARTICLE III
CALCULATIONS
SECTION 3.01. LOAN VALUATION PERCENTAGE CALCULATIONS.
(a) Pursuant to the terms and at the times required in
the Warehouse Note Purchase and Security Agreement, the Valuation Agent
shall compute the Loan Valuation Percentage by undertaking those
analytical procedures it deems appropriate in its sole discretion with
respect to the Financed Loans.
(b) On each 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 3.01 (b)(i) hereof; and
4
(iii) submit the Valuation Report to the Portfolio
Administrator, each Facility Agent, the Administrative Agent
and the Borrower in the form attached as Exhibit A hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Valuation Agent represents and warrants as follows:
(a) The Valuation Agent is a limited liability company
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 except where the failure to so
qualify could not reasonably be expected to materially adversely affect
its ability to perform its obligations under this Valuation Agent
Agreement.
(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 organizational documents, (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, where, in each
case such contravention could reasonably be expected to 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. 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 Agents 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 Agents, threatened, action or proceeding affecting the
Valuation Agent before any court, governmental agency or arbitrator
that could reasonably be expected to materially adversely affect the
financial condition of the Valuation Agent or the ability of the
Valuation Agent to perform its obligations under this Valuation Agents
Agreement. The Valuation Agent is not in default with respect to nay
order of nay court, arbitrator or any other Governmental Authority
which default could reasonably be expected to materially
5
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,
(f) Each Valuation Report and any resignation notice
delivered by, or to be delivered by, the Valuation Agent pursuant to
the terms of Section 2.03 or Article III hereof shall be executed on
behalf of the Valuation Agent by a duly authorized officer of the
Valuation Agent.
ARTICLE V
INDEMNIFICATION
Without limiting any other rights which the Valuation Agent or any of
its respective Affiliates may have hereunder or under applicable law, and
notwithstanding any limitation on recourse to the 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, attomeys-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, attomeys-in-fact and
Affiliates for Indemnified Amounts relating to or resulting from:
(a) any representation or warranty made or deemed made by
the Borrower under or in connection with this Valuation Agent Agreement
or the Transaction Documents, which shall have been false or incorrect
when made or deemed made or delivered;
(b) the failure by the Borrower to comply with any term,
provision or covenant contained in this Valuation Agent Agreement or
the Transaction Documents; and
(c) 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 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.
6
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. CONFIDENTIALITY. Except as permitted by the Warehouse
Note Purchase and Security Agreement, the Valuation Agent, the Administrative
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 Warehouse Note Purchase and Security Agreement,
without the express written consent of the Borrower.
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 Borrower agrees to provide written notice (which
may be by facsimile or other electronic means) to the Valuation Agent
within three Business Days of the appointment of a new Administrative
Agent.
(b) All notices, requests or other communications to the
Valuation Agent, the Borrower, the Conduit Lenders, the Facility
Agents, the Alternate Lenders, the Administrative Agent, the Trustee
and the Eligible Lender Trustee, including the notice 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: Banc of America Securities LLC
Interstate Tower
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Education Finance Group;
▇▇▇▇▇ ▇▇▇▇▇
If to the other parties hereto, at the respective addresses specified
therefor in the Warehouse Note Purchase and Security Agreement. The parties
hereto may change the address for service of notice upon it by a notice in
writing to the other parties hereto. 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 in all of the Borrower's right, title and
interest in, to and under this Valuation Agent Agreement.
7
SECTION 6.06. SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. EACH
OF THE PARTIES HERETO 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 PARTIES HERETO 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 PARTIES HERETO ACKNOWLEDGES 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 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 ANY OF THE PARTIES HERETO. 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 PARTIES HERETO 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 6.07. NO PETITION. The Valuation Agent and the Administrative
Agent each hereby covenants and agrees that prior to the date which is one year
and one day after the payment in fall of all outstanding Notes, it will not
institute against or join any other person or entity in instituting against the
Borrower any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
SECTION 6.08. 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 6.09. 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
8
Valuation Agent Agreement shall be construed and enforced as if such illegal or
invalid provisions had not been contained herein.
SECTION 6.10. 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 6.11. 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.
9
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:
BANC OF AMERICA SECURITIES LLC
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: PRINCIPAL
THE BORROWER:
NELNET EDUCATION LOAN FUNDING, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇, President
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, President
THE ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: VICE PRESIDENT
10
EXHIBIT A
FORM OF VALUATION REPORT
In accordance with the Valuation Agreement, dated as of May 1, 2003,
among Bane of America Securities LLC, as valuation agent, Nelnet Education Loan
Funding, Inc., as borrower, and Bank of America, N.A., as Administrative Agent,
Bane of America Securities LLC 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. Discount Rate %
F. Present value of Net Revenue ("PV") $
G. PV AS A % OF LOAN PRINCIPLE BALANCE (E / A), PLUS 100%
("LOAN VALUATION PERCENTAGE") %
BANC OF AMERICA SECURITIES LLC
By ________________________________
Name: _____________________________
Title: ____________________________
EXHIBIT B
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 ACS EDUCATION SERVICES, INC.
▇▇▇▇▇▇▇▇, 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
PER ACCOUNT SERVICING FEES & PLUS LOANS
Enrolled
Grace
Deferment
Forbearance
Repayment
Default claim filing
V. STUDENT LOANS SERVICED BY GREAT LAKES EDUCATIONAL LOAN SERVICES, INC.
▇▇▇▇▇▇▇▇, SLS CONSOLIDATION
PER ACCOUNT SERVICING FEES & PLUS LOANS LOANS
Enrolled
Grace
Deferment
Forbearance
Repayment
Default claim filing
D-2
EXHIBIT E
VALUATION REPORT ASSUMPTIONS
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: 50/20/10/10/5/5
REIMBURSEMENT LOSS: 1%
REIMBURSEMENT LAG: 540 Days
PAYMENT LAGS:
Government Payments 60 Days
Borrower Receipts Current 60%
30 Days 40%
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 10%
For Timely Payment Programs Attrition, if applicable:
12 Month Qualification Program 40% 40/20/10
24 Month Qualification Program 30% 30/20/10
36 Month Qualification Program 20% 20/15
48 Month Qualification Program 15% 15/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 Current 90-day financial CP
Conduit CP Rate Current 90-day financial CP
Reinvestment Rate Actual GIC rate or T-▇▇▇▇
All-in Cost of Funds 90-Day Financial CP + 24 bps
Discount Rate Cost of Funds + 40 basis points for the portion of the portfolio that
has 91 Day T-▇▇▇▇ Based Special Allowance Payments
Cost of Funds + 10 basis points for the portion of the portfolio that
has 90 Day Financial CP Based Special Allowance Payments
CASH RELEASE LEVEL: 100.25%
CASH RESERVE LEVEL: 0.25%
EXHIBIT C
FORM OF NOTE PURCHASE REQUEST
NELNET EDUCATION LOAN FUNDING, INC. 2003 WAREHOUSING FINANCING
NOTE PURCHASE NOTICE
Date: [One Business Days prior to date Note Purchase is to be made]
In accordance with Section 2.02 of the Warehouse Note Purchase and Security
Agreement, dated as of May 1, 2003 (the "Agreement"), by and among Nelnet
Education Loan Funding, Inc., as borrower (the "Borrower"), ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"), ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as eligible lender trustee, Quincy Capital
Corporation, as a conduit lender, Bank of America, N.A. as a facility agent and
an alternate lender, Gemini Securitization Corp., as a conduit lender, Deutsche
Bank AG, New York Branch, as a facility agent and an alternate lender, ▇▇▇▇▇▇
Capital Corporation, as a conduit lender Societe Generale, as a facility agent
and an alternate lender, and Bank of America, N.A., as the administrative agent,
the Borrower hereby requests a Note Purchase in the amount and as of the date
provided below.
Date of Note Purchase ________________
ROLLOVER NOTE PURCHASES:
Total Required Rollover Note Purchases as required
pursuant to Exhibit D to the Agreement ________________
NEW NOTE PURCHASES FOR THE FUNDING OF STUDENT LOANS:
Aggregate Amount of Student Loans to be Financed
Principal __________________
Maximum Note Purchase Percentage _________ %
Requested Note Purchase Percentage, not to exceed the
the Maximum Note Purchase Percentage provided above __________________ %
Amount of borrowing required for principal funding
(Eligible Loan principal multiplied by Requested Note Purchase %) __________________
Amount of borrowing required for interest funding __________________
Total Amount of New Note Purchases ================
TOTAL NOTE PURCHASES
(Sum of Rollover Note Purchases and ================
Amount of New Note Purchases, provided above)
TEST OF FINANCING AMOUNT:
Facility Amount 765,000,000
Less the sum of:
Total outstanding Notes __________________
Total projected interest due on all outstanding Notes __________________
Total outstanding Notes & 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 Note Purchases
to be purchased in the amount noted above to the Collection Note Purchase
Subaccount held by the Trustee on the Date of Note Purchase set forth above.
Pursuant to Article IV of the Agreement, I hereby certify that Nelnet Education
Loan Funding, Inc. has met the Conditions precedent to all Note Purchases as
required and as described in such article. I further certify that to the best of
my knowledge and belief, (i) the amounts provided above are accurate and
complete and (ii) no Termination Event under the Agreement has occurred and is
continuing.
NELNET EDUCATION LOAN FUNDING,
INC.
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
C-2
EXHIBIT D
FORM OF MONTHLY REPORT
NELNET EDUCATION LOAN FUNDING, INC. 2003 WAREHOUSING FINANCING
MONTHLY REPORT
REPORTING DATE: [4th Business Day prior to the Remittance Date]
COLLECTION PERIOD: [6th Business Day preceding prior Remittance Date to and
including the 6th Business Day preceding the Remittance
Date]
REMITTANCE DATE: [First Business Day of each month]
INTEREST PRINCIPAL
COLLECTIONS COLLECTIONS TOTAL
----------- ----------- -----
COLLECTIONS:
Amounts held in Collection Account from previous remittance/note purchase ___________ ___________ ___________
Balance in the Collection Note Purchase Account to be transferred to the Collection Account ___________ ___________ ___________
Interest Payments received by Servicers or Subservicers ___________ ___________ ___________
Interest Subsidy Payments received (from DOE) ___________ ___________ ___________
Special Allowance Payments received (from DOE) ___________ ___________ ___________
Interest on Collection Account ___________ ___________ ___________
Interest on Reserve Account ___________ ___________ ___________
Principal Payments received by Servicers or Subservicers ___________ ___________ ___________
Reimbursement of Origination Fees (DOE) ___________ ___________ ___________
Reimbursement of Guarantee Fees (guarantor or prior lender) ___________ ___________ ___________
Funds to be received from the sale of loans ___________ ___________ ___________
Adjustments & Misc. Receipts ___________ ___________ ___________
Adjustments and Misc. Requested Payments ___________ ___________ ___________
___________ ___________ ___________
Total Interest & Principal Collections received during this Collection Period =========== =========== ===========
Required Additional Note Purchases ___________
TOTAL COLLECTIONS AND ADDITIONAL NOTE PURCHASES
===========
PAYMENT WATERFALL:
1. Accrued and unpaid Monthly Rebate Fees as of the close of business on the last day of
the immediately preceding Collection Period ___________
2. Accrued and unpaid Servicer Advances as of the close of business on the last day of the
immediately preceding Collection Period ___________
3. Due and owing Servicer Fees and Custodian Fees as of the close of business on the last
day of the immediately preceding Collection Period ___________
4. Due and owing Trustee Fees and Eligible Lender Trustee Fees as of the close of business
on the last day of the immediately preceding Collection Period ___________
5. To the extent permitted by Section 2.05(b)(v) of the Agreement, accrued and unpaid
Senior Carrying Costs (other than any Yield Protection with respect to the Senior Notes)
as of such Remittance Date ___________
6. If the Senior Parity Requirement is satisfied, to the extent permitted by Section
2.05(b)(vi) of the Agreement, accrued and unpaid Subordinate Carrying Costs (other than
any Yield Protection with respect to the Subordinate Notes) due and owning as of such
Remittance Date ___________
7. Amount necessary to reduce the aggregate outstanding principal balance of the Senior
Notes such that the Senior Parity Requirement will be satisfied ___________
8. If not paid under paragraph 6 above, to the extent permitted by Section 2.05(b)(viii)
of the Agreement, accrued and unpaid Subordinate Carrying Costs (other than any Yield
Protection with respect to the subordinate Notes) due and owning as of such Remittance
Date ___________
9. Prior to the commencement of the Liquidation Period, amounts necessary to restore the ___________
Reserve Account to the Reserve Account Requirement or amounts allowed to be withdrawn from
the Reserve Account ___________
10. Prior to the commencement of the Liquidation Period, amounts designated by the Borrower
to reduce [ILLEGIBLE] of the Outstanding Notes or to purchase additional Eligible Loans to
comply with the Minimum Asset Coverage Requirement ___________
11. After the commencement of the Liquidation Period, if consented to in writing by each
Facility Agent, accrued and unpaid Portfolio Administration Fees as of the close of
business on the last day of the immediately preceding Collection Period ___________
12. After the commencement of the Liquidation Period, if consented to in writing by each
Facility Agent, estimated Taxes payable prior to the next Remittance Date ___________
13. After the commencement of the Liquidation Period, remaining amount to be used reduce
the Outstanding Senior Notes until the outstanding principal amount thereof is zero and
then the Outstanding Subordinate Notes until the outstanding principal amount thereof is
zero ___________
14. If not paid under paragraph 5 above, accrued and unpaid Senior Carrying Costs (other
than any Yield Protection with respect to the Senior Notes) as of such Remittance Date ___________
15. If not paid under paragraphs 6 or 8 above, accrued and unpaid Subordinate Carrying
Costs (other than any Yield Protection with respect to the Subordinate Notes) as of such
Remittance Date ___________
16. Accrued and unpaid Indemnified Amounts and Yield Protection as of the close of business
on the last day of the immediately preceding Collection Period ___________
17. If not paid under paragraph 11 above, accrued and unpaid Portfolio Administration Fees
as of the close of business on the last day of the immediately preceding Collection Period ___________
18. Accrued and unpaid Obligations as of the close of business on the last day of the
immediately preceding Collection Period ___________
19. If not paid under paragraph 12 above, estimated Taxes payable prior to the next
Remittance Date ___________
20. Remaining amounts to be transferred to the Borrower ___________
___________
Total Required Payments pursuant to Section 2.05(b) of the Agreement ===========
Amounts held in Collection Account and not used for Principal Reduction
[ILLEGIBLE] Required Payments and Amounts held in the Collection Account
[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 a Termination
Event has not occurred (each such calculation is based upon information
concerning the Pledged Collateral as of the end of the prior calendar month):
After the transfers and payments described herein, the Asset Coverage Ratio equals: ______%
The three-month average of the Net Interest Margin equals: ______%
The three-month average of the Net Interest Margin (solely with respect to Consolidation
Loans and Eligible Loans which are eligible to receive Special Allowance Payments pursuant
to Section 438(b)(2)(B) of the Higher Education Act) equals: ______%
The three-month average of the Defaulted Student Loans equals: ______%
The Liquidity Trigger equals: ______%
The aggregate principal amount of the Subordinate Notes to the aggregate principal amount
of all Notes Outstanding equals: ______%
Principal amount of Eligible Loans purchased since the end of the prior calendar month: $__________
Average premium paid on the Eligible Loans purchase since the end of the prior calendar
month: ______%
Consolidated Tangible Net Worth of Nelnet, Inc. as of the last day of the last fiscal
quarter: $__________
Ratio of Nelnet, Inc.'s Funded Debt to its Tangible Net Worth: _____:1.00
[ILLEGIBLE] ROLLOVER AS OF____________ __, ____
D-2
Principal Balance as of_____________ __, ___
Principal Additions to Loan Portfolio
Principal Sales from the Loan Portfolio
Principal Collections and adjustment
Principal Balance as of ____________ __, ___
As an authorized representative of Nelnet Education Loan Funding, Inc., 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 Remittance Date and in
accordance with the provisions of the Warehouse Note Purchase and Security
Agreement, dated as of May 1, 2003 (the "Agreement"), by and among Nelnet
Education Loan Funding, Inc., as borrower (the "Borrower"), ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as trustee (the "Trustee"), ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as eligible lender trustee, Quincy Capital
Corporation, as a conduit lender, Bank of America, N.A. as a facility agent and
an alternate lender, Gemini Securitization Corp., as a conduit lender, Deutsche
Bank AG, New York Branch, as a facility agent and an alternate lender, ▇▇▇▇▇▇
Capital Corporation, as a conduit lender, Societe Generale, as a facility agent
and an alternate lender, and Bank of America, N.A., as the administrative agent,
and (ii) no Termination 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 D shall constitute the written direction to the Trustee to make the
deposits and transfers set forth in Section 2.05(b) of the Agreement. The
Trustee may conclusively rely on this Exhibit D and shall be under no duty to
review or examine the information set forth herein,
NELNET, INC., as Portfolio Administrator
______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Date:_________________________________
APPROVED:
NELNET EDUCATION LOAN FUNDING, INC.,
as Borrower
______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Date:_________________________________
D-3
EXHIBIT E
COPIES OF CUSTODIAN AGREEMENTS
EXHIBIT E
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated as of May 1, 2003 (this "Custodian
Agreement"), is by and among NELNET EDUCATION LOAN FUNDING, INC. (the
"Borrower"), ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee (the
"Trustee"), ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Eligible Lender
Trustee on behalf of the Borrower (the "Eligible Lender Trustee"), and NELNET
LOAN SERVICES, INC., as custodian (the "Custodian").
WHEREAS, the Borrower, as borrower, the Trustee, as trustee, the
Eligible Lender Trustee, Quincy Capital Corporation, as a conduit lender, Bank
of America, N.A., as a facility agent and an alternate lender, Gemini
Securitization Corp., as a conduit lender, Deutsche Bank AG, New York Branch, as
a facility agent and an alternate lender, ▇▇▇▇▇▇ Capital Corporation, as a
conduit lender, Societe Generale, as a facility agent and an alternate lender,
and Bank of America, N.A., as administrative agent, have entered into a
Warehouse Note Purchase and Security Agreement, dated as of May 1, 2003 (the
"Loan Agreement"), pursuant to which the Borrower, through the Eligible Lender
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; and
WHEREAS, the Trustee has requested, and the Borrower has agreed, that
all Financed Loans (including all Financed Loans with respect to which the
Eligible Lender 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 Master Servicing Agreement,
dated as of May 1, 2003, with Nelnet, Inc., as servicer; and
WHEREAS, Nelnet, Inc. has entered into a Loan Servicing Agreement,
dated as of May 1, 2003 (the "Servicing Agreement"), with the Custodian, as
subservicer; 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 Eligible Lender 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; 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 the 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.
2
(d) To permit inspection at all reasonable times and upon
reasonable advance notice by the Borrower, the Trustee, the Eligible
Lender Trustee, a Guarantor, 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.
(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.
(g) To take any and all such other action with respect to
the Deposited Loans as the Trustee may, consistent with the Custodian's
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, acknowledges receipt of notice of the security interest held by the
Trustee in the Deposited Loans and acknowledges that the Custodian is holding
possession of such Deposited Loans for the Trustee's benefit.
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 the Borrower or to any
Person designated by the Borrower 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.
3
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. Neither the Trustee nor the Eligible Lender
Trustee shall have any 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 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 Eligible
Lender Trustee, the Conduit Lenders, the Alternate Lenders, the Facility Agents,
the Administrative Agent and the Borrower (or their respective designees) upon
request of such Person, 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. FEES AND EXPENSES. The Custodian shall not receive any
additional compensation for acting as custodian hereunder outside of the fees
and expenses paid to the Custodian in its capacity as servicer pursuant to the
Servicing Agreement.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CUSTODIAN.
(a) The Custodian agrees to accept delivery of the
promissory notes and other documents pertaining to the Deposited Loans
and to have and maintain continuous and exclusive possession and
control over all documents evidencing the Deposited Loans delivered to
it under this 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
4
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, at a minimum, the borrower's name and Social Security
number with respect to 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.
10. 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.
(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
MINNESOTA.
(f) The Borrower, the Trustee, the Eligible Lender
Trustee and the Custodian, from time to time and with the written
consent of the Administrative Agent, may amend this Custodian Agreement
subject to any provisions to the contrary herein.
(g) All notices, requests, demands and other
communications under or in respect of this Custodian Agreement shall be
in writing and 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):
5
If to the Borrower: Nelnet Education Loan Funding, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: NELnet, Inc.
▇▇▇▇ ▇.▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee: ▇▇▇▇▇ Fargo Bank Minnesota, National
Association
▇▇▇ ▇▇▇▇▇▇ and Marquette Avenue, ▇▇▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Eligible Lender Trustee: ▇▇▇▇▇ Fargo Bank Minnesota, National
Association
▇▇▇ ▇▇▇▇▇▇ and Marquette Avenue, ▇▇▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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.
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee under
the Loan Agreement
By /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇ ▇▇▇▇▇, Corporate Trust Officer
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Eligible Lender
Trustee
By /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇ ▇▇▇▇▇, Corporate Trust Officer
NELNET LOAN SERVICES, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
NELNET EDUCATION LOAN FUNDING, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, President
7
EXHIBIT F
FORM OF PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT is made and entered into as of the 1st day
of May, 2003, by and between NHELP-I, INC., a Nevada corporation (the "Lender")
and NELNET EDUCATION LOAN FUNDING, INC., a Nebraska corporation (the
"Participant").
WHEREAS, the 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 the Lender; and
WHEREAS, the Lender desires to sell, and the 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
As used in this Participation Agreement, the terms set forth above and
in this Article shall have the meanings ascribed thereto (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
Terms not defined herein shall have the meanings ascribed to such terms in the
Warehouse Note Purchase and Security Agreement.
"Administrative Agent" means Bank of America, N.A., as the
Administrative Agent under the Warehouse Note Purchase and Security Agreement,
and any successor or assign in such capacity.
"Agreement" means this Participation Agreement and any amendment or
supplement hereto.
"Borrower" means the student or parent obligor under an Eligible Loan.
"Commitment Amount" means the aggregate outstanding principal balance
of FFELP Loans up to an amount determined by Participant, 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 to the other party and to the Administrative Agent
and the Trustee at least 30 days 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 the Lender of any of its
obligations hereunder.
"Eligible Lender Trustee" means ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, acting in its capacity as eligible lender trustee for the Lender,
and not in its individual capacity.
"Eligible Loan" means a FFELP Loan in which a participation interest
is to be acquired by the Participant which (a) is 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 (including Section 3.01 hereof); and (d) meets the other
applicable criteria set forth in the Loan Purchase Regulations and is an
"Eligible Loan" as defined under the terms of the Warehouse Note Purchase and
Security Agreement.
"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 guaranteed by any Guarantee
Agency and Interest Subsidy Payments and Special Allowance Payments, if
applicable, to holders of qualifying student loans guaranteed by any Guarantee
Agency.
"FFELP Loans" means loans, 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
Contacts 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 Lender or the Eligible
Lender Trustee on behalf of the Lender.
"Guarantee Agreement" means the Federal Contracts, an agreement between
a Guarantee Agency and either the Lender or the Eligible Lender Trustee on
behalf of the Lender providing for the Guarantee by such Guarantee Agency of the
principal of and accrued interest on Eligible Loans, made or acquired by the
Lender or the Eligible Lender Trustee on behalf of the Lender from time to time,
and any other similar guarantee or agreement issued by a Guarantee Agency to the
Lender or the Eligible Lender Trustee on behalf of the Lender pertaining to
Eligible Loans.
"Guaranteed Loans" means FFELP Loans that are Guaranteed.
2
"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.
"Interest Subsidy Payments" means interest subsidy payments authorized
to be made by the Secretary of Education pursuant to Section 428 of the Higher
Education Act or similar payments authorized by federal law or regulation.
"Lender" means NHELP-I, Inc., a Nevada corporation, an "eligible
lender" under criteria established by the Higher Education Act that has received
an eligible lender designation by the Secretary of Education, which is selling
participation interests in FFELP Loans to the Participant hereunder or, if the
Lender is not designated as an eligible lender under the Higher Education Act,
the 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 (0.0%), 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 the 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.
"Master Note" means a Master Promissory Note in the form mandated by
Section 432(m)(l)(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)(l).
"MPN Loan" means a FFELP Loan evidenced by a Master Note.
"Participant" means NELNET Education Loan Funding, Inc., a Nebraska
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% 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.
3
"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, individually or collectively, (a) Nelnet, Inc., and
(b) 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
Administrative Agent.
"Servicing Agreement" means the agreement in which a Servicer is
engaged by the 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.
"Subservicer" means (a)NELnet Loan Services, Inc., (b) ▇▇▇▇▇▇ ▇▇▇
Servicing L.P., (c) ACS Education Services, Inc., (d) Pennsylvania Higher
Education Assistance Agency, (e) Great Lakes Educational Loan Services, Inc. and
(f) any other servicing agent approved as may be required in the Warehouse Note
Purchase and Security Agreement; provided, however, ▇▇▇▇▇▇ Mae Servicing L.P.,
ACS Education Services, Inc., Pennsylvania Higher Education Assistance Agency
and Great Lakes Educational Loan Services, Inc. shall not service any Financed
Loans until the Administrative Agent has approved its respective Subservicing
Agreement.
"Subservicing Agreement" means, individually or collectively, (a) the
Loan Servicing Agreement, dated as of May 1, 2003, between the Servicer and
Nelnet Loan Services, Inc.; (b) a Servicing Agreement between the Servicer and
▇▇▇▇▇▇ ▇▇▇ Servicing L.P. and approved in writing by the Administrative Agent;
(c)a Servicing Agreement between ACS Education Services Inc. and the Servicer
and approved in writing by the Administrative Agent (d)a Servicing Agreement
between Pennsylvania Higher Education Assistance Agency and the Servicer and
approved in writing by the Administrative Agent (e) a Servicing Agreement
between Great Lakes Educational Loan Services, Inc. and the Servicer and
approved in writing by the Administrative Agent; and (f) with the prior written
consent of the Administrative Agent, any other Subservicing agreement between
the Servicer and any Subservicer, as any such agreement may be amended or
supplemented from time to time with the prior written consent of the
Administrative Agent, under which the respective Subservicer agrees to
administer and collect the Financed Loans.
"Trustee" means ▇▇▇▇▇ Fargo Bank Minnesota, National Association,
acting in its capacity as trustee under the Warehouse Note Purchase and Security
Agreement, and not in its individual capacity.
"Warehouse Note Purchase and Security Agreement" means the Warehouse
Note Purchase and Security Agreement, dated as of May 1, 2003, among the
Participant, as borrower, the Trustee, as trustee, ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, as eligible lender trustee, Quincy Capital Corporation, as
a conduit lender, Bank of America, N.A., as a facility agent and an alternate
lender, Gemini Securitization Corp., as a conduit lender, Deutsche Bank
4
AG, New York Branch, as a facility agent and an alternate lender, ▇▇▇▇▇▇ Capital
Corporation, as a conduit lender, Societe Generate, as a facility agent and an
alternate lender, and the Administrative Agent, as administrative agent, and any
amendments or supplements thereto made in accordance with its terms.
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, the Lender agrees to
sell to the Participant, and the Participant agrees to purchase from the Lender,
in an aggregate amount up to a maximum of the Commitment Amount, an undivided
participation interest in 100% 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. The Participant shall pay to the 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 the Participant shall include the promissory note and related
documents in connection with each participated Eligible Loan. The participation
interest purchased by the 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 the Participant is
not purchasing an interest in an undivided pool of Eligible Loans. It is the
intention of the Lender that the transfer from the Lender to the 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 the 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 the
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 the Lender based on the proportion of the basis points comprising the
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 participation
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 participation
interest in the Eligible Loans under this Agreement is an absolute assignment of
such participation interest in the Eligible Loans and is not a transfer of such
participation interest in the 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, the
Lender shall execute and deliver to the 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
5
Certificate. The 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 the Lender (if an eligible
lender under the Higher Education Act) or by the Eligible Lender Trustee. As the
Lender sells additional participation interests in Eligible Loans to the
Participant hereunder, no more frequently than on a monthly basis, the Lender
shall issue (or cause to be issued) supplemental schedules to the Participant to
be substituted and attached to the Participation Certificate. The participation
interest shall be deemed to have teen transferred to the Participant upon
payment of the Purchase Price therefor, irrespective of whether such
supplemental schedules are issued by the Lender. The Lender shall also perform
any reasonable or necessary acts to perfect the 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 the Participant or the Administrative 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, the Participant shall be entitled to 100% of payments and income earned
with respect to the Eligible Loans covered by the Participation Certificate,
less the Lender's Retained Interest which shall be deducted therefrom and paid
to the Lender on a quarterly basis. The Lender shall pay for all origination
fees payable to the Secretary of Education pursuant to the Higher Education Act
and any other costs incidental to or associated with origination and Guarantee
with respect to each of the Eligible Loans covered by the Participation
Certificate. The Lender agrees to account and deliver to the Participant, or
cause to be delivered to the Participant, all sums of principal, interest,
Special Allowance Payments, Interest Subsidy Payments or other income received
by the Lender on account of the Participant's participation interest in the
Eligible Loans covered by the Participation Certificate during the term of this
Agreement, less the Lender's Retained Interest.
SECTION 2.04. SERVICING AND CONTROL OF ELIGIBLE LOANS. Subject to
Section 5.11 hereof, the Lender agrees that the Participant shall have the
irrevocable right to service the Eligible Loans covered by the Participation
Certificate under a Servicing Agreement or a Subservicing Agreement. The
Participant shall cause a Servicer or a Subservicer to service and collect each
of the Eligible Loans covered by the Participation Certificate under a Servicing
Agreement or a Subservicing 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. Each Servicer and
Subservicer shall act at the direction of the Participant. The Lender shall
promptly deliver the promissory notes and other documents evidencing or relating
to the Eligible Loans covered in the Participation Certificate to the
appropriate Servicer, Subservicer 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 each Servicer, Subservicer or its
agent for safekeeping as custodian in connection with a Servicing Agreement or a
Subservicing Agreement for the benefit of the Lender and the Participant. Each
Servicer or Subservicer shall segregate the Eligible Loans in a separate account
for servicing purposes for the benefit of the Lender and the Participant. During
the term of this Agreement, the 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.
SECTION 2.05. CONDITIONS OF PURCHASE. The 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 the Lender contained in this Agreement shall be true on the
applicable date of purchase;
(b) The Participant, the Administrative Agent and the
Trustee shall receive an opinion of the 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 the Participant,
the Administrative Agent and the Trustee, to the effect that (i) this
Agreement has been duly authorized, executed and delivered by the
Lender and constitutes the legal, valid, binding and enforceable
obligation of the Lender; (ii) the Participation Certificate has been
duly authorized, executed and delivered by the Lender; (iii)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 the
Lender; (iv) 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; (v) to the knowledge of the 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 the Lender or any agreement or
instrument to which the Lender is a party or by which it is bound or
constitute a default thereunder; (vi) to the knowledge of the Lender's
counsel, the 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 the Lender to
perform its obligations under this Agreement; (vii) 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; (viii)
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; (ix) 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, (x) 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,
(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 transfer and assignment of the participation interests in Eligible
Loans to the Participant as a pledge to secure a
7
borrowing rather than as a sale of the participation interests in
Eligible Loans and (xiii) such other opinions as may be reasonably
requested by the Administrative Agent or the Trustee.
(c) delivery by the Lender to the 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 the Participant; UCC-1
Financing Statements evidencing the transfer from the Lender to the
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 the Participant from
the Warehouse Note Purchase 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
the Lender in or pursuant to this Agreement with respect to a FFELP
Loan (including Section 3.01 hereof) 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 or Guarantee Payments) on account of any
circumstance or event that occurred prior to the sale of the
participation interest in such FFELP Loan to the Participant or the
sale of such FFELP Loan to the Participant by and through its eligible
lender trustee or after such sale if such refusal is due to any action
of the Lender;
(c) on account of any circumstance or event that occurred
prior to the sale of a participation interest in a FFELP Loan to the
Participant or the sale a FFELP Loan to the Participant by and through
its eligible lender trustee or after such sale if such refusal is due
to any action of the Lender, 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 the
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 the Lender purports to be a
FFELP Loan is not, in fact, a FFELP Loan;
then the Lender shall repurchase the participation interest in such FFELP Loan
or purported FFELP Loan upon the request of the Participant or the
Administrative Agent by paying the Participant or the Trustee (if required by
the Administrative 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 Interest Subsidy Payments
and Special Allowance Payments with respect to such FFELP Loan or purported
FFELP Loan 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 the
8
Participant in connection with such FFELP Loan or purported FFELP Loan, less the
Lender's Retained Interest with respect to such FFELP Loan.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANT
SECTION 3.01. LENDER'S REPRESENTATIONS AND WARRANTIES. The Lender
hereby represents, warrants and covenants to the Participant and the
Administrative Agent as follows as of the date hereof and as of the date of each
purchase hereunder.
(a) All information furnished by the 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 Lender, the Eligible Lender
Trustee or the Participant as assignee thereof. The Lender shall have
taken all reasonable actions to assure that no Borrower under 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 90 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. Notwithstanding any provisions of the Higher Education
Act that permits the Lender to charge an interest rate less than the
applicable rate of interest, no FFELP Loan purchased hereunder shall
bear 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 the 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) The Lender or the 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 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) The 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 lines, pledges or encumbrances; no FFELP Loan has been
9
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
ownership or security interest in the Pledged Collateral (as defined
herein).
(g) Each FFELP Loan is Guaranteed; such Guarantee 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 a Guarantee
Agency have been or will be paid in full by the Lender, and none of the
FFELP Loans has at any time been tendered to 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 or 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 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 the
Lender or any agreement or instrument to which the Lender is a party or
by which it is bound or constitute a default thereunder, or conflict
with any law, rule or regulation to which the Lender is subject; the
Lender is not a party to or bound by any agreement or instrument or
subject to any charter or other restriction or judgment, order, writ,
injunction, decree, law, rule or regulation which may materially and
adversely affect the ability of the Lender to perform its obligations
under this Agreement and this Agreement constitutes a valid and binding
obligation of the Lender enforceable against it in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, moratorium, or
other similar laws affecting the rights of creditors and (ii) general
principles of equity, whether such enforceability is considered in a
proceeding in equity or at law, and does 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, 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.
(k) The 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.
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(l) The Lender and its servicer have each exercised (and
shall continue to exercise) due diligence and reasonable care in
making, administering, servicing and collecting the FFELP Loans, and
the 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. The 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 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; and the Lender is not in default in the performance of
any of its covenants and agreements made in such Guarantee Agreement.
(n) The 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 the Lender,
except as may be permitted under applicable laws; or (ii) discriminate
on the basis of race, sex, color, creed or national origin.
(o) The FFELP Loans are a representative sample of all
student loans held by the 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.
(p) Each participation interest transferred to the
Participant under this Agreement is a participation interest in a FFELP
Loan which constitutes an Eligible Loan.
(q) The fair salable value of the assets on a going
concern basis of the 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.
(r) The 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.
(s) Each FFELP Loan in which a participation interest is
purchased pursuant to this Agreement includes all Eligible Loans of any
one Borrower held by the Lender.
(t) The Lender hereby represents and warrants that the
Lender is transferring all of its right title 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
(u) 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.
(v) 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.
(w) The transfer, assignment and conveyance of the
participation interests in the Eligible Loans by the Lender pursuant to
this Agreement are not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction. The
Lender is not transferring the participation interests in the Eligible
Loans with an actual intent to hinder, delay or defraud any of its
creditors. The Lender is solvent, will not be rendered insolvent by the
transfer of the participation interests in the Eligible Loans hereunder
nor is aware of any pending insolvency of the Lender.
SECTION 3.02. PARTICIPANT'S REPRESENTATIONS AND WARRANTIES. The
Participant hereby represents and warrants to the Lender that the execution,
delivery and performance of this Agreement by the Participant (a) has been duly
authorized or ratified effective as of the date of execution by all necessary
corporate action on the part of the Participant; (b) does not and will not
conflict with, or result in a violation of, any applicable laws; (c) 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 the
Participant is a party or whereby any of its property may be bound and (d)
constitute a legal, valid and binding obligation of the Participant enforceable
against the Participant in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, moratorium, or other similar laws affecting the rights
of creditors and (ii) general principles of equity, whether such enforceability
is considered in a proceeding in equity or at law.
SECTION 3.03. ORGANIZATIONAL JURISDICTION OF LENDER. The Lender shall
not organize under the law of any jurisdiction other than the State under which
is it organized as of the Closing Date (whether changing its jurisdiction of
organization or organizing under an additional jurisdiction) or, change its
location for purposes of Section 9-307 of the applicable UCC, without giving 30
days prior written notice of such action to the Participant and the
Administrative Agent. 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
the Lender or the Eligible Lender Trustee transfers title to a specific Eligible
Loan covered by the Participation Certificate to the 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, the Lender's Retained
12
Interest, as then accrued and unpaid, shall be paid and if the Participant is
not in material default of its obligations under this Agreement, the Lender
shall immediately transfer to the 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, the Lender shall
execute and deliver to the Participant or its designee an executed Loan Purchase
Agreement, together with all documents of transfer in connection therewith,
between the Lender, as seller and the 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.
ARTICLE V
OTHER PROVISIONS
SECTION 5.01. INDEMNIFICATION. The Lender specifically acknowledges
that the Participant will be making representations and warranties regarding the
Eligible Loans based in part on the accuracy of the Lender's representations and
warranties in this Agreement. The Lender agrees to indemnify and hold the
Participant, the parties to the Warehouse Note Purchase and Security Agreement
and the Program Support Providers under the Warehouse Note Purchase 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 the 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 the 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 the Participant under this
Agreement may be freely assigned or subparticipated, in whole or in part,
without prior written consent of the Lender. The rights and obligations of the
Lender under this Agreement may not be assigned in whole or in part without the
prior written consent of the Participant and the Administrative Agent. This
Agreement shall be binding upon the parties hereto and their permitted
successors and assigns. The Lender acknowledges that the 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 Note Purchase
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 the Lender and the Participant.
The transaction evidenced by this Agreement is a loan participation transaction
pursuant to which the Lender and the 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 the
Lender, the Participant and the Administrative Agent and prior written notice is
given to each rating service then rating
13
the Notes at the request of the Borrower. 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 the Lender: NHELP-I, Inc.
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Participant: NELNET EDUCATION LOAN FUNDING, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
If to the Administrative Agent: Bank of America, N.A.
The Hearst Tower
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: Banc of America Securities, LLC
Global Structured Finance; Portfolio
Management
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 AND OBLIGATIONS. The
warranties and representations of the parties contained in Article III hereof
and the repurchase obligation of the Lender contained in Section 2.06 hereof
shall survive execution of this Agreement and termination of 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
14
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 the 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 a Servicing Agreement or
a Subservicing Agreement for the life of such loan by a Servicer or Subservicer
and shall not be removed from the servicing system of such Servicer or
Subservicer, except as provided below. The Participant agrees that each FFELP
Loan participated pursuant to this Agreement which is held by or on behalf of
the Participant or any of the Participant's affiliates after the date of this
Agreement shall be serviced by a Servicer under a Servicing Agreement or a
Subservicing Agreement for a term of the life of such loan and shall not be
removed from the servicing system of such Servicer or Subservicer; provided,
however, that the Participant may engage a servicing agent other than a Servicer
only if the Administrative Agent approves such 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 a Servicer or Subservicer, and provided further,
however, that the Participant may, at its option, require transfer of servicing
to a new servicing agent as approved by the Administrative Agent upon a Servicer
Default (as defined in the Warehouse Note Purchase and Security Agreement), a
material default under the appropriate Servicing Agreement or Subservicing
Agreement or the insolvency or filing of bankruptcy by such Servicer or
Subservicer.
SECTION 5.12. TERMINATION OF AGREEMENT OR BANKRUPTCY OF LENDER. Upon
the termination of this Agreement or the filing of bankruptcy or receivership by
the Lender, the Lender shall cause title to each Eligible Loan covered by the
Participation Certificate to be transferred by the Lender or the Eligible Lender
Trustee to the Participant or its designee.
SECTION 5.13. FURTHER ASSURANCES. The Lender shall, at its expense,
execute all other documents and take all other steps as may be requested by the
Participant or the Administrative Agent from time to time to affect the sale of
the participation interests in the FFELP Loans hereunder.
SECTION 5.14. INFORMATION. The Lender shall, at its expense, furnish to
the Participant or the Administrative Agent such additional information
concerning the Lender's FFELP Loan portfolio as the Participant or the
Administrative Agent may reasonably request.
SECTION 5.15. SECURITY INTEREST. The parties to this Agreement intend
that the conveyance of the 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 the Lender to
the Participant. The parties to this Agreement intend that the arrangements with
respect to the participation interests 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
15
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 Lender shall be deemed to have granted, and hereby
does grant (subject to the condition above), to the Participant a first priority
perfected security interest in all of the 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 the Participant hereunder and the
obligations of the Lender hereunder (collectively, the "Pledged Collateral"):
(a) all participation interests in FFELP Loans;
(b) all revenues and recoveries of principal received
with respect to any 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 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;
(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).
The 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
each Servicer or Subservicer, as appropriate), and take all take all further
action that the Participant or the Administrative Agent may reasonably request
in order to perfect, protect or more fully evidence the Participant's, the
Trustee's or the Administrative Agent's interest in the Pledged Collateral or to
enable the Participant to exercise or enforce any of its rights hereunder.
SECTION 5.16. INFORMATION AND REPORTING. The Lender shall furnish to
the Participant: (a) upon execution of this Agreement, the Lender's most recent
audited financial statement
16
prepared in accordance with generally accepted accounting principles and duly
certified by nationally recognized independent certified public accountants
selected by the Lender, as well as the 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 the Lender; and (c) such other financial
information as the Participant or the Administrative Agent may reasonably
request from time to time. The Lender shall verify and reconcile Eligible Loan
disbursements and cancellations of Eligible Loans covered by the Participation
Certificate, in such manner as the Participant or the Administrative Agent may
reasonably request from time to time. The Lender shall furnish to the
Participant and the Administrative Agent a certificate of good standing and a
certified copy of resolutions of the 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 the
Participant and the Administrative Agent.
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by officers duly authorized as of the day first above written.
Nelnet Education Loan Funding, Inc.
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: President
NHELP-I, Inc.
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Secretary
18
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 May 1, 2003, by and between Nelnet Education Loan Funding, Inc. (the
"Participant") and NHELP-I, Inc. (the "Lender"), the Lender hereby issues and
delivers this Participation Certificate to evidence the 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 the Lender and are serviced by Nelnet, 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.
NHELP-I, INC.
By _________________________________________
Name: ______________________________________
Title: _____________________________________
Accepted this_________day of_________________, 20____.
NELNET EDUCATION LOAN FUNDING, INC.
By _________________________________________
Name: ______________________________________
Title: _____________________________________
SCHEDULE A TO PARTICIPATION CERTIFICATE
SCHEDULE OF LOANS
EXHIBIT G
CONDITIONS TO INITIAL NOTE PURCHASE
1. Executed copies of this Agreement, the Valuation Agent
Agreement, the Eligible Lender Trust Agreement, the Portfolio Administration
Agreement, each Student Loan Purchase Agreement and Participation Agreement
pursuant to which Student Loans are to be sold to the Borrower, each Servicing
Agreement and each Subservicing Agreement pursuant to such Student Loans are to
serviced, each Custodian Agreement pursuant to such Student Loans are to be
held, each Eligible Lender Trustee Guarantee Agreement and each Trustee
Guarantee Agreement.
2. UCC-1 Financing Statements (naming each Seller as debtor, the
Borrower as assignor and the Trustee as assignee secured party, naming the
Borrower as debtor and the Trustee as secured party and naming the Eligible
Lender Trustee as debtor and the Trustee as secured party).
3. Officers' Certificates of the Borrower, the Trustee, the
Eligible Lender Trustee, the Portfolio Administrator, each Servicer, each
Subservicer, each Custodian and each Seller (including, in the case of the
Borrower, articles of incorporation, by-laws, board resolutions, good standing
and incumbency).
4. Opinions of Counsel to the Borrower, the Trustee, the Eligible
Lender Trustee and each Seller in forms acceptable to the Administrative Agent.
5. A schedule of all Financed Loans as of the Closing Date.
6. All fees due and payable to each Conduit Lender, each Facility
Agent, each Alternate Lender and the Administrative Agent on the Closing Date.
7. Such other information, certificates, documents and actions as
the Facility Agents and the Administrative Agent may reasonably request.
8. UCC 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 Reserve Account and Collection
Account.
EXHIBIT H
FORM OF SENIOR NOTE
NELNET EDUCATION LOAN FUNDING, INC. SENIOR WAREHOUSE NOTE
Number R-_________
$_________________ May 16, 2003
Nelnet Education Loan Funding, Inc., a Nebraska corporation (the
"Borrower"), promises to pay to the order of [NAME OF FACILITY AGENT], for the
benefit of [NAME OF CONDUIT LENDER] and [NAME OF ALTERNATE LENDER] (the
"Facility Agent"), the lesser of the principal sum of _________________DOLLARS
($__________) or the aggregate unpaid principal amount of all Note Purchases
made by the Facility Agent, on behalf of the applicable Note Purchasers,
pursuant to the Warehouse Note Purchase and Security Agreement (as hereinafter
defined), in immediately available funds at its office at ______________________
in __________________, together with all Senior Carrying Costs on the unpaid
principal amount hereof at the rates, in the amounts and on the dates set forth
in the Warehouse Note Purchase and Security Agreement. The Borrower shall pay
the principal of and accrued and unpaid Senior Carrying Costs on this Senior
Note in the amounts and at the times required under the terms of the Warehouse
Note Purchase and Security Agreement.
The Facility Agent shall, and is hereby authorized to, record in
accordance with its usual practice, the date and amount of each Note Purchase
and the date and amount of each principal payment hereunder on the schedule
annexed hereto and any such recordation shall constitute prima facia evidence of
the accuracy of the amount so recorded; provided, that the failure of the
Facility Agent to make such recordation (or any error in such recordation) shall
not affect the obligations of the Borrower hereunder or under the Warehouse Note
Purchase and Security Agreement.
This Senior Note is issued pursuant to, and is entitled to the benefits
of, the Warehouse Note Purchase and Security Agreement, dated as of May 1, 2003
(which, as it may be amended or modified and in effect from time to time, is
herein called the "Warehouse Note Purchase and Security Agreement"), among the
Borrower, ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as trustee, ▇▇▇▇▇
Fargo Bank Minnesota, National Association, as eligible lender trustee, Quincy
Capital Corporation, as a conduit lender, Bank of America, N.A., as a facility
agent and an alternate lender, Gemini Securitization Corp., as a conduit lender,
Deutsche Bank AG, New York Branch, as a facility agent and an alternate lender,
▇▇▇▇▇▇ Capital Corporation, as a conduit lender, Societe Generale, as a facility
agent and an alternate lender, and Bank of America, N.A., as administrative
agent, to which Warehouse Note Purchase and Security Agreement reference is
hereby made for a statement of the terms and conditions governing this Senior
Note, including the terms and conditions under which this Senior Note may be
prepaid or its maturity date accelerated. This Senior Note is secured by the
Pledged Collateral as more particularly described in the Warehouse Note Purchase
and Security Agreement. Capitalized terms used
H-2
herein and not otherwise defined herein are used with the meanings attributed to
them in the Warehouse Note Purchase and Security Agreement.
This Senior Note is one of a series of Senior Warehouse Notes (the
"Senior Notes") issued by the Borrower pursuant to the Warehouse Note Purchase
and Security Agreement. Except as specifically provided in the Warehouse Note
Purchase and Security Agreement, the payment of the principal of and Subordinate
Carrying Costs on the Subordinate Notes issued by the Borrower pursuant to the
Warehouse Note Purchase and Security Agreement is fully subordinated to the
payment of the principal of and Senior Carrying Costs on the Senior Notes.
THIS SENIOR NOTE IS A SPECIAL, LIMITED OBLIGATION OF THE BORROWER
PAYABLE SOLELY FROM THE PLEDGED COLLATERAL PROVIDED THEREFOR AS PROVIDED IN THE
WAREHOUSE NOTE PURCHASE AND SECURITY AGREEMENT, AND DOES NOT CONSTITUTE A
GENERAL OBLIGATION OF THE BORROWER.
THIS SENIOR NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND HAS
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
REGULATORY AUTHORITY OF ANY STATE. THIS SENIOR NOTE HAS BEEN OFFERED AND SOLD
PRIVATELY. THE REGISTERED OWNER HEREOF ACKNOWLEDGES THAT THESE SECURITIES ARE
"RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
AND AGREES FOR THE BENEFIT OF THE ISSUER AND ITS AFFILIATES THAT THESE
SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
TO A PERMITTED ASSIGNEE WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (B) TO A PERMITTED
ASSIGNEE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), OR (C) TO A PERMITTED ASSIGNEE PURSUANT TO
ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SECTION 5 OF THE
SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
NELNET EDUCATION LOAN FUNDING, INC.
By _____________________________________
Name:___________________________________
Title:__________________________________
H-3
ANNEX
SCHEDULE OF NOTE ISSUANCES AND PRINCIPAL REPAYMENTS
--------------------------------------------------------------------------------
DATE OF ISSUANCE OR REPAYMENT AMOUNT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
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--------------------------------------------------------------------------------
$_____________________
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$_____________________
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$_____________________
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$_____________________
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$_____________________
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H-4
EXHIBIT I
FORM OF SUBORDINATE NOTE
NELNET EDUCATION LOAN FUNDING, INC. SUBORDINATE WAREHOUSE NOTE
Number R-_________
$_________________ May 16, 2003
Nelnet Education Loan Funding, Inc., a Nebraska corporation (the
"Borrower"), promises to pay to the order of [NAME OF FACILITY AGENT], for the
benefit of [NAME OF CONDUIT LENDER] and [NAME OF ALTERNATE LENDER] (the
"Facility Agent"), the lesser of the principal sum of ___________________DOLLARS
($_________________) or the aggregate unpaid principal amount of all Note
Purchases made by the Facility Agent, on behalf of the applicable Note
Purchasers, pursuant to the Warehouse Note Purchase and Security Agreement (as
hereinafter defined), in immediately available funds at its office at
______________________ in ____________, together with Subordinate Carrying Costs
on the unpaid principal amount hereof at the rates, in the amounts and on the
dates set forth in the Warehouse Note Purchase and Security Agreement. The
Borrower shall pay the principal of and accrued and unpaid Subordinate Carrying
Costs on this Subordinate Note in the amounts and at the times required under
the terms of the Warehouse Note Purchase and Security Agreement.
The Facility Agent shall, and is hereby authorized to, record in
accordance with its usual practice, the date and amount of each Note Purchase
and the date and amount of each principal payment hereunder on the schedule
annexed hereto and any such recordation shall constitute prima facia evidence of
the accuracy of the amount so recorded; provided, that the failure of the
Facility Agent to make such recordation (or any error in such recordation) shall
not affect the obligations of the Borrower hereunder or under the Warehouse Note
Purchase and Security Agreement.
This Subordinate Note is issued pursuant to, and is entitled to the
benefits of, the Warehouse Note Purchase and Security Agreement, dated as of May
1, 2003 (which, as it may be amended or modified and in effect from time to
time, is herein called the "Warehouse Note Purchase and Security Agreement"),
among the Borrower, ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
trustee, ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as eligible lender
trustee, Quincy Capital Corporation, as a conduit lender, Bank of America, N.A.,
as a facility agent and an alternate lender, Gemini Securitization Corp., as a
conduit lender, Deutsche Bank AG, New York Branch, as a facility agent and an
alternate lender, ▇▇▇▇▇▇ Capital Corporation, as a conduit lender, Societe
Generale, as a facility agent and an alternate lender, and Bank of America,
N.A., as administrative agent, to which Warehouse Note Purchase and Security
Agreement reference is hereby made for a statement of the terms and conditions
governing this Subordinate Note, including the terms and conditions under which
this Subordinate Note may be prepaid or its maturity date accelerated. This
Subordinate Note is secured by the Pledged Collateral as more particularly
described in the Warehouse Note Purchase and Security Agreement. Capitalized
terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Warehouse Note
Purchase and Security Agreement.
This Subordinate Note is one of a series of Subordinate Warehouse Notes
(the "Subordinate Notes") issued by the Borrower pursuant to the Warehouse Note
Purchase and Security Agreement. Except as specifically provided in the
Warehouse Note Purchase and Security Agreement, the payment of the principal of
and Subordinate Carrying Costs on the Subordinate Notes is fully subordinated to
the payment of the principal of and Senior Carrying Costs on the Senior Notes
issued by the Borrower pursuant to the Warehouse Note Purchase and Security
Agreement.
THIS SUBORDINATE NOTE IS A SPECIAL, LIMITED OBLIGATION OF THE BORROWER
PAYABLE SOLELY FROM THE PLEDGED COLLATERAL PROVIDED THEREFOR AS PROVIDED IN THE
WAREHOUSE NOTE PURCHASE AND SECURITY AGREEMENT, AND DOES NOT CONSTITUTE A
GENERAL OBLIGATION OF THE BORROWER.
THIS SUBORDINATE NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND HAS
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
REGULATORY AUTHORITY OF ANY STATE. THIS SUBORDINATE NOTE HAS BEEN OFFERED AND
SOLD PRIVATELY. THE REGISTERED OWNER HEREOF ACKNOWLEDGES THAT THESE SECURITIES
ARE "RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT AND AGREES FOR THE BENEFIT OF THE ISSUER AND ITS AFFILIATES THAT THESE
SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
TO A PERMITTED ASSIGNEE WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (B) TO A PERMITTED
ASSIGNEE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), OR (C) TO A PERMITTED ASSIGNEE PURSUANT TO
ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SECTION 5 OF THE
SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
NELNET EDUCATION LOAN FUNDING, INC.
By _____________________________________
Name:___________________________________
Title:__________________________________
I-2
ANNEX
SCHEDULE OF NOTE ISSUANCES AND PRINCIPAL REPAYMENTS
--------------------------------------------------------------------------------
DATE OF ISSUANCE OR REPAYMENT AMOUNT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
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--------------------------------------------------------------------------------
$_____________________
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--------------------------------------------------------------------------------
$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
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$_____________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$_____________________
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$_____________________
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$_____________________
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$_____________________
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$_____________________
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I-3
EXHIBIT J
PREMIUM SCHEDULE
--------------------------------------------------------------------------------
AVERAGE PRINCIPAL BALANCE RANGES MAXIMUM NOTE PURCHASE PERCENTAGE
--------------------------------------------------------------------------------
LOW HIGH NON-CONSOLIDATION LOANS CONSOLIDATION LOANS
--------------------------------------------------------------------------------
$ 0 $ 4,000 100.000% 100.000%
--------------------------------------------------------------------------------
$ 4,001 $ 4,750 100.000% 100.000%
--------------------------------------------------------------------------------
$ 4,751 $ 5,250 100.750% 100.000%
--------------------------------------------------------------------------------
$ 5,251 $ 5,750 101.000% 100.000%
--------------------------------------------------------------------------------
$ 5,751 $ 6,250 101.250% 100.000%
--------------------------------------------------------------------------------
$ 6,251 $ 6,750 101.500% 100.000%
--------------------------------------------------------------------------------
$ 6,751 $ 7,250 101.500% 100.000%
--------------------------------------------------------------------------------
$ 7,251 $ 7,750 101.750% 100.000%
--------------------------------------------------------------------------------
$ 7,751 $ 8,750 102.000% 100.250%
--------------------------------------------------------------------------------
$ 8,751 $ 9,750 102.000% 100.750%
--------------------------------------------------------------------------------
$ 9,751 $11,750 102.250% 101.500%
--------------------------------------------------------------------------------
$11,751 $15,000 102.250% 102.000%
--------------------------------------------------------------------------------
$15,001 $20,000 102.500% 102.250%
--------------------------------------------------------------------------------
$20,001 $25,000 102.500% 102.250%
--------------------------------------------------------------------------------
$25,001 $30,000 102.500% 102.500%
--------------------------------------------------------------------------------
$30,001 and up 102.500% 102.500%
--------------------------------------------------------------------------------
EXHIBIT K
BORROWER INCENTIVE PAYMENT PROGRAMS
BORROWER INCENTIVE PROGRAM #1:
2% interest rate reduction after 48 on-time payments
..25% interest rate reduction for ACH payments
BORROWER INCENTIVE PROGRAM #2:
1% interest rate reduction after 24 on-time payments.
additional 1% interest rate reduction after 48 on-time payments.