Exhibit 10.3
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WAREHOUSE LOAN AND SECURITY AGREEMENT
among
NHELP-I, INC.,
as the Borrower
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as the Trustee
and
CONCORD MINUTEMEN CAPITAL COMPANY, LLC,
as the Lender
Dated as of September 30, 1998
U.S. $500,000,000
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms ......................................... 1
Section 1.02. Other Terms .................................................. 19
Section 1.03. Computation of Time Periods .................................. 19
ARTICLE II
THE FACILITY
Section 2.01. Borrowings ................................................... 19
Section 2.02. The Initial Borrowing and Subsequent Borrowings .............. 20
Section 2.03. Termination or Reduction of the Facility Limit ............... 21
Section 2.04. [Intentionally Omitted.] ..................................... 21
Section 2.05. Collection Account ........................................... 21
Section 2.06. Transfers from Collection Account ............................ 21
Section 2.07. Cash Reserve Account ......................................... 23
Section 2.08. Transfers from the Cash Reserve Account ...................... 23
Section 2.09. Management of Collection Account and Cash Reserve Account .... 24
Section 2.10. Pledged Collateral Assignment of the Transaction Documents ... 24
Section 2.11. Grant of a Security Interest ................................. 24
Section 2.12. Evidence of Debt ............................................. 25
Section 2.13. Special Provisions Governing Advances ........................ 25
Section 2.14. Payments by the Borrower ..................................... 25
Section 2.15. Payment of Stamp Taxes, Etc. ................................. 26
Section 2.16. Sharing of Payments, Etc. .................................... 26
Section 2.17. Yield Protection ............................................. 26
ARTICLE III
CONDITIONS OF BORROWINGS
Section 3.01. Conditions Precedent to Initial Borrowing .................... 28
Section 3.02. Conditions Precedent to All Borrowings ....................... 28
TABLE OF CONTENTS
(continued)
Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES .............................................. 29
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
Section 5.01. General Covenants ............................................ 31
Section 5.02. Acquisition, Collection and Assignment of Student Loans ...... 36
Section 5.03. Enforcement of Financed Loans ................................ 36
Section 5.04. Enforcement of Servicing Agreements .......................... 37
Section 5.05. Administration and Collection of Financed Loans .............. 37
Section 5.06. Amendment of Form of Sale and Purchase Agreement ............. 37
Section 5.07. Custodian .................................................... 37
Section 5.08. Prepayments and Refinancing .................................. 37
Section 5.09. Periodic Reporting ........................................... 38
Section 5.10. UCC Matters; Protection and Perfection of Pledged Collateral;
Delivery of Documents ........................................ 38
Section 5.11. Obligations of the Borrower With Respect to Pledged Collateral 39
Section 5.12. Collateral Call .............................................. 40
Section 5.13. Guarantor Limitations ........................................ 40
ARTICLE VI
EVENTS OF DEFAULT ........................................................... 40
ARTICLE VII
TRUSTEE
Section 7.01. Acceptance of Trust .......................................... 42
Section 7.02. Trustee's Right to Reliance .................................. 43
Section 7.03. Compensation of Trustee ...................................... 44
Section 7.04. Resignation of Trustee ....................................... 44
Section 7.05. Removal of Trustee ........................................... 44
Section 7.06. Successor Trustee ............................................ 45
Section 7.07. Manner of Vesting Title in Trustee ........................... 45
Section 7.08. Servicing Agreement .......................................... 45
Section 7.09. Trustee Covenants with Respect to "Eligible Lender" Status ... 45
Section 7.10. Trustee's Status as an "Eligible Lender." .................... 46
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TABLE OF CONTENTS
(continued)
Page
ARTICLE VIII
INDEMNIFICATION ............................................................. 46
ARTICLE IX
MISCELLANEOUS
Section 9.01. Amendments and Waivers ....................................... 48
Section 9.02. Notices, Etc. ................................................ 48
Section 9.03. No Waiver; Remedies .......................................... 49
Section 9.04. Binding Effect; Assignability ................................ 49
Section 9.05. Survival ..................................................... 49
Section 9.06. Governing Law; Severability .................................. 49
Section 9.07. Submission to Jurisdiction; Waiver of Jury and Bond .......... 50
Section 9.08. Costs, Expenses and Taxes .................................... 50
Section 9.09. Recourse Against Certain Parties ............................. 51
Section 9.10. Execution in Counterparts; Severability; Integration ......... 51
Section 9.11. Confidentiality .............................................. 51
Section 9.12. Section Titles ............................................... 52
Section 9.13. Entire Agreement ............................................. 52
Section 9.14. No Petition .................................................. 52
EXHIBIT A FORM OF SALE AND PURCHASE AGREEMENT
EXHIBIT B FORM OF VALUATION AGENT AGREEMENT
EXHIBIT C DRAW NOTICE
EXHIBIT D MONTHLY REPORT
EXHIBIT E FORMS OF ASSET COVERAGE RATIO AND CASH RELEASE CERTIFICATE
EXHIBIT F TRUSTEE'S FEE LETTER AGREEMENT
EXHIBIT G COPIES OF SERVICING AND CUSTODIAN AGREEMENTS
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Authorities.
THIS WAREHOUSE LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of
September 30, 1998, among: NHELP-I, INC., a corporation duly organized under
the laws of the state of Nevada (the "Borrower"); CONCORD MINUTEMEN CAPITAL
COMPANY, LLC, a Delaware limited liability company ("Concord"); and NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, as
eligible lender and trustee (the "Trustee").
PRELIMINARY STATEMENTS
1. Concord is engaged in the business of issuing promissory notes in the
domestic commercial paper market and using the proceeds from the sale of such
commercial paper to acquire interests in financial assets from various sellers
from time to time, pursuant to one or more facilities between each seller and
Concord, or to make loans to certain entities for the purpose of financing
financial assets of such entities.
2. The Borrower proposes to purchase from time to time certain Eligible
Loans (as hereinafter defined) in accordance with various Sale and Purchase
Agreements (as hereinafter defined) (such purchases constituting the
"Transactions").
3. The Borrower desires to fund the Transactions through loans made by
Concord up to the Facility Limit on the terms and conditions set forth herein.
4. To provide liquidity support to Concord in connection with the loans
made by it hereunder, Concord may, from time to time, assign all or a part of
such loans to the Agent or to certain other financial institutions as assignees
of the commitment of the Agent pursuant to the terms of the Liquidity Agreement
referred to below, and as a result of such assignment, such financial
institutions would become Lenders hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS.
(a) Certain capitalized terms used throughout this Agreement are
defined above or in this Section 1.01.
(b) As used in this Agreement and its exhibits, the following terms
shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined).
"Advance" means a loan, including a Rollover Advance, made by the Lenders
to the Borrower pursuant to Article II.
"Advance Percentage Calculation Report" means the report prepared by the
Valuation Agent and delivered to the Required Lenders, the Agent, the Trustee
and the Borrower (a) not later than four Business Days prior to each Advance,
other than a Rollover Advance, setting forth the Maximum Advance Percentage for
the Eligible Loans to be financed with such Advance, and (b) on each Valuation
Date, setting forth the weighted average of the Maximum Advance Percentage and
the Eligible Loans financed since the last Advance Percentage Calculation
Report, the forms of which are attached as Exhibit A to the Valuation Agreement.
The Maximum Advance Percentage determined pursuant to any Advance Percentage
Calculation Report with respect to any Financed Loans shall remain in effect
with respect to such Financed Loans until the Borrowing Date immediately
following the delivery of the next Valuation Report delivered pursuant to
Section 5.09.
"Adverse Claim" means a lien, security interest, charge, encumbrance or
other right or claim or restriction in favor of any Person (other than, with
respect to the Pledged Collateral, any lien, security interest, charge,
encumbrance or other right or claim or restriction in favor of the Trustee for
the benefit of the Secured Creditors).
"Affected Party" means each Liquidity Provider and any assignee or
participant of any Liquidity Provider.
"Affiliate" when used with respect to a Person means any other Person
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, membership interests or otherwise.
"Agent" means Mellon Bank, N.A., and its successors and assigns in its
capacity as agent of the Liquidity Providers pursuant to the Liquidity
Agreement.
"Agent Payment Office" means Three Mellon Bank Center, Loan Administration,
Room 1203, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Re: Concord Minutemen Capital Company, LLC).
"Aggregate Market Value" means, as of any date of determination, the sum of
(a) with respect to assets in the Trust Estate which are Financed Loans as of
such date, (i) the outstanding Principal Balance of such Financed Loans, as set
forth in the most recently delivered Valuation Report, multiplied by the Loan
Valuation Percentage, plus, without duplication, (ii) 100% of any accrued
interest thereon, and all accrued and unpaid Special Allowance Payments and
interest subsidies, if any, thereon to such date, (b) with respect to assets in
the Trust Estate, which are Permitted Investments and other cash balances, if
any, on deposit in the Collection Account and the Cash Reserve Account, the
principal balance thereof together with all interest accrued thereon, and (c)
payments on Financed Loans or other assets received by a Servicer or the
Borrower and not yet transferred to the Trustee.
"Agreement" means this Warehouse Loan and Security Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to time
hereafter.
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"Agreement and Acknowledgement" means the Agreement and Acknowledgement
Relating to Student Loan Servicing Agreement dated as of September 30, 1998, by
and among the Borrower, the Lender, the Agent and Great Lakes Higher Education
Servicing Corporation.
"Alternate Borrowing Rate" means the rate of interest most recently
announced by the Agent in Pittsburgh, Pennsylvania, as its prime rate. The
Alternate Borrowing Rate is not necessarily intended to be the lowest per
annum rate of interest determined by the Agent in connection with extensions of
credit. The Alternate Borrowing Rate shall be computed on the basis of a 365
or, when applicable, 366-day year, and shall change from time to time as the
Agent's prime rate changes.
"Asset Coverage Ratio" means, as of the date of any Valuation Report or,
the ratio of (a) the Aggregate Market Value of assets in the Trust Estate as of
such date to (b) the Liabilities as of such date.
"Authorized Officer of the Borrower" means the Borrower's president, chief
financial officer or any vice president.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended from time to time, and any successor statute.
"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.
"Borrowing" means a borrowing of Advances by the Borrower under this
Agreement.
"Borrowing Date" means, with respect to any Borrowing, the date on which
such Borrowing is funded.
"Business Day" means a day of the year other than a Saturday or a Sunday
on which both (a) banks are not authorized or required to close in New York
City and (b) the Agent at the Agent Payment Office is open for business;
provided, however, if the term "Business Day" is used in connection with the
LIBOR, dealings in dollar deposits are carried on in the London interbank
market.
"Calculation Date" means the fourth Business Day preceding the end of each
month.
"Calculation Period" means the calendar month in which each Calculation
Date occurs.
"Cash Reserve Account" means the special account created pursuant to
Section 2.07 hereof.
"Cash Reserve Requirement" means, as of any date of determination,
one-half of one percent (0.50%) of the outstanding Facility Amount as of such
date.
"Closing Date" means September 30, 1998.
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"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
2.05 hereof.
"Collections" means, (a) all revenues and recoveries of principal and
interest and other payments and reimbursements of principal and accrued interest
received with respect to any Financed Loan and any other collection of cash with
respect to such Financed Loan (including, but not limited to, Interest Subsidy
Payments, Special Allowance Payments, finance charges and payments representing
the repurchase of any Financed Loan or rebate of premium thereon pursuant to a
Sale and Purchase Agreement) deemed to have been received pursuant to Section
2.05 and (b) all other cash collections, tax refunds and other cash proceeds of
the Pledged Collateral.
"Commitment" means the obligation of the Agent in its capacity as a
Liquidity Provider to fund Liquidity Advances pursuant to the terms of the
Liquidity Agreement.
"Concord" means Concord Minutemen Capital Company, LLC and its successors
and assigns.
"Concord Account" means Bankers Trust Company, New York, New York, ABA
#▇▇▇▇▇▇▇▇▇ (Concord Minutemen Capital Company, LLC; Account # 00-369-457).
"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 or ▇▇▇▇▇▇▇▇ Loans in accordance with the
Higher Education Act.
"CP" means the Commercial Paper Notes issued by Concord from time to time
in the United States commercial paper market.
"Custodian" means, individually or collectively, UNIPAC Service
Corporation, Great Lakes Higher Education Servicing Corporation, and each
additional Servicer or bailee with which the Borrower has entered into a
Custodian Agreement.
"Custodian Agreement" means, individually or collectively, (a) the
Custodian Agreement dated September 30, 1998 among the Borrower, the Trustee and
UNIPAC Service Corporation, (b) the Custodian Agreement dated September 30, 1998
among the Borrower, the Trustee and Great Lakes Higher Education Servicing
Corporation, and (c) each additional or successor custodian agreement entered
into among the Borrower, the Trustee and a Custodian and approved by the
Required Lenders and the Agent.
"Custodian Fees" means the fees, expenses and charges of the Custodian
pursuant to the Custodian Agreement, except to the extent included in Servicing
Fees.
"Debt" of any Person means (a) indebtedness of such Person for borrowed
money, (b) obligations of such Person evidenced by bonds, debentures, notes,
letters of credit, interest rate and currency swaps or other similar
instruments, (c) obligations of such Person to pay the deferred purchase price
of property or services, (d) obligations of such Person as lessee under
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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 180 days past due from the original
due date thereof, unless such Student Loan is a Higher Education Act Student
Loan and such Student Loan is in Deferment, (b) the Obligor of which is the
subject of an Event of Bankruptcy or is deceased or disabled, or (c) as to which
a continuing condition that with notice or the lapse of time or both would
constitute a default, breach, violation or event permitting acceleration under
the terms of such Student Loan (other than payment defaults continuing for a
period of not more than 180 days.)
"Deferment" means the period permitted by the Higher Education Act and the
policies of applicable Guarantor as being a period during which a borrower under
a Student Loan may postpone making payments of principal or interest.
"Department" means the United States Department of Education, or any
successor thereto or to the functions thereof.
"Due Diligence Requirements" means the due diligence requirements
established from time to time pursuant to the Higher Education Act and any
regulations promulgated by the Secretary of Education thereunder from time to
time regarding the activities required to be performed by or on behalf of a
lender with respect to delinquent or defaulted loans, including the requirements
set forth in 34 C.F.R. Section 682.411.
"Eligible Borrower" means a borrower who is eligible under the Higher
Education Act to be the obligor of a loan for financing a program of education
at an Eligible Institution, including a borrower who is eligible under the
Higher Education Act to be an obligor of a loan made pursuant to Section 428A,
428B and 428C of the Higher Education Act.
"Eligible Institution" means (a) an institution of higher education, (b) a
vocational school or (c) any other institution which, in all of the above cases,
has been approved by the Secretary of Education and the applicable Guarantor.
"Eligible Lender" means any "eligible lender," as defined in the Higher
Education Act, and which has received an eligible lender designation from the
Guarantor with respect to Guaranteed Loans.
"Eligible Loan" means a Student Loan:
(a) which was originated or acquired by the Borrower in the ordinary
course of its business and was originated in the United States, its
territories or possessions;
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(b) that constitutes an account or general intangible as defined in the
UCC as in effect in the jurisdiction that governs the perfection of the
interests of the Borrower therein and the perfection of the Trustee's interest
therein under this Agreement;
(c) the borrower is an Eligible Borrower attending an Eligible
Institution;
(d) if such Student Loan is a subsidized ▇▇▇▇▇▇▇▇ Loan, such Student Loan
qualifies the holder thereof to receive Interest Subsidy Payments and Special
Allowance Payments from the Department; 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 to the extent
applicable; and if such Student Loan is a PLUS/SLS or an unsubsidized ▇▇▇▇▇▇▇▇
Loan, such Student Loan qualifies the holder thereof to receive Special
Allowance Payments from the Department to the extent applicable;
(e) at the time of purchase with proceeds from an Advance, is not a
Defaulted Student Loan and has not been tendered at any time to any Guarantor
for payment;
(f) that provides or, when the payment schedule with respect thereto is
determined, will provide for payments on a periodic basis that will fully
amortize the Principal Balance thereof by its maturity, as such maturity may be
modified in accordance with applicable deferral and forbearance periods granted
in accordance with applicable laws, including the Higher Education Act and any
Guarantee Agreements, as applicable;
(g) that is denominated and payable only in Dollars;
(h) that together with the related Student Loan Note therefor represents
the genuine, legal, valid and binding payment obligation of the related
borrower, enforceable by or on behalf of the holder thereof against such
borrower in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and similar laws relating to
creditors' rights generally and subject to general principles of equity; and
that has not been satisfied, subordinated or rescinded and no right of
rescission, setoff, counterclaim or defense has been asserted or, to the
knowledge of the Borrower, overtly threatened in writing with respect to such
Student Loan;
(i) that (i) is the subject of a valid Guarantee Agreement with an
eligible Guarantor, (ii) with respect to which the Borrower is not in default in
any material respect in the performance of any covenants and agreements made in
the applicable Guarantee Agreement, and (iii) with respect to which all amounts
due and payable to the Department or a Guarantor, as the case may be, have been
paid in full;
(j) that (i) is the subject of a valid Servicing Agreement with an
eligible Servicer, with respect to which the Borrower has executed and delivered
a Custodian Agreement, (ii) with respect to which the Borrower is not in default
in any material respect in the performance of any covenants and agreements made
in the applicable Servicing Agreement, and (iii) with respect to which all
amounts due and payable to the Servicer have been paid in full;
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(k) the payment terms of which have not been altered or amended
except in accordance with the Higher Education Act;
(l) if such Student Loan is a Proprietary Loan, the outstanding
Principal Balance of which when added to the outstanding Principal Balance
of all other Financed Loans that are Proprietary Loans does not exceed
20% of the aggregate outstanding Principal Balance of all Financed Loans;
and
(m) if such Student Loan is serviced by a Servicer for which the
reporting of financial information concerning such Servicer to the Agent is
not permitted under its Servicing Agreement, the outstanding Principal
Balance of which when added to the aggregate outstanding Principal Balance
of all other Financed Loans serviced by such Servicer or other Servicers
for which the reporting of financial information to the Agent is not
permitted under their Servicing Agreements shall not exceed 10% of the
aggregate outstanding Principal Balance of all Financed Loans.
"ERISA means the U.S. Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means (a) any corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as the 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 of (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.
"Event of Bankruptcy" shall be deemed to have occurred with respect to a
Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up, or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee sequestrator or the like
for such Person or all or substantially all of its assets, or any similar
action with respect to such Person under any law relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment of
debts, and such case or proceeding shall continue undismissed, or unstayed
and in effect, for a period of 60 consecutive days; or an order for relief
in respect of such Person shall be entered in an involuntary case under the
federal bankruptcy laws or other similar laws now or hereafter in effect;
or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect,
or shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for, such Person or for any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall
fail to, or admit in
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writing its inability to, pay its debts generally as they become due, or,
if a corporation or similar entity, its board of directors shall vote to
implement any of the foregoing.
"Event of Default" has the meaning assigned to that term in Section 6.01.
"Facility Amount" means at any time the aggregate principal amount of
outstanding Advances made to the Borrower under this Agreement.
"Facility Limit" means, at any time, $500,000,000 as such amount may be
adjusted from time to time pursuant to Section 2.03; provided, however, that at
all times on or after the termination of the Revolving Period, the "Facility
Limit" shall mean the Facility Amount.
"Federal Reimbursement Contracts" means any agreement between any
Guarantor and the Secretary of Education providing for the payment by the
Secretary of Education of amounts authorized to be paid pursuant to the Higher
Education Act, including but not necessarily limited to reimbursement of
amounts paid or payable upon defaulted Financed Loans and other student loans
Guaranteed by any Guarantor and federal Interest Subsidy Payments and Special
Allowance Payments, if applicable, to holders of qualifying student loans
guaranteed by any Guarantor.
"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 loans financed with Advances under this
Agreement that were purchased by the Borrower from a Seller pursuant to a Sale
and Purchase Agreement with the proceeds of Advances.
"Fitch" means Fitch IBCA Inc. or its successor.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"Governmental Authority" means the United States of America, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Grant" or "Granted" means to pledge, create and grant a first priority
security interest in and with regard to property free and clear of all Adverse
Claims. A Grant of Financed Loans, other assets or of any other agreement
includes all rights, powers and options (but none of the obligations) of the
granting party thereunder.
"Guarantee" or "Guaranteed" means, with respect to a Student Loan, the
insurance or guarantee by the Guarantor, in accordance with the terms and
conditions of the Guarantee Agreement, of at least the minimum required by law
of the principal of the Student Loan and the
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coverage of the Student Loan by the Federal Reimbursement Contracts providing,
among other things, for reimbursement to the Guarantor for losses incurred by it
on defaulted Student Loans insured or guaranteed by the Guarantor up to the
minimum required by law of such losses.
"Guarantee Agreements" means the Federal Reimbursement Contracts, the
Trustee Guarantee Agreement and any other similar guarantee or agreement issued
by a Guarantor to the Trustee, which pertain to Student Loans.
"Guarantee Program" means the Guarantor's student loan guarantee program
pursuant to which the Guarantor guarantees or insures Student Loans.
"Guaranteed Loan" means an Eligible Loan which is Guaranteed.
"Guarantor" means any entity authorized to guarantee Student Loans under
the Higher Education Act and with which the Trustee maintains in effect a
Guarantee Agreement.
"Higher Education Act" means Title IV, Parts B, F and G of the Higher
Education Act of 1965, as amended or supplemented from time to time, and all
regulations and guidelines promulgated thereunder.
"Indemnified Amounts" has the meaning assigned to that term in Article
VIII.
"Independent Director" means a Person who (a) is not a stockholder or other
securityholder (whether direct, indirect or beneficial), customer or supplier of
the Borrower or any of its Affiliates; (b) is not a director, officer, employee,
former employee, Affiliate, member, manager or associate of the Borrower or any
of its Affiliates (other than in its capacity as the Independent Director for
the Borrower or any of its Affiliates); (c) is not related to any Person
referred to in clauses (a) or (b); and (d) is not a trustee, conservator or
receiver for the Borrower or any of its Affiliates (other than in its capacity
as Independent Director for the Borrower or any of its Affiliates).
"Interest period" means a (a) period of one month, commencing on the first
Business Day of each month and ending on (but excluding) the first Business Day
of the immediately succeeding calendar month or (b) such other period as may be
agreed on from time to time by the Borrower and the Required Lenders. At no time
may there be more than one Interest Period outstanding, unless otherwise
approved by the Required Lenders.
"Interest Rate" means, (a) with respect to a Regular Advance, the Regular
Interest Rate and (b) with respect to a Liquidity Advance, the applicable
Liquidity Interest Rate; provided, however, that while any Event of Default
shall have occurred and be continuing, the Borrower shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Advances and other Obligations, at a rate
per annum which is equal to the rate otherwise in effect plus 2.0%.
"Interest Subsidy Payments" means the interest subsidy payments on Student
Loans received from the Secretary of Education pursuant to Section 428 of the
Higher Education Act or similar payments authorized by federal law or
regulations.
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"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 Concord, the Agent and the Liquidity Providers, and their
respective successors and assigns.
"Liabilities" means the sum of (a) the Facility Amount and (b) all accrued
Yield and Liquidity Fees applicable thereto plus (c) any accrued and unpaid
fees, including Custodian Fees, Liquidity Fees, Servicing Fees, Portfolio
Administration Fees, Trustee Fees and any other fees payable pursuant to the
Transaction Documents or the Liquidity Agreement by the Borrower.
"LIBOR" means for any Interest Period, the rate determined as of the first
day of such Interest Period for Eurodollar deposits corresponding to the number
of months in such Interest Period which appears on Telerate Page 3750 (as
defined in the International Swaps and Derivatives Associations, Inc. 1991
Interest Rate and Currency Definitions) or such other page as may replace
Telerate Page 3750. In the event that LIBOR is not so quoted for the length of
any particular Interest Period, LIBOR for such Interest Period shall be
determined by Concord or, if Concord is not the sole Lender, the Agent using an
interpolated rate for LIBOR.
"Liquidity Advances" means Advances owed to the Liquidity Providers.
"Liquidity Agreement" means the Liquidity Agreement dated as of September
30, 1998, among Concord, each of the Liquidity Providers named therein and the
Agent, as the same may be amended, restated, supplemented or otherwise modified
from time to time hereafter.
"Liquidity Facility" means, individually or collectively, (a) the Liquidity
Agreement and (b) any other such agreement entered into between Concord and any
Person providing liquidity support for the CP issued to finance the Financed
Loans.
"Liquidity Fee" means fees payable to the Liquidity Provider(s) pursuant to
the terms of the Liquidity Facility, and any other fees or expenses of the Agent
or the Liquidity Providers that the Borrower may from time to time agree to pay.
"Liquidity Interest Rate" means the yield to be paid on Liquidity Advances.
The Liquidity Interest Rate shall be equal to either (a) the sum of: (i) LIBOR
and (ii) 0.625%, or (b) the Alternate Borrowing Rate, as selected in accordance
with Section 2.02.
"Liquidity Provider" means, collectively, one or more financial
institutions having a short-term unsecured debt rating of at least "A-1"/"P-1"
by S&P and Moody's, respectively, and which are now or hereafter parties to the
Liquidity Agreement, or otherwise providing all or a portion of the Liquidity
Facility.
"Liquidity Termination Event" means the occurrence of any of the following
events: (a) any Liquidity Provider then providing liquidity to Concord has its
rating lowered below A-1 by S&P or P-1 by Moody's, unless a replacement
Liquidity Provider having ratings of at least A-1 from S&P and P-1 by ▇▇▇▇▇'▇ is
substituted within 30 days of such downgrade, (b) any
10
Liquidity Provider shall fail to honor any of its payment obligations under the
Liquidity Agreement, or (c) the Liquidity Agreement shall cease for any reason
to be in full force and effect or be declared null and void.
"Loan Valuation Percentage" as determined by the Valuation Agent means
(a)(i) the present value of the Net Revenues (using the Portfolio
Characteristics and the Valuation Report Assumptions) divided by (ii) the
outstanding Principal Balance of Financed Loans, plus (b) 100%.
"Material Adverse Effect" means a material adverse effect on:
(a) the ability of the Borrower to perform its obligations under this
Agreement or any other Transaction Document; or
(b) the status, existence, perfection, priority or enforceability of
the interest in the Pledged Collateral.
"Maturity Date" means the specified maturity of each Advance, which, unless
otherwise extended by mutual agreement between the Required Lenders and the
Borrower, shall be the last day of the applicable Interest Period.
"Maximum Advance Percentage" means the rate, stated as percentage, of the
aggregate outstanding amount of the Eligible Loans financed or to be financed,
as determined by the Valuation Agent, all as calculated by the Valuation Agent
pursuant to Article III of the Valuation Agent Agreement. The Maximum Advance
Percentage determined pursuant to any Advance Percentage Calculation Report with
respect to any Financed Loans shall remain in effect with respect to such
Financed Loans until the Borrowing Date immediately following the delivery of
the next Valuation Report delivered pursuant to Section 5.09.
"Minimum Asset Coverage Requirement" means an Asset Coverage Ratio of
100.25%.
"Monthly Report" means a report, in substantially the form of Exhibit D,
furnished by the Borrower to the Agent, the Valuation Agent and the Required
Lenders.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or its successor.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding five years contributed to by the Borrower or any ERISA
Affiliate on behalf of its employees.
"NELNET" means National Education Loan Network, Inc., a Nevada corporation.
"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 Lenders, the Trustee and/or any other Person, arising under or
in connection with this Agreement or any other Transaction Document or the
transactions contemplated hereby or thereby and shall include, without
limitation, all liability for principal of and interest on the Advances, closing
fees, unused line
11
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, Guarantors and the Department.
"Outstanding Balance" means, with respect to a Financed Loan on any day,
the aggregate amount (including outstanding principal and accrued and unpaid
interest) owed by the Obligor thereunder as of the close of business on the
prior Business Day.
"Permitted Investments" means (a) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of no more than 90 days from the date
of acquisition; (b) time deposits and certificates of deposit having maturities
of no more than 90 days from the date of acquisition, maintained with or issued
by any commercial bank having capital and surplus in excess of $500,000,000 and
having a short-term rating not less than "A-1" or the equivalent thereof from
S&P and, if rated by Fitch, not less than "F-1" or the equivalent thereof from
Fitch; (c) repurchase obligations for underlying securities of the types
described in clauses (a) or (b) above with a term of not more than ten days and
maturing no later than 90 days after the date of acquisition; (d) commercial
paper (other than CP) maturing within 90 days after the date of acquisition and
having a rating of not less than "A-1" or the equivalent thereof from S&P and if
rated by Fitch, not less than "F-1" or the equivalent thereof from Fitch; (e)
freely redeemable shares in money market funds having a rating of "AAA-m" or
"AAAM-G" from S&P and, if rated by Fitch, "AAA" from Fitch; and (f) any other
investment approved in writing by the Required Lenders.
"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 2.11 hereof.
"PLUS/SLS" means a Student Loan originated under the authority set forth in
Section 428A or B (or a predecessor section thereto) of the Higher Education Act
and shall include Student Loans designated as "ALAS Loans" or "SLS Loans," as
defined, under the Higher Education Act.
"Portfolio Administration Fee" means, for each Calculation Period, a per
annum fee payable monthly in arrears equal to 0.45% on the average outstanding
principal balance of the Financed Loans during such Calculation Period and paid
to the Portfolio Administrator.
"Portfolio Administrator" means NELNET or its successors and assigns.
"Principal Balance" means, with respect to any Student Loan, any Financed
Loan and any specified date, the original principal amount of such Student Loan
or Financed Loan, plus capitalized interest thereon, if any, minus prior
payments of principal by or on behalf of the Obligor of such Student Loan or
Financed Loan as of such date.
12
"Proprietary Institution" means a for-profit vocational school, including
a proprietary institution.
"Proprietary Loan" means a loan made to or for the benefit of a student
attending a Proprietary Institution.
"Pro Rata Share" means with respect to any Lender at any time, a fraction
(expressed as a percentage) the numerator of which is the outstanding principal
balance of the Advances owing to such Lender and the denominator of which is
the outstanding principal balance of all Advances outstanding under this
Agreement. As of the date of this Agreement and at all times prior to any
drawing by Concord under the Liquidity Agreement, the Pro Rata Share of Concord
shall be 100%.
"Records" means 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 Financed Loans or otherwise in respect of the Pledged Collateral.
"Regular Interest Rate" means LIBOR plus 0.10%.
"Regular Advances" means Advances owed to Concord.
"Regulatory Change" means, relative to any Affected Party:
(a) any change after the date of this Agreement in (or the adoption,
implementation, change in phase-in or commencement or effectiveness of)
any:
(i) United States federal or state law or foreign law applicable
to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to such
Affected Party of (A) any court, governmental authority charged with
the interpretation or administration of any law referred to in clause
(a)(i) or of (B) any fiscal, monetary or other authority having
jurisdiction over such Affected Party; or
(iii) generally accepted accounting principles or regulatory
accounting principles applicable to such Affected Party and affecting
the application to such Affected Party of any law, regulation,
interpretation, directive, requirement or request referred to in
clause (a)(i) or (a)(ii) above; or
(b) any change after the date of this Agreement in the application to
such Affected Party of any existing law, regulation, interpretation,
directive, requirement, request or accounting principles referred to in
clause (a)(i), (a)(ii) or (a)(iii) above.
"Requested Advance Percentage" means the rate, stated as a percentage, of
the aggregate Principal Balance of the Eligible Loans to be financed by an
Advance that is requested by the Borrower, not to exceed the Maximum Advance
Percentage.
13
"Required Lenders" means (a) prior to any drawing by Concord under the
Liquidity Facility, Concord, except as otherwise provided in Section 4.1(d) of
the Liquidity Agreement, (b) subsequent to any drawing by Concord under the
Liquidity Facility and written notice to the Borrower of such drawing by the
Agent, so long as any amounts are owed under this Agreement to Concord, Concord
and the Agent, except as otherwise provided in Section 4.9 of the Liquidity
Agreement, and (c) at all other times, the Agent.
"Revolving Period" means the period commencing on the Closing Date and
terminating on the earlier of (a) the Termination Date or (b) the date on which
Concord ceases to be the sole Required Lenders under this Agreement. So long as
no Event of Default or an event which with the lapse of time or the giving of
notice, or both, would constitute an Event of Default, shall have occurred and
be continuing, the Revolving Period may be reinstated at any time prior to the
occurrence of the Termination Date with the consent of the Required Lenders.
"Rollover Advance" means an Advance the funding of which would not and
does not have the effect of increasing the Facility Amount.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill (or
its predecessor or successors in interest) if an so long as it has rated and is
continuing to rate commercial paper notes of Concord, and otherwise means such
other nationally recognized statistical rating organization as may be
designated by Concord.
"Sale and Purchase Agreements" means a student loan purchase agreement
between the Borrower and a Seller, substantially in the form attached hereto as
Exhibit A, for the purchase of Eligible Loans.
"Schedule of Purchased Student Loans" means a listing of certain Financed
Loans of the Borrower delivered to and held by the Trustee pursuant to Section
5.01(c)(vii) (which Schedule may be in the form of microfiche or computer file
or other medium acceptable to the Trustee), as from time to time amended,
supplemented, or modified, which Schedule shall be the master list of all
Financed Loans then compromising a part of the Pledged Collateral pursuant to
this Agreement.
"Secretary of Education" or "Secretary" means the Commissioner of
Education and the Secretary of the United States Department of Education (who
succeeded to the functions of the Commissioner of Education pursuant to the
Department of Education Organization Act), or any other officer, board, body,
commission or agency succeeding to the functions thereof under the Higher
Education Act.
"Secured Creditors" means the Trustee and the Lenders.
"Sellers" means any entity which sells Eligible Loans to the Borrower
pursuant to the terms of a Sale and Purchase Agreement; including, but not
limited to, NEBHELP, INC. and Union Bank and Trust Company.
"Servicer" means, individually or collectively, (a) UNIPAC Service
Corporation, (b) Great Lakes Higher Education Servicing Corporation, and (c)
any other organization with
14
which the Borrower has entered into a Servicing Agreement with respect to
Eligible Loans, with the prior written approval of the Required Lenders and the
Agent.
"Servicer Event of Default" means (a) any Servicer shall fail in any
material respect to perform or observe any term, covenant or agreement that is
an obligation of such Servicer under a Servicing Agreement (other than as
referred to in clause (b) below) and such failure continues unremedied for 10
days after (i) written notice thereof shall have been given by the 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 a Servicing Agreement when due and such failure shall
remain unremedied for three Business Days; (c) any representation or warranty
made or deemed to be made by any Servicer (or any of its officers) under or in
connection with a Servicing Agreement or any information or report delivered
pursuant to a Servicing Agreement shall prove to have been false or incorrect
in any material respect when made; (d) an Event of Bankruptcy shall have
occurred with respect to a Servicer; (e)(i) any litigation (including, without
limitation, derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by the Borrower to the Lenders 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), in the opinion of the
Agent and the Required Lenders, has a material adverse effect on the ability of
such Servicer to perform its obligations under a Servicing Agreement.
"Servicing Agreement" means, individually or collectively, (a) the Servicing
Agreement dated September 30, 1998, between the Borrower and UNIPAC Service
Corporation, (b) the Servicing Agreement dated as of September 30, 1998,
between Great Lakes Higher Education Servicing Corporation and the Borrower,
and (c) with the prior written consent of the Required Lenders and the Agent,
any other servicing agreement between the Borrower and any Servicer, as any
such agreement may be amended or supplemented from time to time with the prior
written consent of the Agent and the Required Lenders, 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 a Servicing
Agreement, including legal fees and expenses.
"Settlement Date" means the first Business Day of each month.
"Solvent" means, at any time, a condition under which:
(a) the fair value and present fair saleable value of such Person's total
assets is, on the date of determination, greater than such Person's total
liabilities (including contingent and unliquidated liabilities) at such time;
(b) the fair value and present fair saleable value of such Person's
assets is greater than the amount that will be required to pay such Person's
probable liability on its existing debts as they become absolute and matured
("debts," for this purpose, includes
15
all legal liabilities, whether matured or unmatured, liquidated or
unliquidated, absolute, fixed, or contingent);
(c) such Person is and shall continue to be able to pay all of its
liabilities as such liabilities mature; and
(d) such Person does not have unreasonably small capital with which to
engage in its current and in its anticipated business.
For purposes of this definition:
(i) the amount of a Person's contingent or unliquidated liabilities at
any time shall be that amount which, in light of all the facts and
circumstances then existing, represents the amount which can reasonably be
expected to become an actual or matured liability;
(ii) the "fair value" of an asset shall be the amount which may be
realized within a reasonable time either through collection or sale of such
asset at its regular market value;
(iii) the "regular market value" of an asset shall be the amount which
a capable and diligent business person could obtain for such asset from an
interested buyer who is willing to purchase such asset under ordinary
selling conditions; and
(iv) the "present fair saleable value" of an asset means the amount
which can be obtained if such asset is sold with reasonable promptness in
an arms-length transaction in an existing and not theoretical market.
"Special Allowance Payments" means special allowance payments authorized
to be made by the Secretary of Education by Section 438 of the Higher Education
Act, or similar allowances authorized 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, a ▇▇▇▇▇▇▇▇
Loan or a Proprietary Loan.
16
"Student Loan Notes" means the promissory notes or other writings evidencing
the Student Loans.
"Termination Date" means the earliest to occur of (a) September 30, 2003,
(b) such other date as may be agreed in writing by the Agent and the Required
Lenders and the Borrower, (c) the date of termination of the Facility Limit
pursuant to Section 2.03, (d) the date of the declaration or automatic
occurrence of the Termination Date pursuant to Article VI, (e) failure by the
Servicer to perform or observe any material term, covenant or agreement under
the Servicing Agreement and such failure shall remain unremedied for three
Business Days, unless such Servicer is replaced by either the Borrower or the
Required Lenders in accordance with the provisions of the related Servicing
Agreement, (f) if Concord shall be owed any Advances under this Agreement on
such date, the date on which the Liquidity Facility is terminated or expires or
(g) the occurrence of any Liquidity Termination Event.
"Transaction Documents" means, collectively, this Agreement, the Valuation
Agent Agreement, all Servicing Agreements, all Custodian Agreements, all Sale
and Purchase Agreements, all Guarantee Agreements, the Agreement and
Acknowledgement and all other instruments, documents and agreements executed in
connection with any of the foregoing.
"Treasury Regulations" means any regulations promulgated by the Internal
Revenue Service interpreting the provisions of the Code.
"Trigger Rate" means, as to any Guarantor, such Guarantor's default rate as
defined in Section 428(c)(1)(B) of the Higher Education Act.
"Trust Estate" means all of the Pledged Collateral of the Borrower pledged
and assigned to the Trustee for the benefit of the Secured Creditors pursuant
to this Agreement.
"Trustee" means Norwest Bank Minnesota, National Association, Minneapolis,
Minnesota, and its successor or successors and any other corporation which may
at any time be substituted in its place pursuant to this Agreement.
"Trustee Fees" means the fees, expenses and charges of the Trustee,
including legal fees and expenses.
"Trustee Guarantee Agreement" means, collectively, the Lender Agreements for
Guarantee of Student Loans with Federal Reinsurance between the Trustee and the
Nebraska Student Loan Program, Inc., as amended, the Agreement to Guarantee
Loans between the Trustee and United Student Aid Funds, as amended, the
Certificate for Comprehensive Insurance between the Trustee and the Colorado
Student Loan Program, as amended, the Student Loan Guaranty between the Trustee
and Great Lakes Higher Education Guaranty Corporation, as amended, the Lender
Agreement for Guarantee of Student Loans with Federal Reinsurance between the
Trustee and Education Assistance Corporation, as amended, the Lender
Participation Agreement and Contract of Insurance between the Trustee and
Kentucky Higher Education Assistance Authority, as amended, the Holder
Agreement for Payment on Guarantee of Student Loans with Federal Insurance
between the Trustee and Educational Credit Management Corporation, as amended,
the Agreement to Endorse Loans between the Trustee and Oklahoma Guaranteed
Student Loan Program, as amended, the Lender Agreement between
17
the Trustee and Texas Guaranteed Student Loan Program, as amended, the Agreement
to Guarantee Loans for Secondary Market between the Trustee and Student Loan
Guarantee Foundation of Arkansas, Inc., as amended, and other guarantee or
agreement issued by any Guarantor to the Trustee, and any amendment thereto
entered into in accordance with the provisions thereof and hereof.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"United States" means the United States of America.
"Valuation Agent" means ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated, or any other
entity appointed as Valuation Agent by the Borrower and approved by the Agent
and the Required Lenders, which approval shall not be unreasonably withheld.
"Valuation Agent Agreement" means the Valuation Agent Agreement dated
September 30, 1998, among the Borrower, Concord and the Valuation Agent and any
other valuation agent agreement in the form attached hereto as Exhibit B among
the Borrower, Concord and the Valuation Agent, as any such agreement may be
amended or supplemented from time to time with the prior written consent of the
Required Lenders and the Agent.
"Valuation Agent Fee" means for each Calculation Period, a per annum fee
payable monthly in arrears equal to 0.025% on the average outstanding principal
balance of the Advances during such Calculation Period.
"Valuation Date" means the day either (a) within 30 days after the
Valuation Agent's receipt of a written request for a Valuation Report from any
of the Agent, Concord or the Borrower or (b) not later than the fourth Business
Day preceding each April 30, July 31, October 31 or January 31.
"Valuation Report" means a report furnished by the Valuation Agent to the
Agent, the Required Lenders, the Trustee and the Borrower pursuant to Section
5.09(a) hereof, the form of which is attached as Exhibit B to the Valuation
Agreement.
"Yield" means, for all Advances allocated to any Interest Period during
any such Interest Period, the product of
IRT x C x ED
------------
360
where:
C = the principal amount of the Advances allocated to such Interest
Period,
ED = the actual number of days elapsed during such Interest Period,
and
IRT = the Interest Rate for such Interest Period;
18
provided, however that (a) no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the maximum permitted
by applicable law and (b) Yield shall not be considered paid by any
distribution if at any time such distribution is rescinded or otherwise
returned by the Required Lenders to the Borrower or any other Person for any
reason.
SECTION 1.02. OTHER TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. All terms used in Article 9
of the UCC in the State of Illinois, and not specifically defined herein, are
used herein as defined in such Article 9.
SECTION 1.03. COMPUTATION OF TIME PERIODS. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding."
ARTICLE II
THE FACILITY
SECTION 2.01. BORROWINGS.
(a) On the terms and conditions hereinafter set forth, the Lenders
severally agree to make Advances to 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 Facility Limit in effect at the
time of such Advance. In addition to the other terms and conditions hereinafter
set forth, under no circumstances shall Concord be obligated or committed to
make any Advance (i) unless the amount available for drawing by Concord under
the Liquidity Agreement from Liquidity Providers rated at least "A-1" and "P-1"
by S&P and Moody's, respectively, shall equal or exceed the aggregate amount of
the principal and interest due on the Advances then outstanding (including any
requested Advance) to Concord plus accrued and unpaid interest owing or which
will be owing at the end of all then outstanding Interest Periods (and the
Interest Period with respect to any requested Advance) on such Advances, (ii) if
Concord is unable for any reason to raise funds in the United States commercial
paper market to make such Advances, (iii) if Concord, in good faith, determines
there is a general disruption in the United States commercial paper market or
Concord's ability to access the commercial paper market or (iv) if any Liquidity
Provider fails to honor its payment obligations under the Liquidity Facility.
Within the limits set forth in this Section 2.01 and the other terms and
conditions of this Agreement, during the Revolving Period, the Borrower may
borrow, prepay and reborrow under this Section 2.01. In addition, the aggregate
principal amount of any Advance, which is not a Rollover Advance, during the
Revolving Period shall not exceed the result of (x) the aggregate Principal
Balance of Eligible Loans to be financed by such Advance, multiplied by (y) the
Requested Advance Percentage related thereto, plus accrued interest thereon. All
Advances hereunder shall be denominated in and be payable in United States
dollars. All then outstanding Advances and other Obligations hereunder shall be
due and payable on September 30, 2003 or such earlier date as provided in
Article VI hereof.
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(b) Each Lender's obligations under this Section 2.01 are several and the
failure of any Lender to make available its Pro Rata Share of any requested
Advance shall not relieve any other Lender of its obligations hereunder or
obligate any other Lender to honor the obligations of any defaulting Lender.
Notwithstanding anything contained in this Agreement to the contrary, no Lender
shall be obligated or committed to fund any portion of any Advance in excess of
its Pro Rata Share thereof.
SECTION 2.02. THE INITIAL BORROWING AND SUBSEQUENT BORROWINGS.
(a) Any Advances made by the Lenders during the Revolving Period, will be
made on the first Business Day of a calendar month (unless otherwise agreed by
the Borrower and the Required Lenders) at the request of the Borrower, subject
to and in accordance with the terms and conditions of Section 2.01 and this
Section 2.02. After the Revolving Period, the Lenders shall make Advances on
the first Business Day of any calendar month (unless otherwise agreed by the
Borrower and the Required Lenders) at the request of the Borrower, subject to
and in accordance with the terms and conditions of Section 2.01 and this
Section 2.02, solely to the extent necessary to refund any maturing Advances.
(b) Subject to satisfaction of the conditions precedent set forth in this
Agreement and, if the Advance to be made is a Liquidity Advance, to satisfaction
of the conditions precedent in the Liquidity Agreement, the Borrower may request
an Advance hereunder by giving written notice to the Lenders in the form of
Exhibit C hereto not later than 12:00 noon, Chicago time, at least three
Business Days' prior to the proposed date of such Borrowing. Each such notice
shall specify (i) the aggregate amount of such Borrowing, which shall be in an
amount equal to or greater than $1,000,000, (ii) the date of such Borrowing
(which may only be the first Business Day of a calendar month unless otherwise
agreed by the Borrower and the Required Lenders), (iii) if the Advance to be
made is a Liquidity Advance, the requested applicable Liquidity Interest Rate
for such Borrowing and (iv) the Requested Advance Percentage. On the date of
such Borrowing, each Lender shall, upon satisfaction of the applicable
conditions set forth in this Agreement, make available to the Borrower in same
day funds, their respective Pro Rata Share of the amount of such Borrowing by
payment to the account which the Borrower has designated in writing. Unless
otherwise agreed by the Required Lenders, the duration of all Interest Periods
shall be one (1) calendar month.
(c) Except as otherwise provided in Article VIII of this Agreement,
principal and accrued Yield on the Advances shall be payable solely from the
Pledged Collateral and from payments made or owing pursuant to the "Collateral
Calls" made in accordance with Section 5.12. The Advances plus accrued Yield
will be payable in full so as received by the Lenders no later than 10:00 a.m.
(Chicago time) on the applicable Maturity Date and may not be prepaid in whole
or in part on any day other than the applicable Maturity Date without the
consent of the Required Lenders.
(d) If as a result of a draw under the Liquidity Agreement the Agent shall
become a Lender on any day other than the first day of an Interest Period, the
Liquidity Interest Rate applicable to the Agent's Advances for the remainder of
such Interest
20
Period shall be (i) the Alternate Borrowing Rate plus 2.0% if such draw is
the result of the occurrence of an Event of Default hereunder or the Agent
shall not be given notice of such draw request not later than 12:00 noon,
Pittsburgh time, at least three Business Days prior to the date of such
draw, or (ii) the sum of (A) LIBOR and (B) 0.625% if such draw is not the
result of the occurrence of an Event of Default hereunder and provided that
the Agent shall be given written notice of such draw request not later than
12:00 noon, Pittsburgh time, at least three Business Days prior to the date
of such draw, unless otherwise agreed to by the Agent.
SECTION 2.03. TERMINATION OR REDUCTION OF THE FACILITY LIMIT. The Borrower
may, upon at least 60 days' written notice to the Required Lenders, (i) at any
time, but only after the first anniversary of the Closing Date or (ii) at any
time prior to the first anniversary of the Closing date if the Lenders shall
fail to respond (whether affirmatively or negatively) to any written request for
a waiver, amendment or modification to any of the prohibitions set forth in any
of Section 5.01(j), 5.04, 5.06 or 5.07 within 30 days after Concord's receipt of
such request, terminate in whole or reduce in part the portion of the Facility
Limit that exceeds the outstanding Advances; provided, however, that each
partial reduction of the Facility Limit shall be in an aggregate amount equal to
$5,000,000 or an integral multiple thereof.
SECTION 2.04. [INTENTIONALLY OMITTED.]
SECTION 2.05. COLLECTION ACCOUNT. On or prior to the date hereof, the
Borrower shall establish and maintain, or cause to be established and
maintained, the Collection Account. The Collection Account shall be maintained
as a segregated trust account in the trust department of the Trustee, and shall
be under the sole dominion and control of, and in the name of, the Trustee. Any
Collections received by the Borrower, the Trustee, the student loan depositaries
or co-depositaries, the Custodians, the Sellers or the Servicers, or any agent
thereof, as the case may be, are to be transmitted to the Collection Account
within two Business Days or receipt. The Borrower shall direct each Servicer,
Seller, Custodian, student loan depository or co-depositories, or agent thereof,
to transmit any collections it receives with respect to the Financed Loans
directly to the Trustee for deposit to the Collection Account. Funds on deposit
in the Collection Account may be invested from time to time in Permitted
Investments in accordance with Section 2.09. The Trustee shall apply funds on
deposit in the Collection Account as described in Section 2.06.
SECTIONS 2.06. TRANSFERS FROM COLLECTION ACCOUNT.
(a) On each date on which any principal or interest is due with
respect to any Advance, the Trustee shall promptly apply moneys held in the
Collection Account to pay to the Lenders the accrued and unpaid Yield and
principal amounts then due and owing; provided, however, that during the
Revolving Period, if more than $10,000,000 from either the Collection
Account or the Cash Reserve Account shall be applied at the end of any one
Interest Period to repay the principal balance of the Advances, a fee of
1/12th of 0.10% shall be applied to all such principal payments over
$10,000,000 made at the end of any such Interest Period.
21
(b) On each Calculation Date, the Borrower shall direct the Portfolio
Administrator to prepare the Monthly Report and shall provide or cause to be
provided to the Portfolio Administrator all information necessary or appropriate
to accurately prepare such Monthly Report, all calculations, unless otherwise
specified, to be made as of the end of the current Calculation Period, and cause
the Portfolio Administrator to forward such Monthly Report to the Trustee, the
Agent, the Valuation Agent and the Required Lenders.
(c) The Trustee, on each Settlement Date, shall apply the moneys held by
the Trustee in the Collection Account, in the following amounts and priority:
(i) pay as directed by the Borrower, an amount equal to the
estimated taxes owed by the Borrower that are payable prior to the next
Settlement Date and not previously paid, which relate to the net income of the
Borrower realized on the Financed Loans and other assets in the Trust Estate, as
certified by the Portfolio Administrator;
(ii) pay to each Servicer and Custodian an amount equal to the
Servicing Fee and Custodian Fee which is accrued and unpaid as of the close of
business on the immediately preceding Calculation Period, as certified by the
Portfolio Administrator;
(iii) pay to the Lenders an amount equal to the accrued and
unpaid Yield, principal and all other Obligations, net of any Rollover
Advances, in each case, due and owing as of such Settlement Date; provided,
however, that during the Revolving Period, if more than $10,000,000 from either
the Collection Account or the Cash Reserve Account shall be applied at the end
of any one Interest Period to repay the principal balance of the Advances, a
fee of 1/12th of 0.10% shall be applied to all such principal payments over
$10,000,000 made at the end of any such Interest Period;
(iv) pay to the Liquidity Providers the Liquidity Fee which is
accrued and unpaid as of the close of business on the current Calculation
Period due and owing as of such Settlement Date;
(v) pay fees and expenses which are accrued and unpaid as of
the close of business on the immediately preceding Calculation Period with
respect to the Financed Loans (as certified by the Portfolio Administrator or
the Borrower);
(vi) pay to the Trustee an amount equal to the Trustee Fee which
is accrued and unpaid as of the close of business on the immediately preceding
Calculation Period;
(vii) transfer to the Cash Reserve Account the amount, if any,
necessary to restore the Cash Reserve Account to the Cash Reserve Requirement;
22
(viii) pay to the Portfolio Administrator the Portfolio
Administration Fee which is accrued and unpaid as of the close of
business on the current Calculation Period, as certified by the
Portfolio Administrator;
(ix) pay to the Valuation Agent the Valuation Agent Fee
which is accrued and unpaid as of the close of business on the current
Calculation Period, as certified by the Portfolio Administrator; and
(x) on the Settlement Date immediately following each April
30, July 31, October 31 or January 31, if the Asset Coverage Ratio is
greater than 101.25% and any transfer hereunder will not result in an
Event of Default or require a collateral call pursuant to any
provision contained in this Agreement, transfer to the Borrower or any
other Person as directed by the Borrower (by wire transfer as directed
by the Borrower), any amounts calculated pursuant to the provisions of
Exhibit E hereto the form of which shall not be changed or amended
without the prior written consent of the Agent and the Required
Lenders.
(d) Any moneys allocated to the payment of Trustee Fees, Liquidity
Fees, Valuation Agent Fees, Portfolio Administration Fees, Servicing Fees,
Custodian Fees, Advances, Yield on Advances and other Obligations pursuant
to this Section 2.06 shall be transferred to the applicable payee, to the
extent such Obligations are then due and payable. The Trustee shall make
the foregoing transfers in accordance with this Section 2.06.
SECTION 2.07. CASH RESERVE ACCOUNT. On or prior to the date hereof, the
Borrower shall establish and maintain, or cause to be established and
maintained, the Cash Reserve Account. The Cash Reserve Account shall be
maintained in a segregated trust account in the trust department of the Trustee
or another commercial bank designated by the Trustee, and shall be under the
sole dominion and control of, and in the name of, the Trustee. The Cash
Reserve Requirement shall be deposited to the Cash Reserve Account from
proceeds of the Initial Borrowing and additional amounts shall be deposited to
the Cash Reserve Account pursuant to Section 2.06(c)(vii) hereof. Funds on
Deposit in the Cash Reserve Account may be invested from time to time in
Permitted Investments in accordance with Section 2.09. The Trustee shall apply
funds on deposit in the Cash Reserve Account as described in Section 2.08.
SECTION 2.08. TRANSFERS FROM THE CASH RESERVE ACCOUNT. To the extent there
are insufficient moneys in the Collection Account to pay the following amounts
in accordance with the provisions of Section 2.06, the Trustee shall transfer
moneys held by the Trustee in the Cash Reserve Account, to the extent available
for distribution on the specified day, in the following amounts and priority:
(a) On each date on which any principal or interest is due with
respect to any Advance, the Trustee shall promptly apply moneys held in the
Cash Reserve Account to pay to the Lenders the accrued and unpaid Yield and
principal amounts then due and owing; provided, however, that during the
Revolving Period, if more than $10,000,000 from either the Collection Account
or the Cash Reserve Account shall be applied at the end of any one Interest
Period to repay the principal balance of the Advances, a fee of
23
l/12th of 0.10% shall be applied to all such principal payments over
$10,000,000 made at the end of any such Interest Period; and
(b) on any Settlement Date, to the Collection Account for
the payment of accrued and unpaid fees and expenses described in
Section 2.06(c)(i) through (vi).
SECTION 2.09. MANAGEMENT OF COLLECTION ACCOUNT AND CASH RESERVE
ACCOUNT. All funds held in the Collection Account and the Cash Reserve Account
(or any subaccount thereof), including investment earnings thereon, shall be
invested at the direction of the Borrower 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 Cash Reserve Account; provided, however, that from and after
the Termination Date or otherwise upon the occurrence and during the continuance
of any Event of Default the Required Lenders shall have the sole right to
restrict the maturities of any investments held in the Collection Account and/or
the Cash Reserve Account and to direct the withdrawal of any such investments
for the purposes of paying the Obligations, including the principal on the
Advances. All investment earnings (net of losses) on such Permitted Investments
shall be credited to and retained in the Collection Account or the Cash Reserve
Account, as the case may be.
SECTION 2.10. PLEDGED COLLATERAL ASSIGNMENT OF THE TRANSACTION
DOCUMENTS. To secure the prompt and complete payment when due of the Obligations
and the performance by the Borrower of all of the covenants and obligations to
be performed by it pursuant to this Agreement and each other Transaction
Document, the Borrower hereby assigns to the Trustee, and Grants to the Trustee
a security interest, in each case, for the benefit of the Secured Creditors in
accordance with their interests, in all of the Borrower's right and title to and
interest in (but not the obligations of) the Transaction Documents. The Borrower
confirms and agrees that the Trustee shall have, following an Event of Default,
the sole right to enforce the Borrower's rights 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 2.11. GRANT OF A SECURITY INTEREST. To secure the prompt
and complete payment when due of the Obligations and the performance by the
Borrower of all of the covenants and obligations to be performed by it pursuant
to this Agreement and each other Transaction Document, the Borrower hereby
Grants to the Trustee on behalf of the Secured Creditors (and their respective
successors and assigns), a security interest in all of the Borrower's right,
title and interest in and to all of the following property and interests in
property (collectively, the "Pledged Collateral"), whether tangible or
intangible and whether now owned or existing or hereafter arising or acquired
and wheresoever located:
(a) all Financed Loans;
(b) all revenues and recoveries of principal from
Financed Loans, including all borrower payments and reimbursements of
principal and accrued interest on default claims received from any
Guarantor;
24
(c) any other Collections, funds and accrued earnings
thereon held in the various funds and accounts created under this
Agreement, including the Collection Account and the Cash Reserve
Account;
(d) all rights and remedies (but none of the obligations)
under each of the Transaction Documents;
(e) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment
of such Financed Loans, whether pursuant to the contract related to
such Financed Loan or otherwise;
(f) all Records relating to such Financed Loans; and
(g) all proceeds of any of the foregoing.
SECTION 2.12. EVIDENCE OF DEBT. Each Lender shall maintain a loan
account (the "Loan Account") on its books in which shall be recorded (a) all
Advances owed to such Lender by the Borrower pursuant to this Agreement, (b) all
payments made by the Borrower on all such Advances and (c) all appropriate
debits and credits as provided in this Agreement including, without limitation,
all fees, charges, expenses and interest. All entries in the Loan Account shall
be made in accordance with such Lender's customary accounting practices as in
effect to from time to time. The entries in the Loan Account shall be
conclusive and binding for all purposes, absent manifest error. Any failure to
so record or any errors in doing so shall not, however, limit or otherwise
affect the obligation of the Borrower to pay any amount owing with respect to
the Loans or any of the other Obligations.
SECTION 2.13. SPECIAL PROVISIONS GOVERNING ADVANCES. The Borrower
shall indemnify each Lender, upon written request (which request shall set forth
in reasonable detail the basis for requesting such amounts and which shall,
absent manifest error, be presumed correct and binding upon all parties hereto),
for losses, expenses and liabilities (including, without limitation, any loss
(including interest paid) sustained by it in connection with the liquidation or
re-employment of funds acquired to fund or maintain the Advances), that such
Person may sustain: (a) if for any reason other than an act, default or omission
by the Lenders (of any of them) a borrowing of any Advance does not occur on a
date specified therefor; (b) if the Borrower elects, or is required by reason of
a breach by the Borrower of this Agreement, to prepay any Advance on a date that
is not the last day of the Interest Period applicable to that Advance; or (c) as
a consequence of any other default by the Borrower to repay its Advances when
required by the terms of this Agreement. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be payable on
demand after receipt by the Borrower thereof.
SECTION 2.14. 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 the Borrower shall be
made, if to Concord, directly to the Concord Account, and if to any other
Lender, to the Agent for the account of such Lender at the Agent's Payment
Office in Dollars. Such payments shall be made in immediately available funds so
as to be received by the Lenders no later than 10:00 a.m., Chicago time, on the
date specified herein. Payments shall be applied first against interest amounts
then due and unpaid in
25
respect of any Advance, second, after all such interest has been paid in full,
against fees then due and unpaid hereunder, and third, after all such interest
and fees have been paid in full, against any principal amounts then due and
unpaid in respect of any Advance. Any payment which is received by any Lender
later than 10:00 a.m., Chicago time, shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall continue to
accrue.
SECTION 2.15. 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 the Trustee and each Lender
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 2.16. SHARING OF PAYMENTS, ETC. If, other than as expressly
provided elsewhere herein, any Lender shall obtain on account of the Advances
owed to it any payment (whether voluntary, involuntary, through the exercise of
any right of set-off or otherwise) in excess of its Pro Rata Share (or other
share contemplated hereunder), such Lender shall immediately (a) notify the
Agent of such fact, and (b) purchase from the other Lenders such participations
in the Advances made by them as shall be necessary to cause such purchasing
Lender to share the excess payment pro rata (based on the Pro Rata Share of each
Lender) with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Lender, such purchase
shall to that extent be rescinded and each other Lender shall repay to the
purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender's ratable share (according to the proportion of (i)
the amount of such paying Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender 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 Lender were the direct creditor of the Borrower in the amount
of such participation. The Agent will keep records (which shall be conclusive
and binding in the absence of manifest error) of participations purchased under
this Section 2.16 and will in each case notify the Lenders following any such
purchases or repayments.
SECTION 2.17. YIELD PROTECTION.
(a) If any Regulatory Change (including a change to
Regulation D under the Securities Exchange Act of 1933, as amended)
occurring after the date hereof:
(i) shall subject any Affected Party to any tax,
duty or other charge with respect to any portion of the
Obligations owned or funded by it or with respect to its
Unused Commitment (as defined in the Liquidity Agreement)
(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
26
payments to the Affected Party of any yield on or reductions
to the Obligations owed to or with respect to the Obligations
funded in whole or in part by it or any other amounts due
under this Agreement in respect of any portion of the
Obligations owned by or funded by it or its obligations or
rights, if any, to fund Advances or in respect of its Unused
Commitment (except for changes in the rate of tax on the
overall net income or gross receipts of such Affected Party
imposed by the United States of America, by the jurisdiction
in which such Affected Party's principal executive office is
located and, if such Affected Party's principal executive
office is not in the United States of America, by the
jurisdiction where such Affected Party's principal office in
the United States is located); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed by
the Federal Reserve Board, but excluding any reserve included
in the determination of yield on the Obligations), special
deposit or similar requirement against assets of any Affected
Party, deposits or obligations with or for the account of any
Affected Party or with or for the account of any Affiliate (or
entity deemed by the Federal Reserve Board to be an affiliate)
of an Affected Party, or credit extended to any Affected
Party; or
(iii) shall change the amount of capital
maintained or required or requested or directed to be
maintained by any Affected Party;
(iv) shall impose any other condition affecting
any portion of the Obligations owned or funded in whole or in
part by any Affected Party, or its obligations or rights, if
any, to pay any portion of the Unused Commitment or to provide
funding therefor; or
(v) shall change the rate for, or the manner in
which the Federal Deposit Insurance Corporation (or any
successor thereto) assesses deposit insurance premiums or
similar charges;
and the result of any of the foregoing is or would be:
(A) to increase the cost to or to impose a
cost on an Affected Party funding or making or
maintaining any portion of the Obligations, or any
purchases, reinvestments or loans or other extensions
of credit under the Liquidity Agreement or any other
Transaction Document or any commitment of such
Affected Party with respect to the foregoing;
(B) to reduce the amount of any sum received
or receivable by an Affected Party under this
Agreement, or under the Liquidity Agreement or any
other Transaction Document with respect thereto; or
(C) in the sole determination of such
Affected Party, to reduce the rate of return on the
capital of an Affected Party as a consequence of its
obligations hereunder or under the Liquidity
Agreement or arising in
27
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, of (2) the Affected Party reasonably and
in good faith did not believe the Regulatory Change resulted in such an
additional or increased cost or such a reduction.
(b) Each Affected Party will promptly notify the
Borrower, the Required Lenders and the Agent of any event of which it
has actual knowledge which will entitle such Affected Party to any
compensation pursuant to this Section 2.17; provided, however, no
failure or delay in giving such notification shall adversely affect the
rights of any Affected Party to such compensation unless such failure
or delay results in a Material Adverse Effect.
(b) In determining any amount provided for or referred to
in this Section 2.17, an Affected Party may use any reasonable
averaging or attribution methods that it (in its sole discretion
exercised in good faith) shall deem applicable and which it applies on
a consistent basis. Any Affected Party when making a claim under this
Section 2.17 shall submit to the Borrower 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.
ARTICLE III
CONDITIONS OF BORROWINGS
SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL BORROWING. The
initial Borrowing hereunder is subject to the condition precedent that Concord
or the Agent or both, as the case may be, shall have received on or before the
date of such Borrowing the items listed in the Exhibits hereto, in form and
substance satisfactory to Concord or the Agent or both, as the case may be.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL BORROWINGS. Each
Borrowing (including the initial Borrowing) by the Borrower from any Lender
shall be subject to the further conditions precedent that:
(a) on or prior to the date of such Borrowing, the
Borrower shall have delivered to the Agent, each Required Lender and
the Trustee (i) a Advance Percentage
28
Calculation Report from the Valuation Agent and (ii) if requested by
the Agent or a Required Lender, copies of the relevant Sale and
Purchase Agreement; and
(b) on the date of such Borrowing, the following
statements shall be true, and the Borrower by accepting the amount of
such Borrowing shall be deemed to have certified that:
(i) the representations and warranties contained
in Article IV 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 Borrowing, which constitutes an Event
of Default or an event which, with the giving of notice or the
passage of time, or both, would constitute an Event of
Default;
(iii) on and as of such day, after giving effect
to such Borrowing, the Facility Amount would not exceed the
Facility Limit; and
(iv) no law or regulation shall prohibit, and no
order, judgment or decree of any federal, state or local court
or governmental body, agency or instrumentality shall prohibit
or enjoin, the making of such Advances by such Lender in
accordance with the provisions hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and
is duly qualified to do business, and is in good standing, in every
jurisdiction in which the nature of its business requires it to be so
qualified.
(b) The execution, delivery and performance by the
Borrower of this Agreement and all Transaction Documents to be
delivered by it in connection herewith or therewith, including the
Borrower's use of the proceeds of Advances, are within the Borrower's
organizational powers, have been duly authorized by all necessary
organizational action, do not contravene (i) the Borrower's Articles of
Incorporation or bylaws, (ii) any law, rule or regulation applicable to
the Borrower, (iii) any contractual restriction binding on or affecting
the Borrower or its property or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting the Borrower or its
property, and do not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect
to any of its properties (other than in favor of the Trustee for the
benefit of the Secured Creditors with respect to the Pledged
Collateral); and no transaction contemplated hereby or by the other
Transaction Documents to which it is a party requires compliance with
any bulk sales act or similar
29
law. This Agreement and the other Transaction Documents to which it is
named as a party have each been duly executed and delivered by the
Borrower.
(c) No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority is required for
the due execution, delivery and performance by the Borrower of this
Agreement or any other Transaction Document to which it is a party,
except for the filing of certain UCC financing statements, all of which
financing statements have been duly filed and are in full force and
effect.
(d) This Agreement and each other Transaction Document to
which the Borrower is a party constitute the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms, subject to (i) applicable
bankruptcy, insolvency, moratorium, or other similar laws affecting the
rights of creditors and (ii) general principals of equity, whether such
enforceability is considered in a proceeding in equity or at law.
(e) There is no pending or, to the knowledge of the
Borrower, threatened, action or proceeding affecting the Borrower
before any court, governmental agency or arbitrator that may materially
adversely affect the financial condition of the Borrower or the ability
of the Borrower to perform its obligations under each Transaction
Document to which it is a party. The Borrower is not in default with
respect to any order of any court, arbitrator or any other Governmental
Authority.
(f) No proceeds of any Advances will be used by the
Borrower to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(g) The Pledged Collateral shall, at all times, be owned
by the Borrower free and clear of any Adverse Claim except as provided
herein, and the Trustee, for the benefit of the Secured Creditors, has
a valid and perfected first priority security interest in such Pledged
Collateral. No effective financing statement or other instrument
similar in effect covering any Pledged Collateral shall at any time be
on file in any recording office except such as may be filed in favor of
the Trustee relating to this Agreement.
(h) As of the close of business on each Business Day, the
Facility Amount shall not exceed the Facility Limit on such Business
Day.
(i) No Valuation Report (to the extent that information
contained therein is supplied by the Borrower), information, exhibit,
financial statement, document, book, record or report furnished or to
be furnished by the Borrower to the Agent or any Required Lender in
connection with this Agreement is or will be inaccurate in any material
respect as of the date it is or shall be dated or (except as otherwise
disclosed to the Agent or such Required Lender 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.
30
(j) The principal place of business and chief executive
office of the Borrower and the office where the Borrower keeps all the
Records are located at the address of the Borrower referred to in
Section 9.02 or such other location as the Borrower shall have given
notice of to the Required Lenders pursuant to Section 5.10.
(k) The Borrower has no trade names, fictitious names,
assumed names or "doing business as" names or other names under which
it has done or is doing business.
(1) The Borrower is Solvent at the time of (and
immediately after) each "Advance" and each purchase of Eligible Loans
made by the Borrower.
(m) The Borrower is not an "investment company" or a
company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
(n) The Borrower has directed (or caused to be directed)
all Servicers to transmit Collections on the Financed Loans and the
other Pledged Collateral to the Trustee for deposit to the Collection
Account.
(o) All representations and warranties of the Borrower
set forth in the Transaction Documents to which it is a party are true
and correct in all material respects.
(p) Each Student Loan to be financed with the proceeds of
any Advance constitutes an Eligible Loan as of the date of such Advance
purchased from a Seller pursuant to a Sale and Purchase Agreement.
(q) The Borrower and its Affiliates have reviewed the
areas within their business and operations which could be adversely
affected by, and have developed or are developing a program to address
on a timely basis, the risk that certain computer applications used by
the Borrower or its Affiliates (or their respective material suppliers
or vendors (other than the Department), including, but not limited to,
any Servicer and the Valuation Agent) may be unable to recognize or
perform properly date-sensitive functions involving dates prior to and
after December 31, 1999 (the "Year 2000 Problem"). On the basis of the
foregoing, to the best knowledge of the Borrower, the Year 2000 Problem
will not have a Material Adverse Effect
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
SECTION 5.01. GENERAL COVENANTS.
(a) COMPLIANCE WITH LAWS; PRESERVATION OF CORPORATE
EXISTENCE. The Borrower will comply in all material respects with all
applicable laws, rules, regulations and orders and preserve and
maintain its legal existence, and will preserve and maintain its
rights, franchises, qualifications and privileges in all material
respects.
31
(b) SALES, LIENS, ETC. Except as otherwise provided
herein, the Borrower will not (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any Pledged Collateral or (ii)
create or suffer to exist any Adverse Claim upon or with respect to any
of the Borrower's assets.
(c) GENERAL REPORTING REQUIREMENTS. The Borrower will
provide to the Agent and to each Required Lender the following:
(i) as soon as available and in any event within
120 days after the end of each fiscal year of the Borrower, a
copy of the balance sheet of the Borrower and the related
statements of income, beneficial interest holders' (or
securityholders') equity and cash flows for such year, each
prepared in accordance with GAAP consistently applied and duly
certified by nationally recognized independent certified
public accountants selected by the Borrower;
(ii) as soon as possible and in any event within
five days after the occurrence of each Event of Default and
each event which, with the giving of notice or lapse of time
or both, would constitute an Event of Default, a statement of
the Borrower setting forth details of such Event of Default or
event and the action which the Borrower has taken and proposes
to take with respect thereto;
(iii) promptly following receipt thereof; to the
extent requested by the Agent or any Required Lender, copies
of all financial statements, settlement statements, portfolio
and other material reports, notices, disclosures, certificates
and other written material delivered or made available to the
Borrower by any Person pursuant to the terms of any
Transaction Document;
(iv) promptly following the Agent's or any
Required Lender'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 Agent or any Required Lender may from time
to time reasonably request;
(v) with respect to each Guarantor, promptly
after receipt thereof as made available to the Borrower after
request therefor, copies of any audited financial statements
of such Guarantor certified by an independent certified public
accounting firm and a written statement setting forth the
Trigger Rate of such Guarantor and the source of the
Borrower's representation thereof;
(vi) with respect to each Servicer and promptly
after receipt thereof after a good faith effort to obtain such
material is made by the Borrower, (A) copies of any annual
audited financial statements of such Servicer, certified by an
independent certified public accounting firm; (B) on an annual
basis within 10 days after receipt thereof, copies of SAS 70
reports for such Servicer, or, if not available, the annual
compliance audit for each Servicer required by Section
428(b)(l)(4) of the Higher Education Act; and (C) to the
extent not included in
32
the financial information provided pursuant to clauses (A) and
(B) hereof, such Servicer's net dollar loss for the year due
to servicing errors;
(vii) upon request, a Schedule of Purchased Loans;
(viii) as soon as available and in any event within
120 days after the end of each fiscal year of Union Financial
Services, Inc., copies of consolidated financial statements
for it and its consolidated subsidiaries prepared in
accordance with generally accepted accounting principles, duly
certified by independent certified public accountants of
recognized standing selected by it, including consolidating
statements;
(ix) promptly after the filing or receiving
thereof, copies of all reports and notices with respect to any
Reportable Event defined in Article IV of ERISA which the
Borrower files under ERISA with the Internal Revenue Service,
the Pension Benefit Guarantee Corporation or the U.S.
Department of Labor or which the Borrower receives from the
Pension Benefit Guarantee Corporation;
(x) immediately upon becoming aware of the
existence of any Event of Default, a written statement of an
Authorized Officer of the Borrower setting forth details of
such event and the action that the Borrower proposes to take
with respect thereto; and immediately upon becoming aware of
any Servicer Event of Default, written notice thereof;
(xi) as soon as possible and in any event within
three Business Days of the Borrower's actual knowledge
thereof, written notice of (A) any litigation investigation or
proceeding which may exist at any time which could have a
Material Adverse Effect and (B) any material adverse
development in previously disclosed litigation, including in
each case, if known to the Borrower, any of the same against a
Servicer; and
(xii) promptly after the occurrence thereof,
written notice of changes in the Higher Education Act or any
other law of the United States that could have a Material
Adverse Effect or could materially and adversely affect (A)
the ability of a Servicer to perform its obligations under any
Servicing Agreement, or (B) the collectibility or
enforceability of a material amount of the Financed Loans, or
any Guarantee Agreement or Federal Reimbursement Contract with
respect to a material amount of Financed Loans.
(d) MERGER, ETC. The Borrower will not merge or
consolidate with, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter
acquired), or acquire all or substantially all of the assets or capital
stock or other ownership interest of any Person, other than, with
respect to asset dispositions, in connection herewith.
(e) NATURE OF BUSINESS. The Borrower will engage in no
business other than (i) purchases and sales of Eligible Loans and (ii)
the other transactions permitted or
33
contemplated by this Agreement and its Articles of Incorporation and
bylaws as they exist on the Closing Date, or as amended with the
consent of the Required Lenders.
(f) TRANSACTION DOCUMENTS. The Borrower (i) will take all
action necessary to perfect, protect and more fully evidence the
ownership interest of the Borrower and the security interest of the
Trustee in favor of the Secured Creditors in the Financed Loans and
Collections with respect thereto and in the other Pledged Collateral
and the Transaction Documents including, without limitation, (A) filing
and maintaining effective financing statements (Form UCC-1) in all
necessary or appropriate filing offices, (B) filing continuation
statements, amendments or assignments with respect thereto in such
filing offices and (C) executing or causing to be executed such other
instruments or notices as may be necessary or appropriate and (ii) will
take all additional action to perfect, protect and fully evidence the
security interest of the Trustee, for the benefit of the Secured
Creditors, in the Financed Loans and other Pledged Collateral related
thereto.
(g) MAINTENANCE OF SEPARATE EXISTENCE. The Borrower will
do all things necessary to maintain its existence as a Nevada
corporation separate and apart from all Affiliates of the Borrower,
including, without limitation, (i) practicing and adhering to corporate
formalities, such as maintaining appropriate books and records; (ii)
maintaining [a] Person who is an Independent Director; (iii) owning or
leasing pursuant to written leases all office furniture and equipment
necessary to operate its business; (iv) refraining from (A)
guaranteeing or otherwise becoming liable for any obligations of any of
its Affiliates, (B) having obligations guaranteed by its Affiliates,
(C) holding itself out as responsible for debts of any of its
Affiliates or for decisions or actions with respect to the affairs of
any of its Affiliates, and (D) being directly or indirectly named as a
direct or contingent beneficiary or loss payee on any insurance policy
of any Affiliate; (v) maintaining all of its deposit and other bank
accounts and all of its assets separate from those of any other
Person; (vi) maintaining all of its financial records separate and
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 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
34
capitalization in light of its business and purpose; and (xiii)
conducting all of its business (whether written or oral) solely in its
own name.
(h) TRANSACTIONS WITH AFFILIATES. The 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
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 ▇▇▇▇▇ ▇▇▇▇ to the Secured
Creditors relating to the issues of substantive consolidation.
(i) DEBT. Except as provided in the Borrower's Articles
of Incorporation, the Borrower will not incur any Debt other than Debt
arising hereunder. The Borrower will not make any Investments other
than Permitted Investments and purchases of Eligible Loans.
(j) EXTENSION OR AMENDMENT OF TRANSACTION DOCUMENTS.
Without the written consent of the Agent and the Required Lenders, the
Borrower will not:
(i) cancel, terminate, extend, amend, modify or
waive (or consent to or approve any of the foregoing) any
provision of any Transaction Document;
(ii) cancel, terminate, extend, amend, modify or
waive (or consent to or approve any of the foregoing) any
provision of any Sale and Purchase Agreement, Servicing
Agreement, Custodian Agreement, Financed Loan or other
instrument, document or agreement included in the Pledged
Collateral in any manner that (A) may reduce the amount owing
by the Obligor under a Financed Loan, by a Servicer, or defer
or extend the date scheduled for the final payment thereof,
except for extensions of past-due Financed Loans entered into
by a Servicer in accordance with the Higher Education Act in
order to maximize Collections thereof, or (B) may permit or
result in the release of any portion of the Pledged
Collateral;
(iii) take or consent to any other action that may
impair the rights of any Secured Creditor to any Pledged
Collateral or modify, in a manner adverse to any Secured
Creditor, the right of such Secured Creditor to demand or
receive payment under any of the Transaction Documents; or
(iv) take or consent to any other action that may
impair the interests of the Borrower or its assignees to any
Pledged Collateral or modify, in a manner adverse to the
Borrower or its assignees, the right of the Borrower and its
assignees to demand or receive payment under any of the
Transaction Documents.
35
(k) ERISA. The Borrower will not adopt, maintain,
contribute to or incur or assume any legal obligation with respect to
any Benefit Plan or Multiemployer Plan or permit any of its ERISA
Affiliates to do any of the foregoing.
(l) SERVICERS. The Borrower will not permit any Person
other than the Servicer to collect, service or administer the Financed
Loans.
(m) ELIGIBLE LOANS NOT ORIGINATED BY SELLERS. The
Borrower shall not purchase from a Seller pursuant to a Sale and
Purchase Agreement any Eligible Loan that was originated by a Person
other than the applicable Seller unless the Borrower shall have taken
(or caused to be taken) all steps reasonably necessary to ensure that
(i) after giving effect to such purchase, the Borrower shall have
acquired all legal and beneficial ownership in such Financed Loan, free
and clear of any Adverse Claim and (ii) that the Person that originated
such Eligible Loan (and any transferee thereof other than the Seller)
shall have received reasonable equivalent value for the transfer of
such Eligible Loan made by it.
SECTION 5.02. ACQUISITION, COLLECTION AND ASSIGNMENT OF STUDENT
LOANS. The Borrower shall acquire only Eligible Loans (or beneficial interests
therein) with proceeds of the Advances and shall diligently cause to be
collected all principal and interest payments on all the Financed Loans and all
sums to which the Borrower or Trustee is entitled pursuant to any Sale and
Purchase Agreement, and all grants, subsidies, donations, Special Allowance
Payments and all defaulted payments Guaranteed by any Guarantor which relate to
such Financed Loans. The Borrower shall also make, or cause to be made by
Sellers or Servicers or Trustees, every effort to collect the Borrower's or such
Seller's or Servicer's or Trustee's claims for payment from the Secretary of
Education or any Guarantor as soon as possible, of all payments related to such
Financed Loans. The 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.
SECTION 5.03. ENFORCEMENT OF FINANCED LOANS. The Borrower shall
cause to be diligently enforced and taken all steps, actions and proceedings
reasonably necessary for the enforcement of all terms, covenants and conditions
of all Financed Loans and agreements in connection therewith, including the
prompt payment of all principal and interest payments and all other amounts due
the Borrower and Trustee, as applicable thereunder. The Borrower shall not
permit the release of the obligations of any Eligible Borrower under any
Financed Loan and shall at all times, to the extent permitted by law, cause to
be defended, enforced, preserved and protected the rights and privileges of the
Borrower, the Trustee and the Lenders 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 Lenders (with respect to the
rights of the Lenders, without the approval of the Agent and the Required
Lenders, which approval shall not be unreasonably withheld). Nothing in this
Agreement shall be construed to prevent the Borrower and Trustee, as applicable,
from settling a default or curing a delinquency on any Financed Loan on such
terms as shall be permitted by law.
36
SECTION 5.04. ENFORCEMENT OF SERVICING AGREEMENTS. The Borrower
shall cause to be diligently enforced and taken all reasonable steps, actions
and proceedings necessary for the enforcement of all terms, covenants and
conditions of all Servicing Agreements, including the prompt payment of all
principal and interest payments and all other amounts due the Borrower or
Trustee, as applicable, thereunder, including all grants, subsidies, donations,
Special Allowance Payments and all defaulted payments Guaranteed by any
Guarantor and/or by the Secretary of Education which relate to any Financed
Loans. The Borrower shall not permit the release of the obligations of any
Servicer under any Servicing Agreement and shall at all times, to the extent
permitted by law, cause to be defended, enforced, preserved and protected the
rights and privileges of the Borrower and of the Trustee under or with respect
to each Servicing Agreement. The Borrower shall not consent or agree to or
permit any amendment or modification of any Servicing Agreement which will in
any manner materially adversely affect the rights or security of the Trustee
or the Lenders, without the written consent of the Agent and the Required
Lenders, except (a) as required by the Higher Education Act, (b) solely for
the purpose of extending the term thereof or adding to the Financed Loans
serviced thereunder Eligible Loans financed under an indenture or similar
agreement other than this Agreement and/or (c) in any other manner, if such
modification, amendment or supplement so made without the prior written
consent of the Agent and the Required Lenders shall not be effective with
respect to the servicing of Financed Loans; provided, however, that the Agent
and the Required Lenders shall respond as promptly as may be practicable after
receipt by the Required Lenders of a request of the Borrower for the Agents'
and the Required Lenders' consent to any modification, amendment or supplement
of, or any waiver with respect to, any provision of any Servicing Agreement.
SECTION 5.05. ADMINISTRATION AND COLLECTION OF FINANCED LOANS. All
Financed Loans shall be administered and collected either by the Borrower or by
a Servicer in a competent, diligent and orderly fashion and in accordance with
all requirements of the Higher Education Act, the Secretary of Education, this
Agreement, the Federal Reinsurance Agreements, the Trustee Guarantee Agreement
and any other guarantee agreement issued by any Guarantor to the Trustee.
SECTION 5.06. AMENDMENT OF FORM OF SALE AND PURCHASE AGREEMENT. The
Borrower shall notify the Trustee, the Agent and the Required Lenders in writing
of any proposed material amendments to the form of Sale and Purchase Agreement.
No such amendment shall become effective unless and until the Agent and the
Required Lenders consent in writing thereto (which consent shall not be
unreasonably withheld).
SECTION 5.07. CUSTODIAN. Each Custodian shall hold the Student Loan
Notes in a safe and secure manner for purposes of perfecting the security
interest in and lien on such Financed Loans as herein provided. The Student Loan
Notes shall be held in a limited access vault facility with a two-hour fire
rating and shall be assigned a designation which is distinct from other
promissory notes held to secure any other financings of the Borrower, if any,
for which the Trustee acts in a fiduciary capacity.
SECTION 5.08. PREPAYMENTS AND REFINANCING. The Borrower or its
Affiliates has entered into, and intend to enter into in the future, 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
37
(previously pledged hereunder), none of which agreements constitute or will
constitute an Adverse Claim on the Financed Loans continuing to be Pledged
Collateral. Notwithstanding any provision to the contrary herein, if and to the
extent the Borrower or an Affiliate so borrows money or sells Financed Loans or
its interest therein, upon either (a) payment in full of, or (b) deposit of cash
into a segregated account maintained with the Trustee for the sole benefit of
the Lenders, 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 Advances and other Obligations relating to such Financed
Loans and the Trust Estate or any interest therein affected by such action
(together with all accrued and unpaid Yield thereon together with all Yield
which would accrue through the end of the related Interest Periods) such
Financed Loans shall no longer be security for the Advances. Notwithstanding
anything to the contrary contained herein, without the prior written consent of
the Required Lenders, in no event shall any such payment to the Lenders occur
(i) more than three Business Days after the delivery by the Valuation Agent of a
Valuation Report, (ii) if, after giving effect to such repayment and the
release of the Trustee's security interest in or removal from the Pledged
Collateral of the Related Financed Loans, an Event of Default (or an event that
with the passage of time or the giving of notice, or both, would constitute an
Event of Default) or the requirements giving rise to a collateral call under any
provision of this Agreement would exist or result therefrom, and (iii) on a day
other than the first Business Day of a calendar month.
SECTION 5.09. PERIODIC REPORTING.
(a) The Borrower will cause the Valuation Agent to
deliver to the Agent (at the address provided in the Liquidity
Agreement) and to the Required Lenders and the Trustee:
(i) not later than each Valuation Date, a
Valuation Report setting forth the Aggregate Market Value, the
Liabilities and the Asset Coverage Ratio; and
(ii) not later than four Business Days prior to
each Advance, a Advance Percentage Calculation Report.
(b) The Borrower will cause to be provided to the Agent,
the Required Lenders and the Valuation Agent, (i) not later than the
third Business Day prior to each Calculation Date, a summary of each
servicer report setting forth the material characteristics of the
Financed Loans, all as of the last day of the immediately preceding
calendar month and (ii) not later than one Business Day prior to each
Calculation Date, (A) the balances in the Collection Account (including
a breakout of principal and interest received with respect to the
Financed Loans) and the Cash Reserve Account and (B) the Liabilities,
all as of the last day of the immediately preceding calendar month.
SECTION 5.10. 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 Article IV (j) or, upon 30 days'
prior written notice to the Trustee and the Lenders, at such other locations
within the United States where all actions reasonably requested by the Agent or
any Required Lender to protect and perfect the interest of the Borrower and the
Secured
38
Creditors in the Pledged Collateral have been taken and completed. The Borrower
will not make any change to its name or use any tradenames, fictitious names,
assumed names, "doing business as" names or other names, unless prior to the
effective date of any such name change or use, the Borrower delivers to the
Agent and the Required Lenders such executed financing statements as any
Required Lender may request to reflect such name change or use, together with
such other documents and instruments as the Agent or any such Required Lender
may request in connection therewith. The Borrower agrees that from time to time,
at its expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that the Agent or any Required Lender may
reasonably request in order to perfect, protect or more fully evidence the
Trustee's interest in the Pledged Collateral for the benefit of the Secured
Creditors, or to enable the Trustee or the Required Lenders to exercise or
enforce any of their respective rights hereunder. Without limiting the
generality of the foregoing, the Borrower will upon the request of any Required
Lender: (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 any such Required Lender may
request, and (b) ▇▇▇▇ its master data processing records evidencing such Pledged
Collateral with a legend acceptable to the Required Lenders, 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
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 5.10, any Secured Creditor may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of such Secured Creditor incurred in
connection therewith shall be payable by the Borrower upon the such Secured
Creditor's demand therefor. For purposes of enabling any such Secured Creditor
and the Trustee to exercise their respective rights described in the preceding
sentence and elsewhere in this Agreement, the Borrower hereby authorizes, and
irrevocably grants a power of attorney to, the Secured Creditors, the Trustee
and their respective successors and assigns to take any and all steps in the
Borrower's name and on behalf of the Borrower necessary or desirable, in the
determination of the Secured Creditors or the Trustee, as the case may be, to
collect all amounts due under any and all Financed Loans and other Pledged
Collateral, including, without limitation, endorsing the Borrower's name on
checks and other instruments representing Collections and enforcing such
Financed Loans and other Pledged Collateral.
SECTION 5.11. OBLIGATIONS OF THE BORROWER WITH RESPECT TO PLEDGED
COLLATERAL. The Borrower will (a) at its expense, regardless of any exercise by
any Secured Creditor of its rights hereunder, timely and fully perform and
comply with all provisions, covenants and other promises required to be observed
by it under the Transaction Documents included in the Pledged Collateral to the
same extent as if Pledged Collateral had not been pledged hereunder and (b) pay
when due any taxes, including without limitation, sales and excise taxes,
payable in connection with the Pledged Collateral. In no event shall any Secured
Creditor have any 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
39
the Borrower or any of its Affiliates thereunder. The Borrower will timely and
fully comply in all respects with each Transaction Document.
SECTION 5.12. COLLATERAL CALL. The Borrower shall maintain at all
times the Minimum Asset Coverage Requirement. If the Borrower is notified by the
Valuation Agent that the Asset Coverage Ratio is below the Minimum Asset
Coverage Requirement, fee Borrower shall deposit cash or Eligible Loans (valued
at no greater than the aggregate Principal Balance thereon), within three
Business Days, or such other period as agreed, to by the Agent and the Required
Lenders in writing, of receipt of notice from the Valuation Agent, in the
Collection Account or the Trust Estate, as applicable, the amount specified by
the Valuation Agent as necessary to meet the Minimum Asset Coverage
Requirement.
SECTION 5.13. GUARANTOR LIMITATIONS. The Borrower shall not permit
any Financed Loan to be guaranteed by any guaranty agency or entity other than
(a) those specifically named in the definition of the term "Trustee Guarantee
Agreements" in Section 1.01 hereof or (b) any other guaranty agency or entity
specifically approved as a Guarantor by the Agent and the Required Lenders in
advance in writing.
ARTICLE VI
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
(a) the Borrower fails to pay any of its Obligations
under this Agreement or any of the other Transaction Documents when
such Obligations are due or are declared due and such failure shall
remain unremedied for one Business Day;
(b) any representation or warranty made or deemed to be
made by the Borrower (or any of its officers) under or in connection
with this Agreement or any other Transaction Document, or other
information or report delivered pursuant hereto or thereto shall prove
to have been false or incorrect in any material respect when made; or
(c) the Borrower shall fail to perform or observe any
other term, covenant or agreement contained in any Transaction Document
on its part to be performed or observed (other than in Section 5.12
hereof) and any such failure shall remain unremedied for three Business
Days after written notice thereof shall have been received; or
(d) the Trustee, for the benefit of the Secured
Creditors, shall, for any reason, cease to have a valid and perfected
first priority security interest in any of the Pledged Collateral; the
Borrower shall, for any reason, cease to have a valid and perfected
first priority ownership interest in each Financed Loan and Collections
with respect thereto; or
(e) an Event of Bankruptcy shall have occurred with
respect to the Borrower;
or
40
(f) entry of a judgment or judgments in the aggregate in excess
of $100,000 against the Borrower which are not (i) stayed, bonded,
vacated, paid or discharged within 30 days after entry or (ii) fully
covered by insurance as to which the insurance carrier acknowledged
coverage to the Borrower in writing within 30 days after entry; or
(g) (i) any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by the Borrower to the Agent and
Concord prior to the date of execution and delivery of this Agreement
is pending against Borrower or Affiliate hereof, or (ii) any material
development not so disclosed has occurred in any litigation (including,
without limitation, derivative actions), arbitration proceedings or
governmental proceedings so disclosed, which, in the case of clause (i)
or (ii), in the opinion of the Agent and the Required Lenders, has a
Material Adverse Effect; or
(h) the Internal Revenue Service shall file notice of a lien
pursuant to 6323 of the Internal Revenue Code with regard to any of the
assets of the Borrower such lien shall not have been released within 60
days, or the Pension Benefit Guarantee Corporation shall, or shall
indicate its intention to, file notice of a lien pursuant to Section
4068 of the Employee Retirement Income Security Act of 1974 with regard
to any of the assets of the Borrower or any of its Affiliates and such
lien shall not have been released within 60 days; or
(i) a Servicer Event of Default shall have occurred or any
Servicing Agreement shall not be in full force and effect for any
reason, and, in either case, such Servicer or Servicing Agreement, as
the case may be, shall not be replaced by a Servicer or a Servicing
Agreement, as the case may be, acceptable to the Agent and the Required
Lenders within 60 days of such event; provided, however, the foregoing
event shall not be an "Event of Default" hereunder if such Servicer
Event of Default arises under a Servicing Agreement with a Servicer
that is not an Affiliate of the Seller and within the 30 days of the
occurrence of such event, all Financed Loans then serviced by such
Servicer are released from the Pledged Collateral in accordance with
the terms of this Agreement; or
(j) at any time the sum of the aggregate outstanding Principal
Balance of all Financed Loans that are Proprietary Loans exceeds 20% of
the aggregate outstanding Principal Balance of all Financed Loans; or
(k) the Borrower shall fail to perform or observe the covenant
set forth in Section 5.12 hereof; or
(l) the occurrence of an event or circumstance that has a
Material Adverse Effect; or
(m) at any time the sum of the aggregate outstanding Principal
Balance of Financed Loans serviced by Servicers for which the reporting
of financial information to the Agent is not permitted under their
Servicing Agreements shall exceed 10% of the aggregate outstanding
Principal Balance of all Financed Loans; or
41
(n) after 180 days from any drawing by Concord under the
Liquidity Agreement, one or more Liquidity Advances remain unpaid to
the Liquidity Providers; or
(o) information in any of the reports described in Exhibits C, D
or E hereof or in the reports described in the Valuation Agent
Agreement, shall prove to have been false or incorrect in any material
respect and such false or incorrect information shall remain
uncorrected for three Business Days after written notice thereof shall
have been received;
then, and in any such event, the Agent or Required Lenders may, by
notice to the Borrower and the Trustee, declare the Termination Date to
have occurred, whereupon all of the Obligations shall become
immediately due and payable, except that, in the case of any event
described in subsection (e) above, the Termination Date shall be deemed
to have occurred automatically upon the occurrence of such event and
all of the Obligations shall automatically become and be immediately
due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the Borrower.
Upon any such declaration or automatic occurrence, the Trustee and the
Required Lenders shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and
remedies provided to a secured party under the UCC of the applicable
jurisdiction and other applicable laws, which rights shall be
cumulative. The rights and remedies of a secured party which may be
exercised by the Trustee and/or the Required Lenders pursuant to this
Article VI shall include, without limitation, the right, without notice
except as specified below, to solicit and accept bids for and sell the
Pledged Collateral or any part thereof in one or more parcels at a
public or private sale, at any exchange, broker's board or at any of
the Trustee's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Trustee or the Required
Lenders may deem commercially reasonable. Any sale or transfer by the
Trustee and/or the Required Lenders of Financed Loans shall only be
made to an Eligible Lender. The Borrower agrees that, to the extent
notice of sale shall be required by law, 10 Business Days' notice to
the Borrower of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification and that it shall be commercially reasonable for the
Trustee to sell the Pledged Collateral to an Eligible Lender on an "as
is" basis, without representation or warranty of any kind. The Trustee
shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given and may adjourn any
public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
ARTICLE VII
TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUST. The Trustee hereby accepts the
trusts imposed upon it by this Agreement, and agrees to perform said trusts, but
only upon and subject to the following terms and conditions:
(a) Except during the continuance of an Event of Default,
42
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement,
and no implied covenants or obligations shall be read into this
Agreement against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement; but in the case of any
such certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform as to form with the requirements of
this Agreement and whether or not they contain the statements
required under this Agreement.
(b) In case an Event of Default has occurred and is
continuing, the Trustee, in exercising the rights and powers vested in
it by this Agreement, shall use the same degree of care and skill in
their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not herein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section.
SECTION 7.02. TRUSTEE'S RIGHT TO RELIANCE. The Trustee shall be
protected in acting upon any notice, resolution, request, consent, order,
certificate, report, servicer's report appraisal, opinion or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee may consult with experts and with
counsel (who may be counsel for the Borrower or the Trustee), and the opinion of
such counsel shall be full and complete authorization and protection in respect
of any action taken or suffered, and in respect of any determination made by it
hereunder in good faith and in accordance with the opinion of such counsel.
Whenever in the administration hereof the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering, or
omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
a certificate signed by an officer of the Borrower, the Agent or the Required
Lenders; provided, however, that the Trustee may not delay any action required
hereunder after receipt of a certificate because the Trustee has failed to
receive such certificate.
The Trustee shall not be liable for any action taken, suffered, or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred
43
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 Borrower or Lender request, provided that no such
Financed Loan may be sold, assigned, transferred, or conveyed to any Person who
is not an Eligible Lender. The Trustee is further authorized to enter into
agreements with other Persons, in its capacity as Trustee, in order to carry out
or implement the terms and provisions of this Agreement.
SECTION 7.03. COMPENSATION OF TRUSTEE. The Borrower shall pay to the
Trustee from time to time pursuant to Section 2.06(c)(vi) reasonable
compensation for all services rendered by it hereunder, as set forth in the
letter agreement dated August 26, 1998 and attached as Exhibit F hereto, and
also all its reasonable expenses, charges, and other disbursements and those of
its attorneys, agents, and employees incurred in and about the administration
and execution of the trusts hereby created. The Trustee may not change the
amount of its annual compensation without giving the Borrower at least 90 days'
written notice prior to the beginning of a calender year and without the written
consent of the Required Lenders.
SECTION 7.04. RESIGNATION OF TRUSTEE. The Trustee and any successor to
the Trustee may resign and be discharged from the trust created by this
Agreement by giving to the Borrower and the Lenders notice in writing which
notice shall specify the date on which such resignation is to take effect;
provided, however, that such resignation shall only take effect on the day
specified in such notice if a successor Trustee shall have been appointed
pursuant to Section 7.06 hereof (and is qualified to be the Trustee under the
requirements of Section 7.06 hereof). If no successor Trustee has been appointed
by the date specified or within a period of 90 days from the receipt of the
notice by the Borrower and the Lenders, whichever period is the longer, the
Trustee may (a) appoint a temporary successor Trustee having the qualifications
provided in Section 7.06 hereof or (b) request a court of competent jurisdiction
to (i) require the Borrower to appoint a successor, as provided in Section 7.06
hereof, within three days of the receipt of citation or notice by the court, or
(ii) appoint a Trustee having the qualifications provided in Section 7.06
hereof. In no event may the resignation of the Trustee be effective until a
qualified successor Trustee shall have been selected and appointed. In the event
a temporary successor Trustee is appointed pursuant to (a) above, the Borrower
may remove such temporary successor Trustee and appoint a successor thereto
pursuant to Section 7.06 hereof.
SECTION 7.05. REMOVAL OF TRUSTEE. The Trustee or any successor Trustee
may be removed (a) by the Borrower for cause or upon the sale or other
disposition of the Trustee or its trust functions or (b) by the Borrower without
cause so long as no Event of Default exists or has existed within the last 90
days, upon payment to the Trustee so removed of all money then due to it
hereunder and appointment of a successor thereto by the Borrower and acceptance
thereof by said successor.
In the event a Trustee (or successor Trustee) is removed, by any
person or for any reason permitted hereunder, such removal shall not become
effective until the successor Trustee has accepted appointment as such.
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SECTION 7.06. SUCCESSOR TRUSTEE. In case at any time the Trustee or any
successor Trustee shall resign, be dissolved, cease to be an "eligible lender"
as defined in the Higher Education Act, or otherwise shall be disqualified to
act or be incapable of acting, or in case control of the Trustee or of any
successor Trustee or of its officers shall be taken over by any public officer
or officers, a successor Trustee may be appointed by the Borrower by an
instrument in writing duly authorized by resolution. In the case of any such
appointment by the Borrower of a successor to the Trustee, the Borrower shall
forthwith cause notice thereof to the Lenders.
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 an Eligible Lender.
SECTION 7.07. MANNER OF VESTING TITLE IN TRUSTEE. Any successor Trustee
appointed hereunder shall execute, acknowledge, and deliver to its predecessor
Trustee, and also to the Borrower and the Lenders, an instrument accepting such
appointment hereunder, and thereupon such successor Trustee, without any further
act, deed, or conveyance shall become fully vested with all the estate,
properties, rights, powers, trusts, duties, and obligations of its predecessors
in trust hereunder (except that the predecessor Trustee shall continue to have
the benefits to indemnification hereunder together with the successor Trustee),
with like effect as if originally named as Trustee herein; but the Trustee
ceasing to act shall nevertheless, on the written request of the Borrower, or an
authorized officer of the successor Trustee, execute, acknowledge, and deliver
such instruments of conveyance and further assurance and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in such successor Trustee all the right, title, and interest of the Trustee
which it succeeds, in and to the Pledged Collateral and such rights, powers,
trusts, duties, and obligations, and the Trustee ceasing to act also, upon like
request, pay over, assign, and deliver to the successor Trustee any money or
other property or rights subject to the lien of this Agreement, including any
pledged securities which may then be in its possession. Should any deed or
instrument in writing from the Borrower be required by the successor Trustee for
more fully and certainly vesting in and confirming to such new Trustee such
estate, properties, rights, powers, and duties, any and all such deeds and
instruments in writing shall on request be executed, acknowledged and delivered
by the Borrower.
SECTION 7.08. SERVICING AGREEMENT. The Trustee acknowledges the receipt
of copies of the Servicing Agreements and Custodian Agreements attached as
Exhibit G hereto.
SECTION 7.09. TRUSTEE COVENANTS WITH RESPECT TO "ELIGIBLE LENDER"
STATUS. The Trustee covenants as follows:
(a) The Trustee represents and warrants that it satisfies the
requirements to be an "eligible lender" as that term is defined in the
Higher Education Act and covenants that it will remain an "eligible
lender" so long as the Trustee remains Trustee under this Agreement
provided, however, that the Trustee shall have no responsibility or
liability
45
hereunder if it fails to remain as an "eligible lender" as a result of
the actions or inactions of the Borrower or any Servicer; and
(b) The Trustee shall take such actions, but only such
actions, with respect to being an "eligible lender" as shall be
reasonably requested by the Borrower; such actions do not include
taking steps or instituting suits, actions or proceedings necessary or
appropriate for the enforcement of all terms, covenants and conditions
of all Financed Loans and agreements in connection therewith, including
the prompt payment of all principal and interest payments and all other
amounts due thereunder, for which the Borrower is solely responsible.
SECTION 7.10. TRUSTEE'S STATUS AS AN "ELIGIBLE LENDER." For the
purposes of this Agreement, all documents, agreements, understandings and
arrangements relating to this Agreement that are executed by the Trustee have
been executed by the Trustee with the understanding that it may be deemed to be
an "eligible lender" under the Higher Education Act. The Borrower hereby
acknowledges the fact that the Trustee may be deemed an "eligible lender" under
the Higher Education Act and thus may be subject to certain liabilities because
of such status and that the Trustee is willing to accept the status of "eligible
lender" hereunder as an accommodation to the Borrower, and the Borrower hereby
agrees that it will indemnify and hold harmless the Trustee and its officers,
directors, employees and agents for any and all liability which may be incurred
because of Trustee's status as an "eligible lender" or because of the Trustee's
entering into the Agreement or any of the other Transaction Documents that
results from the actions or inactions of the Borrower or any Servicer.
ARTICLE VIII
INDEMNIFICATION
Without limiting any other rights which the Lenders, the Trustee or any
of their respective Affiliates may have hereunder or under applicable law, and
notwithstanding any limitation on recourse to the Borrower set forth in this
Agreement or any of the other Transaction Documents or the Liquidity Agreement,
the Borrower hereby agrees to indemnify the Lenders, the Trustee and each of
their respective officers, directors, employees, agents, attorneys-in-fact and
Affiliates from and against any and all damages, losses, claims, liabilities and
related costs and expenses, including reasonable attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising out of
or as a result of this Agreement, the Liquidity Agreement or the Pledged
Collateral, excluding, however, Indemnified Amounts to the extent resulting from
the gross negligence or willful misconduct of the Person seeking
indemnification. Without limiting the foregoing, the Borrower shall indemnify
the Lenders, the Trustee and each of their respective officers, directors,
employees, agents, attorneys-in-fact and Affiliates for Indemnified Amounts
relating to or resulting from:
(a) any Financed Loan treated as or represented by the
Borrower to be an Eligible Loan which is not at the applicable time an
Eligible Loan;
46
(b) any representation or warranty made or deemed made by the
Borrower, the Servicer or any of their respective officers under or in
connection with this Agreement or any other Transaction Document, which
shall have been false or incorrect when made or deemed made or
delivered;
(c) the failure by the Borrower or the Servicer to comply with
any term, provision or covenant contained in this Agreement or any
other Transaction Document, or with any applicable law, rule or
regulation with respect to any Pledged Collateral, or the nonconformity
of any Financed Loan or any other Pledged Collateral with any such
applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the Trustee for
the benefit of the Secured Creditors or to transfer to the Trustee, a
first priority security interest in any of the Pledged Collateral, free
and clear of any Adverse Claim (except as otherwise provided herein);
(e) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to
any Pledged Collateral;
(f) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Financed Loan or any Servicer to the payment of any obligation
otherwise owing under a Transaction Document (including, without
limitation, a defense based on such Financed Loan or obligation or the
related Transaction Document not being a legal, valid and binding
obligation of such Person enforceable against it in accordance with its
terms);
(g) any failure of the Borrower to perform its duties or
obligations in accordance with the provisions of this Agreement or any
other Transaction Document or any failure by the Borrower to perform
its respective duties in respect of the Financed Loans;
(h) any breach of contract by the Borrower or any claim or
action of whatever sort arising out of or in connection with any
Transaction Document or the transactions contemplated thereby;
(i) the failure to pay when due any taxes, including without
limitation, sales, excise or personal property taxes payable in
connection with the Pledged Collateral;
(j) any repayment by the Lenders of any amount previously
distributed in payment of Advances or payment of Yield or any other
amount due hereunder, in each case which amount any such Lender
believes in good faith is required to be repaid;
(k) the commingling by the Borrower or any of its Affiliates
of Collections at any time with other funds;
47
(l) any investigation, litigation or proceeding expressly
related to this Agreement, the Liquidity Agreement or any other
Transaction Document or the use of proceeds of Advances or the Pledged
Collateral or in respect of any Financed Loan;
(m) any failure by the Borrower to give reasonably equivalent
value to any Seller in consideration for the Financed Loans sold, or
deemed to have been sold, to it by such Seller, or any attempt by any
Person to void or otherwise avoid any such transaction under any
statutory provision or common law or equitable action, including,
without limitation, any provision of the Bankruptcy Code; or
(n) any failure of the Borrower or any of its agents or
representatives to remit to the Trustee, Collections of Financed Loans
and other Pledged Collateral remitted to the Borrower or any such agent
or representative.
Any amounts subject to the indemnification provisions of this Article
VIII shall be paid by the Borrower to the Lenders, the Trustee or their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates, as the case may be, for the benefit of the applicable payee, within
two Business Days following written demand therefor.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS AND WAIVERS. No amendment or modification of
any provision of this Agreement shall be effective without the written agreement
of the Borrower, the Required Lenders and, to the extent affected thereby, the
Trustee, and no termination or waiver of any provision of this Agreement or
consent to any departure therefrom by the Borrower shall be effective without
the written concurrence of the Required Lenders. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Notwithstanding the foregoing, the Borrower, the Required Lenders and, if
applicable, the Trustee shall not amend, modify, terminate, waive or consent to
any departure from any provision contained herein which would require the
consent, approval, concurrence or other action of the Agent, or which would
otherwise affect in an adverse way the rights of the Agent or the Liquidity
Providers hereunder, nor amend or modify any of the defined terms used in the
foregoing provisions, without the prior written concurrence of the Agent.
SECTION 9.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy) and mailed,
delivered by nationally recognized overnight courier service, telexed,
transmitted or delivered by hand, as to each party hereto, at its address set
forth under its name on the signature pages hereof or at such other address as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, upon receipt, or
in the case of (a) notice by mail, five days after being deposited in the United
States mails, first class postage prepaid, (b) notice by telex, when telexed
against receipt of answerback, or (c) notice by facsimile copy, when verbal
communication of receipt is obtained, except that notices and communications
pursuant to Article II shall not be effective until received.
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SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of the
Trustee or the Lenders 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 9.04. BINDING EFFECT; ASSIGNABILITY. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Lenders, the Trustee
and their respective successors and permitted assigns. This Agreement and the
Lenders' rights and obligations hereunder and interest herein shall be
assignable in whole or in part (including by way of the sale of participation
interests therein or by assignment by the Agent of any of its assigns of the
whole or any part of the Commitment) by the Lenders and its successors and
assigns; provided, however, that the Lender shall not transfer or assign its
interests in the Advances if immediately after such transfer or assignment, the
Advances would be owned by more than 100 persons as described in Treasury
Regulation 1.7704-l(h). The Borrower may not assign any of its rights and
obligations hereunder or any interest herein without the prior written consent
of the Agent and the Required Lenders. The parties to each assignment or
participation made pursuant to this Section 9.04 shall execute and deliver to
Concord and the 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. 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 Lenders shall notify the
Borrower of any assignment or participation thereof made pursuant to this
Section 9.04. Subject to Section 9.11, the Lenders may not, in connection with
any assignment or participation or any proposed assignment or participation
pursuant to this Section 9.04, disclose to the assignee or participant or
proposed assignee or participant any information relating to the Borrower and
the Pledged Collateral furnished to the Lenders by or on behalf of the Borrower,
without either (a) first obtaining the prior written consent of the Borrower,
which consent shall not be unreasonably withheld, or (b) delivering to the
Borrower a written agreement signed by the proposed assignee or participant, for
the Borrower's benefit and otherwise in form and substance reasonably acceptable
to the Borrower pursuant to which the proposed assignee or participant agrees to
maintain the confidentiality of the information concerning the Borrower and the
Financed Loans that may be provided to it by the Agent or any Lender.
SECTION 9.05. SURVIVAL. The rights and remedies with respect to any
breach of a representation and warranty made by the Borrower pursuant to Article
IV and the indemnification and payment provisions of Articles VII and VIII and
Sections 2.17, 9.08, 9.09 and 9.14 shall be continuing and shall survive the
termination of this Agreement.
SECTION 9.06. 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 Illinois. Whenever
possible, each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Agreement.
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SECTION 9.07. SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. THE
BORROWER AND EACH OF THE LENDERS HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF ▇▇▇▇, STATE OF
ILLINOIS, 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 AND
EACH LENDER 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 LENDERS AND THE BORROWER 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 LENDERS. NOTHING CONTAINED IN THIS SECTION 9.07 SHALL AFFECT THE
RIGHT OF THE LENDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR AFFECT THE RIGHT OF THE LENDERS TO BRING ANY ACTION OR PROCEEDING AGAINST THE
BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT
NECESSARY TO ENFORCE ITS LIENS AGAINST PROPERTY LOCATED IN SUCH JURISDICTIONS.
THE BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
SECTION 9.08. COSTS, EXPENSES AND TAXES. In addition to the rights of
indemnification granted to the Lenders, the Trustee and their respective
Affiliates under Article VIII hereof, and notwithstanding any limitation on
recourse set forth herein, the Borrower agrees to pay on demand all reasonable
costs and expenses of the Lender and the Trustee incurred in connection with the
preparation, execution, delivery, administration (including periodic auditing),
or any amendment or modification of, or any waiver or consent issued in
connection with, this Agreement, the Liquidity Agreement or any other
Transaction Document, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Trustee and each of
50
the Lenders with respect thereto and with respect to advising the Trustee and
the Lenders as to their respective rights and remedies hereunder or thereunder,
and all costs and expenses, if any (including reasonable counsel fees and
expenses), incurred by the Trustee or the Lenders in connection with the
enforcement of this Agreement, the Liquidity Agreement and the other Transaction
Documents.
SECTION 9.09. 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 Lenders as
contained in this Agreement or any other agreement, instrument or document
entered into by it pursuant hereto or in connection herewith shall be had
against any administrator of any Lenders or any incorporator, affiliate,
stockholder, officer, employee or director of any Lenders 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 Lenders contained in this
Agreement and all of the other agreements, instruments and documents entered
into by each such Lender pursuant hereto or in connection herewith are, in each
case, solely the corporate obligations of such Lender, and that no personal
liability whatsoever shall attach to or be incurred by any administrator of any
Lender or any incorporator, stockholder, affiliate, officer, employee or
director of any Lender or of any such administrator, as such, or any other them,
under or by reason of any of the obligations, covenants or agreements of any
such Lender contained in this Agreement or in any other such instruments,
documents or agreements, or which are implied therefrom, and that any and all
personal liability of every such administrator of any Lender and each
incorporator, stockholder, affiliate, officer, employee or director, of any such
Lender or of any such administrator, or any of them, for breaches by any Lender
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 9.09 shall survive the
termination of this Agreement.
SECTION 9.10. 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 9.11. CONFIDENTIALITY. The Trustee and each of the Lenders each
agree to keep confidential and not disclose any non-public information or
documents related to the Borrower or any Affiliate of the Borrower delivered or
provided to such Person in connection with this Agreement, any other Transaction
Document or the transactions contemplated hereby or thereby and which are
clearly identified in writing by the Borrower or such Affiliate as being
confidential; provided, however, that each of the Trustee and each of the
Lenders may disclose
51
any such information (a) to the extent required or deemed necessary and/or
advisable by such Person's counsel in any judicial, regulatory, arbitration or
governmental proceeding or under any law, regulation, order, subpoena or decree,
(b) to its officers, directors, employees, accountants, auditors and outside
counsel, in each case, provided they are informed of the confidentiality thereof
and agree to maintain such confidentiality, (c) to or by any liquidity or credit
provider for Concord, any potential liquidity or credit provider for Concord, or
any assignee or participant or potential assignee or participant of any
liquidity or credit provider for Concord, 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
Lender or the Trustee, provided such Person agrees to be bound by the
confidentiality provisions hereof or similar hereto, (e) to bank examiners and
any other Person to whom the Trustee, any Lender, any such liquidity or credit
support provider or assignee or participant is required by law, regulation,
decree or order to make such disclosure, (f) in connection with the enforcement
hereof or of any of the other Transaction Documents or the Liquidity Agreement,
(g) to any rating agency rating the commercial paper notes of the Lender, and
(h) to such other Persons as may be approved by the Borrower. Notwithstanding
the foregoing, the foregoing obligations shall not apply to any such
information, documents or portions thereof that: (i) were of public knowledge or
literature generally available to the public at the time of such disclosure or
(ii) have become part of the public domain by publication or otherwise, other
than as a result of the failure of the Trustee, the applicable Lender, or any of
their respective employees, directors, officers, advisors, accountants,
auditors, or legal counsel to preserve the confidentiality thereof.
SECTION 9.12. 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 9.13. 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 9.14. NO PETITION. Each of the Borrower and the Trustee hereby
covenants and agrees that prior to the date which is one year and one day after
the payment in full of all outstanding CP of Concord, it will not institute
against or join any other person or entity in instituting against Concord, 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.
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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:
NHELP-I, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Treasurer
c/o National Higher Education Loan Program
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Atta: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
THE LENDER:
CONCORD MINUTEMEN CAPITAL
COMPANY, LLC
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
c/o The Liberty Hampshire Company, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
53
THE TRUSTEE:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Norwest Bank Minnesota, National Association
▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Corporate Trust Services
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
54
EXHIBIT A
FORM OF SALE AND PURCHASE AGREEMENT
LOAN SALE AGREEMENT
This LOAN SALE AGREEMENT (the "Agreement") is made and entered into as
of the _____ day of ________________, 1998, by and between ____________________,
as seller ("Seller") and NHELP-I, Inc., a Nevada corporation, as purchaser
("Purchaser").
WITNESSETH:
WHEREAS, Purchaser is engaged or wishes to engage in a program of
purchasing, holding and selling loans made to eligible borrowers in accordance
with the provisions of the Higher Education Act (as defined herein), the
proceeds of which are used to pay the costs incurred by students attending
post-secondary educational institutions;
WHEREAS, Seller is engaged in a program of originating, purchasing,
holding and selling student loans;
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain student loans, including Federal ▇▇▇▇▇▇▇▇ Loans,
Federal PLUS Loans and Federal Supplemental Loans for Students, made and
guaranteed or insured pursuant to the Higher Education Act, in accordance with
the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
The following words and terms used in this Agreement shall have the
following meanings unless otherwise provided herein or unless the context or
use clearly indicates another or different meaning or intent:
"Adverse Claim" shall mean a lien, security interest, charge,
encumbrance or other right or claim or restriction in favor of any Person
(other than, with respect to the Pledged Collateral, as defined in the
Warehouse Loan Agreement, any lien, security interest, charge, encumbrance or
other right or claim or restriction in favor of the Trustee, as defined in the
Warehouse Loan Agreement, for the benefit of the Secured Creditors, as defined
in the Warehouse Loan Agreement).
"Agreement" shall mean this Agreement, including all exhibits attached
hereto, and any supplements or amendments hereto.
"Business Day" shall mean a day of the year other than a Saturday or a
Sunday on which banks are not authorized or required to close in the State of
Nebraska.
"Certificate of Insurance" shall mean a certificate of federal loan
insurance issued with respect to an Eligible Loan by the Secretary pursuant to
the provisions of the Higher Education Act
"Commitment" shall mean Seller's commitment to sell Eligible Loans to
Purchaser pursuant to Section 2.1 hereof.
"Consolidation Loan" shall mean a Student Loan authorized under
Section 428C of the Act consolidating Eligible Loans.
"Contract of Insurance" shall mean a contract of insurance under the
Higher Education Act between the Secretary and Seller or the Secretary and the
Purchaser, providing for the Insurance of Student Loans.
"Department" shall mean the United States Department of Education, or
any successor thereto or to the functions thereof.
"Eligible Borrower" shall mean 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, or for consolidating two or more such
loans, including, without limitation, a borrower who is eligible under the
Higher Education Act to be an obliger of a loan made pursuant to Section 428A,
428B or 428C of the Higher Education Act.
"Eligible Institution" shall mean (i) an institution of higher
education; (ii) a vocational school; or (iii) any other institution which, in
all of the above cases, has been approved by the Secretary and the applicable
Guarantee Agency.
"Eligible Loan" shall mean a Student Loan:
(a) which was originated or acquired by the Seller in
the ordinary course of its business and was originated in the United
States, its territories or possessions;
(b) that constitutes an account or general intangible as
defined in the UCC as in effect in the jurisdiction that governs the
perfection of the interests of
2
the Purchaser therein and the perfection of the interest of the
Trustee (as defined in the Warehouse Loan Agreement) therein under the
Warehouse Loan Agreement;
(c) on which the borrower is an Eligible Borrower
attending an Eligible Institution;
(d) if such Student Loan is a subsidized ▇▇▇▇▇▇▇▇ Loan,
such Student Loan qualifies the holder thereof to receive Interest
Subsidy Payments and Special Allowance Payments from the Department 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 to the extent applicable; and
if such Student Loan is a PLUS/SLS or an unsubsidized ▇▇▇▇▇▇▇▇ Loan,
such Student Loan qualifies the holder thereof receive Special
Allowance Payments from the Department, to the extent applicable;
(e) at the time of purchase pursuant to this Agreement,
is not a Defaulted Student (as defined in the Warehouse Loan
Agreement), and has not been tendered at any time to any Guarantor for
payment;
(f) that provides or, when the payment schedule with
respect thereto is determined, will provide for payments on a periodic
basis that will fully amortize the Principal Balance thereof by its
maturity, as such maturity may be modified in accordance with
applicable deferral and forbearance periods granted in accordance with
applicable laws, including the Higher Education Act and any Guarantee
Agreements, as applicable;
(g) that is denominated and payable only in Dollars (as
defined in the Warehouse Loan Agreement);
(h) that together with the related Student Loan Note (as
defined in the Warehouse Loan Agreement) 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
Seller, overtly threatened in writing with respect to such Student
Loan;
(i) that (i) is the subject of a valid Guarantee
Agreement with an eligible Guarantor, (ii) with respect to which the
Seller is not in default in any material
3
respect in the performance of any covenants and agreements made in the
applicable Guarantee Agreement, and (iii) with respect to which all
amounts due and payable to the Department or a Guarantor, as the case
may be, have been paid in full;
(j) that (i) is the subject of a valid servicing
agreement with Servicer, (ii) with respect to which the Seller is not
in default in any material respect in the performance of any covenants
and agreements made in the applicable agreement with the Servicer and
(iii) with respect to which all amounts due and payable to the
Servicer have been paid in full;
(k) the payment terms of which have not been altered or
amended except in accordance with the Higher Education Act; and
(1) if such Student Loan is a Proprietary Loan (as
defined in the Warehouse Loan Agreement), the outstanding Principal
Balance of which when added to the outstanding Principal Balance of
all other Financed Loans (as defined in the Warehouse Loan Agreement)
that are Proprietary Loans (as defined in the Warehouse Loan
Agreement) does not exceed 20% of the aggregate outstanding Principal
Balance of all Financed Loans (as defined in the Warehouse Loan
Agreement); and
(m) if such Student Loan is serviced by a Servicer for
which the reporting of financial information concerning such Servicer
to the Agent (as defined in the Warehouse Loan Agreement) is not
permitted under its servicing agreement, the outstanding Principal
Balance of which when added to the aggregate outstanding Principal
Balance of all other Financed Loans (as defined in the Warehouse Loan
Agreement) serviced by such Servicer or other Servicers for which the
reporting of financial information to the Agent (as defined in the
Warehouse Loan Agreement) is not permitted under their servicing
agreements shall not exceed 10% of the aggregate outstanding Principal
Balance of all Financed Loans (as defined in the Warehouse Loan
Agreement).
"Federal Reimbursement Contract" shall mean the agreement between the
Guarantee Agency and the Secretary providing for the payment by the Secretary
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 or Insured by the
Guarantee Agency and Interest Benefit Payments and Special Allowance Payments
to holders of qualifying Student Loans Guaranteed or Insured by the Guarantee
Agency.
4
"Guarantee" or "Guaranteed" shall mean, with respect to a Student
Loan, (i) the guarantee by the Guarantee Agency pursuant to such Guarantee
Agency's Guarantee Agreement of the maximum percentage of the principal of and
accrued interest on such Student Loan allowed by the terms of the Act with
respect to such Student Loan, and (ii) the coverage of such Student Loan by a
Federal Reimbursement Contract, providing, among other things, for
reimbursement to the Guarantee Agency for payments made by it on defaulted
Student Loans insured or guaranteed by the Guarantee Agency of at least the
minimum reimbursement allowed by the Federal Reimbursement Contract and the
Higher Education Act with respect to a particular Student Loan.
"Guarantee Agency" shall mean a guarantee agency mutually acceptable
to the parties which is authorized to Guarantee Student Loans under the Higher
Education Act and with which the Trustee maintains a Guarantee Agreement.
"Guarantee Agreement" shall mean any guarantee or lender agreement
with any other Guarantee Agency, and any amendments to the foregoing.
"Guaranteed Loan" shall mean a Student Loan which is Guaranteed or
Insured.
"Higher Education Act" shall mean Parts B, F and G of Title IV of the
Higher Education Act of 1965, as amended or supplemented from time to time, or
any successor federal act, and all regulations, directives, bulletins and
guidelines proposed or promulgated from time to time thereunder.
"Insurance" or "Insured" or "Insure" shall mean, with respect to a
Student Loan, the insurance by the Secretary under the Higher Education Act (as
evidenced by a Contract of Insurance issued or entered into under the
provisions of the Higher Education Act) of the maximum percentage of the
principal of and accrued interest on such Student Loan allowed under the Higher
Education Act with respect to such Student Loan.
"Insured Loan" shall mean a Student Loan which is Insured.
"Interest Benefit Payments" shall mean interest payments on Student
Loans received pursuant to the agreement between the Guarantee Agency and the
Secretary whereby the Secretary agrees to pay holders of Student Loans
guaranteed by the Guarantee Agency the portion of interest charges on such
loans which students are entitled to have paid on their behalf pursuant to
Section 428(a) of the Higher Education Act.
"PLUS Loan" shall mean a Student Loan authorized under Section 428B of
the Higher Education Act.
5
"Portfolio" shall mean a group of Eligible Loans sold to Purchaser by
Seller pursuant to Section 2.1 hereof on a Scheduled Sale Date.
"Principal Balance" shall mean the original principal amount of a
Student Loan, plus capitalized interest (if any) and items which may not be
Guaranteed or Insured (such as late charges), less payments by or on behalf of
the Student Borrower applied to reduce such amounts.
"Purchase Price" shall mean, with respect to a Portfolio of Eligible
Loans, ___ % of the aggregate Principal Balance of the Eligible Loans included
in the Portfolio, plus accrued and unpaid interest thereon, each as of the
Scheduled Sale Date.
"Purchaser" shall mean NHELP-I, Inc., or its successors or assigns.
"Scheduled Sale Date" shall mean the date on which the sale and
purchase of Eligible Loans pursuant to Section 2.1 hereof is to be consummated.
"Schedule of Student Loans" shall have the meaning set forth in
Section 4.1 hereof.
"Secured Creditors" shall have the same meaning ascribed thereto in
the Warehouse Loan Agreement
"Seller" shall mean _____________________________, or its successors or
assigns.
"Secretary" shall mean the Secretary of the United States Department
of Education or any successor to the pertinent functions of that official or
department under the Higher Education Act, or, when the context so requires,
the former Commissioner of Education of the former United States Department of
Health, Education and Welfare.
"Servicer" shall mean, individually or collectively, UNIPAC Service
Corporation and Great Lakes Higher Education Servicing Corporation as
applicable with respect to the particular Eligible Loan.
"SLS Loan" shall mean a Student Loan made under Section 428A of the
Higher Education Act.
"Special Allowance Payments" shall mean the special allowance payments
authorized to be made by the Secretary by Section 438 of the Higher Education
Act, or similar allowances authorized from time to time by federal law or
regulation.
"Student Borrower" shall mean the obligor on a Student Loan.
6
"Student Loan" shall mean a loan under the Higher Education Act to an
Eligible Borrower for education at an Eligible Institution (or loan to
consolidate the same).
"Trustee" shall mean Norwest Bank Minnesota, National Association, in
its capacity as trustee for NHELP-I, Inc., or its successors or assigns.
"UNIPAC" shall mean UNIPAC Service Corporation, or its successors or
assigns.
"Warehouse Loan Agreement" shall mean that certain Warehouse Loan and
Security Agreement among the Purchaser, the Trustee and Concord Minutemen
Capital Company, LLC dated as of September 30, 1998.
"Unsubsidized Loan" shall mean a Student Loan authorized under Section
428H of the Higher Education Act.
ARTICLE II
LOAN SALE COMMITMENT
2.1 Loan Sale Commitment. Subject to the terms and conditions of
this Agreement, and in express reliance upon the representations, warranties
and covenants set forth herein, Seller agrees to sell, and Purchaser agrees to
purchase free and clear of all Adverse Claims at the Purchase Price all right,
title and interest of the Seller in and to Eligible Loans having an aggregate
Principal Balance of approximately $ _________________, which sale and purchase
is to be consummated on or before ___________________________, 199_ (the
"Scheduled Sale Date").
Upon sale of the Eligible Loans to the Purchaser, the Seller shall
relinquish all power and control over the original promissory notes relating to
such Eligible Loans, and any related documents, instruments or records.
2.2 Delivery Prior to Scheduled Sale Date. The parties agree that
consummation of the sale of a Portfolio of Eligible Loans may occur prior to
the Scheduled Sale Date set forth above at the discretion of the Seller;
provided, however, that the requirements of Article IV shall be met in
connection with such sale regardless of the timing of such sale; and provided
further, that the sale of the Portfolios of Eligible Loans shall be consummated
no later than the Scheduled Sale D.
2.3 Rebate of Premium. In the event the Seller originates or
purchases a Consolidation Loan under Section 428C of the Higher Education Act
and the proceeds of such Consolidation Loan are used to repay the principal and
interest due on an Eligible Loan sold by Seller to Purchaser under this
agreement, then, upon demand by Purchaser
7
(or without demand if Seller has actual knowledge of such repayment), Seller
shall rebate the premium paid by Purchaser to Seller in connection with the
purchase of said Eligible Loan by paying to Purchaser an amount equal to __% of
the principal balance of said Eligible Loan then outstanding; provided, that
the rebate specified herein shall not be payable to the extent paid pursuant to
Section 5.2 hereof.
2.4 Characterization of Transfer. The Purchaser and each Seller
intend that each transfer under Section 2.1 be treated as a true and absolute
sale of all of the Seller's right, title and interest in and under the Eligible
Loans and not a transfer intended as a security interest.
ARTICLE III
SERVICING
3.1 Servicing. All of the Eligible Loans that may be sold by
Seller to Purchaser pursuant to this Agreement are currently serviced (or will
be serviced on the Scheduled Sale Date) by Servicer pursuant to a servicing
agreement. On the effective date (determined under Section 4.4 hereof) for the
sale of a Portfolio of Eligible Loans, Purchaser shall cause the Servicer which
had serviced such Eligible Loans prior to the Scheduled Sale Date to commence
servicing such Portfolio at Purchaser's expense and under the identification
number of Purchaser or its designee.
ARTICLE IV
SALE/PURCHASE OF PORTFOLIOS
4.1 Tender of Eligible Loans to Purchaser. With respect to a
Portfolio of Eligible Loans to be sold to Purchaser pursuant to Section 2.1
hereof, prior to the Scheduled Sale Date (or at such other time as the parties
may agree), Seller shall furnish Purchaser or its designee with a list of the
Eligible Loans (each, a "Schedule of Student Loans") to be included in such
Portfolio, and shall authorize and direct the applicable Servicer to release
such information and documentation to Purchaser or its designee as Purchaser,
in its reasonable judgement, deems necessary and appropriate to undertake a
review of such loans to determine whether such loans constitute Eligible Loans
under this Agreement.
4.2 Conditions of Purchase. Purchaser's obligation to purchase
and pay for Eligible Loans in a Portfolio hereunder shall be subject to the
following conditions precedent:
(a) all representations, warranties and statements by or on
behalf of Seller contained in this Agreement are true on the Scheduled Sale
Date;
8
(b) any notification to or approval by the Secretary or Guarantee
Agency required by the Higher Education Act or the Guarantee Agreement as a
condition to the assignment of Eligible Loans shall have been made or received
and evidence thereof delivered to Purchaser, and
(c) the entire interest of Seller in each Eligible Loan shall
have been duly assigned by endorsement, such endorsement to be without recourse
except as provided in Article V hereof.
4.3 Rejection of Student Loans by Purchaser Prior to Purchase.
(a) If (i) Seller is unable to make or furnish the
representations and warranties required to be made or furnished by it pursuant
to this Agreement as to a Student Loan, or (ii) Seller is unable to fulfill one
or more covenants or conditions of this Agreement as to a Student Loan, or
(iii) Purchaser in its reasonable judgment deems that such Student Loan does
not comply with the terms and conditions of this Agreement or is not being
delivered in compliance with such terms and conditions; or (iv) the conditions
of Section 4.2 shall not have been complied with, then Purchaser may, in its
sole discretion, refuse to accept and purchase any such Student Loan.
(b) If Purchaser rejects a Student Loan, any such Student Loan
shall be excluded from the sale, and Seller shall be furnished with a letter
identifying each excluded Student Loan and stating the basis for its exclusion.
If Purchaser rejects a Student Loan, Seller may substitute a different Eligible
Loan for the rejected Student Loan, provided, however, that the terms and
conditions of such Eligible Loan are in compliance with the terms and
conditions of this Agreement and Seller shall have complied with the
requirements of Section 4.1 with respect to each Eligible Loan.
4.4 Consummation of Sale and Purchase of Portfolio.
(a) To consummate the sale and purchase of a Portfolio of
Eligible Loans, on or before the Scheduled Sale Date, Seller shall deliver to
Purchaser such instruments of transfer, including a ▇▇▇▇ of sale and blanket
endorsement, as Purchaser shall reasonably deem necessary for conveyance of
title of the Eligible Loans contained in the Portfolio free and clear of all
Adverse Claims and, upon receipt by Purchaser of such instruments of transfer
(which may occur by delivery of facsimile copies to be followed by delivery of
the original executed instruments), the Purchaser shall pay to the Seller on
said date the Purchase Price for such Portfolio. The purchase and sale of the
Portfolio shall be effective as of the date of the ▇▇▇▇ of sale. Seller shall
retain all ownership rights with respect to Eligible Loans in a Portfolio at
all times prior to the effective date of the sale of such Portfolio.
9
(b) Unless otherwise agreed by Seller and Purchaser, payment of
the Purchase Price for a Portfolio of Eligible Loans shall be made by wire
transfer of immediately available funds to the Seller or its designated agent,
with no offset, deduction, reserve or other holdback by Purchaser.
4.5 Other Information and Documents. Seller shall furnish or make
available to Purchaser such additional information concerning Seller's Student
Loan portfolio as Purchaser may reasonably request. Seller shall execute all
other documents and take all other steps as may be reasonably requested by
Purchaser from time to time to effect the sale hereunder of a Portfolio of
Eligible Loans.
ARTICLE V
REPURCHASE OBLIGATION OF SELLER
5.1 Conditions Precedent to Repurchase Obligation. At the request
of Purchaser, Seller shall repurchase any Student Loan purchased by Purchaser
pursuant to this Agreement if:
(a) any representation or warranty made or furnished by Seller in
or pursuant to this Agreement shall prove to have been materially inaccurate as
to such Student Loan;
(b) the Secretary or a Guarantee Agency, as the case may be,
refuses to honor all or part of a claim filed with respect to a Student Loan
(including any claim for Interest Subsidy Payments, Special Allowance Payments,
Insurance, reinsurance or Guarantee Payments) on account of any circumstances
or event that occurred prior to the sale of such Student Loan to Purchaser; or
(c) on account of any wrongful or negligent act or omission of
Seller or its servicing agent that occurred prior to the sale of a Student Loan
to Purchaser, a maker (or endorser, if any) has a valid defense that makes the
Student Loan unenforceable with respect to his or her obligation to pay all or
any part of the Student Loan.
5.2 Repurchase by Seller. Upon the occurrence of any of the
conditions set forth in Section 5.1 hereof and upon the request of Purchaser,
Seller shall pay to Purchaser, an amount equal to ______% of the then-
outstanding principal balance of such Student Loan, plus interest and Special
Allowance Payments accrued and unpaid with respect to such Student Loan from
the Scheduled Sale Date to and including the date of repurchase, plus any
attorney's fees, legal expenses, court costs, servicing fees or other expenses
incurred by Purchaser or the appropriate successors or assigns in connection
with such Student Loans and arising out of the reasons for the repurchase. The
repurchase obligation of Seller pursuant to this Section 5.2 shall constitute
the sole remedy to the
10
Purchaser against the Seller with respect to any event described in Section 5.1.
With respect to any Student Loan repurchased by Seller pursuant to this
Agreement, the Purchaser shall assign, without recourse, representation or
warranty, to the Seller all of Purchaser's right, title and interest in and to
such Student Loan, and all security and documents relating thereto.
ARTICLE VI
COVENANTS AND ONGOING OBLIGATIONS OF SELLER
6.1 OBLIGATION OF SELLER TO FORWARD PAYMENTS. Seller shall promptly remit,
or cause to be remitted, to the Servicer as it may direct, all funds received
by Seller after the Scheduled Sale Date which constitute payments of principal
or interest or Special Allowance Payments accrued after the Scheduled Sale Date
with respect to any Student Loan sold pursuant to Section 2.1 hereof.
6.2 OBLIGATION OF SELLER TO FORWARD COMMUNICATIONS. Seller shall
immediately transmit to Purchaser any communication received by Seller after the
Scheduled Sale Date with respect to a Student Loan or the borrower under such a
Student Loan. Such communication shall include, but not be limited to, letters,
notices of death or disability, adjudication of bankruptcy and similar
documents and forms requesting deferment of repayment or loan cancellations.
6.3 NOTIFICATION TO STUDENT BORROWERS. Seller and Purchaser shall provide
each borrower under the Eligible Loans purchased under this Agreement with
notice of the assignment and transfer to the Trustee for the account and on
behalf of Purchaser of Seller's interest in such Eligible Loans as required by
the Higher Education Act.
6.4 NO MODIFICATION OF LENDER AGREEMENTS. Seller will consent to no
amendments to, or modifications of the Contract of Insurance or Guarantee
Agreement that may affect Eligible Loans which are sold or to be sold pursuant
to this Agreement without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld. Amendments or modifications required by the
Higher Education Act are excluded from the requirement of this Section 6.4.
6.5 CLEAR TITLE. Upon the request of the Purchaser the Seller shall cause
all termination statements, or partial releases, as the case may be, with
respect to all existing liens, financing statements and continuation statements
and any other necessary documents covering the right, title and interest of the
Purchaser in and to the Student Loans to be promptly filed, and at all times
(except with respect to termination statements) to be kept recorded, registered
and filed, all in such manner and in such places as may be required by law fully
to preserve and protect the right, title and interest of the Purchaser hereunder
11
to the Student Loans. The Seller shall deliver to the Purchaser file-stamped
copies of, or filing receipts for, any document recorded, registered or filed as
provided above, as soon as available following such recordation, registration or
filing. The Purchaser shall cooperate fully with the Seller in connection with
the obligations set forth above and will execute any and all documents
reasonably required to fulfill the intent of this Section 6.5. The Seller shall
be under no obligation hereunder in the event no Adverse Claims exist with
respect to the Student Loans.
Except for the conveyances hereunder or as specified herein, the Seller
will not purport to sell, pledge, assign or transfer to any other person, or
grant, create, incur, assume or suffer to exist any Adverse Claims on the
Student Loans purchased and assigned hereunder or on any interest therein, and
the Seller shall defend the right, title, and interest of the Purchaser in, to
and under such Student Loans against all Adverse Claims of third parties
claiming through or under the Seller.
6.6 Defenses. Seller shall take all reasonable actions to assure
that no maker of an Eligible Loan has or may acquire a defense to the payment
thereof on account of Seller's action or inaction during the time in which
Seller owned the Eligible Loan.
6.7 Release of Guarantee Agency or Secretary. Seller will not,
with respect to any Eligible Loan subject to this Agreement, agree to release
the Guarantee Agency or the Secretary from any of its contractual obligations to
Guarantee or Insure such loan, or agree to otherwise alter, amend or renegotiate
any terms or conditions under which such Eligible Loan is Guaranteed or Insured,
without the express prior written consent of Purchaser and the Secured
Creditors.
6.8 Borrower Withdrawal. In the event a Student Borrower withdraws
within the period specified as qualifying for a cancellation refund by the
Guarantee Agency, Seller agrees to pay the amount of the premium to be refunded
to Purchaser.
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 Representations and Warranties of Seller. Seller hereby
represents and warrants to Purchaser as of the date hereof and on the date of
sale of any Eligible Loans hereunder that:
(a) Organization and Authority of Seller. Seller is duly
organized, validly existing and in good standing under the laws of the State of
Nebraska, and has all necessary statutory power and authority to own its assets
and carry on its business as now being conducted; Seller has, and its officers
acting on its behalf have, all necessary
12
statutory power and authority to make and perform this Agreement, including
(without limitation) the power and authority to sell, assign and transfer
Student Loans to Purchaser, and to repurchase Student Loans as required under
the terms hereof.
(b) Eligible Lender Status. Seller has applied for and received
the Secretary's or Guarantee Agency's designation, as the case may be, as an
"eligible lender" under the Higher Education Act.
(c) Legal and Binding Obligation. The execution, delivery and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action, and do not require any stockholder approval or
approval or consent of or notice to holders of indebtedness or obligations of
Seller, upon due execution and delivery by the parties hereto, this Agreement
will constitute the legal, valid and binding obligation of Seller, enforceable
in accordance with its terms.
(d) No Conflicts. Neither the execution, delivery or performance
by Seller of this Agreement, nor the consummation or performance by Seller of
the transactions contemplated hereby, will conflict with, result in a violation
of or constitute a default (or an event which could constitute a default with
the passage of time or notice or both) under, (i) any of the terms of Seller's
charter or bylaws, or (ii) any indenture, mortgage, contract or other agreement
to which Seller is a party or by which it or its properties are bound, or any
law or regulation by which it or its properties are bound, where, in the case of
this clause (ii), such conflict, violation or default could have a material
adverse effect on Seller's ability to perform its obligations hereunder. Seller
is not a party to or bound by any agreement or instrument or subject to any
charter or other corporate restrictions or judgment, order, writ, injunction,
decree, law, rule or regulation which may materially and adversely affect the
ability of Seller to perform its obligations under this Agreement.
(e) No Defaults or Violations. Seller is not in default under any
mortgage, deed of trust, indenture or other instrument or agreement to which
Seller is a party or by which it or its properties are bound, or in violation of
any law or regulation, which default or violation could have a material adverse
effect on Seller's ability to perform its obligations hereunder.
(f) No Consents. No consent, approval or authorization of any
government or governmental body, including (without limitation) the Office of
Thrift Supervision, the Federal Deposit Insurance Corporation, the Comptroller
of the Currency, the Board of Governors of the Federal Reserve System or any
state bank regulatory agency, is required in connection with the execution,
delivery and performance of this Agreement, or the consummation of the
transactions contemplated hereby.
13
(g) No Litigation. There are no pending or threatened actions or
proceedings by or before any court, administrative agency or arbitrator, that
could if adversely determined, materially and adversely affect the ability of
Seller to perform its obligations hereunder, and there are no presently existing
orders of any court, administrative agency or arbitrator that could have a
material and adverse effect on the ability of Seller to perform its obligations
hereunder.
(h) Continuing Obligation of Seller. Seller agrees that during the
term of this Agreement, it will (i) remain in good standing and qualified to do
business under the laws of the State of Nebraska and the jurisdictions in which
it operates, (ii) conduct its business in accordance with all applicable state
and federal laws, and (iii) continue to be qualified to carry out this
Agreement.
(i) Solvency. The fair salable value of the assets on a going
concern basis of the Seller and its subsidiaries, on a consolidated basis, as of
the time of each Scheduled Sale Date is in excess of the total amount of their
liabilities.
7.2 Representations and Warranties of Seller with Respect to
Student Loans. Seller hereby represents and warrants to Purchaser that as of the
date of sale of any Eligible Loan:
(a) Accuracy of Information. Any information furnished by Seller
to Purchaser or its agents with respect to any Eligible Loan is true, complete
and correct.
(b) Validity of Loans. Each Eligible Loan has been duly executed
and delivered and constitutes the legal valid and binding obligation of the
maker (and the endorser, if any) thereof, enforceable in accordance with its
terms.
(c) No Defenses Against Repayment of Loans. The amount of the
unpaid principal balance of each Eligible Loan is true and owing, and no
counterclaim, offset, defense or right to rescission exists with respect to any
Eligible Loan which can be asserted and maintained or which, with notice, lapse
of time, or the occurrence or failure to occur of any act or event, could be
asserted and maintained by the Eligible Borrower against Purchaser as assignee
thereof. The rate of interest carried by each Eligible Loan is currently
allowable and was allowable by law at the time the loan was made, and no such
Eligible Loan carries a rate of interest in excess of that permitted by the
provisions of the Higher Education Act.
(d) Ownership and Location of Loans; Existence of Liens. Seller is
the sole owner and holder of each Eligible Loan and has full right and authority
to sell and assign the same free and clear of all Adverse Claims, and upon the
endorsement and delivery of
14
promissory notes evidencing such Eligible Loan to Purchaser pursuant to this
Agreement Purchaser will acquire full right, title and interest in the Eligible
Loan free and clear of all Adverse Claims whatsoever. All documentation relating
to the Eligible Loans including the original promissory note for each Eligible
Loan, is in the possession of the applicable Servicer.
(e) Guarantee and Insurance on Loans. Each Eligible Loan sold
hereunder is either Insured or Guaranteed. With respect to all Insured Loans
being acquired, a Contract of Insurance is in full force and effect with respect
thereto, the applicable Certificates of Insurance are valid and binding upon the
parties thereto in all respects, Seller is not in default in the performance of
any of its covenants and agreements made in respect thereof and such Insurance
is freely transferable as an incident to the sale of each Eligible Loan to be
sold. With respect to all Guaranteed Loans being acquired, a Guarantee Agreement
is in full force and effect with respect thereto and is valid and binding upon
the parties thereto in all material respects, Seller is not in default in the
performance of any of its covenants and agreements made in such Guarantee
Agreement, and such Guarantee is freely transferable as an incident to the sale
of each Eligible Loan to be sold. All amounts due and payable to the Secretary
or the Guarantee Agency, as the case may be have been paid in full by Seller,
and none of the Eligible Loans to be sold to Purchaser has at any time been
tendered to either the Secretary or the Guarantee Agency for payment.
(f) Compliance with Higher Education Act. Each Eligible Loan
complies in all respects with the requirements of the Higher Education Act and
is an Eligible Loan as those terms are defined in this Agreement.
(g) Compliance with Federal Laws. Each Eligible Loan was made in
compliance with all applicable local, state and federal laws, rules and
regulations, including without limitation all applicable nondiscrimination,
truth-in-lending, consumer credit and usury laws.
(h) No Discrimination. In making each Eligible Loan to be
purchased by Purchaser pursuant to this Agreement, Seller has not discriminated
based upon the Eligible Institutions attended by, or the age, sex, race,
national origin, color, religion, handicapped status, income, attendance at a
particular Eligible Institution within the area served by Purchaser, length of
the Student Borrower's educational program, or the Student Borrower's academic
year in school.
(i) Serial Loans. The Eligible Loans to be purchased pursuant to
this Agreement include all Eligible Loans of any one Eligible Borrower held by
Seller.
15
(j) Due Diligence in Servicing Loans. Seller and any independent
servicer have each exercised and shall continue until the Scheduled Sale Date
to exercise due diligence and reasonable care in making, administering,
servicing and collecting the Eligible Loans in compliance with the requirements
of the Higher Education Act and the rules and regulations of the Secretary and
the applicable Guaranty Agency, and Seller has conducted a reasonable
investigation of sufficient scope and content to enable it duly to make the
representations and warranties contained in this Agreement. Seller has paid the
costs and expenses incident to origination of the Eligible Loans, and has no
right of reimbursement therefor from Purchaser.
(k) Origination Fees. Seller has reported the amount of origination
fees (if any) authorized to be collected with respect to any Eligible Loan
pursuant to Section 438(c) of the Higher Education Act to the Secretary for the
period in which such fee was authorized to be collected; and Seller has made
any refund of an origination fee collected in connection with any Eligible Loan
which may be required pursuant to the Higher Education Act.
(l) Insurance Premium. For each Eligible Loan, Seller has reported
the amount of the insurance premium authorized to be collected, and has paid
said premium to the Guarantee Agency or the Secretary with all rights therein
inuring to Purchaser.
(m) Schedule of Student Loans. This information set forth in each
Schedule of Student Loans is true and correct in all material respects as of
the opening of business on the respective Scheduled Sale Date, and no selection
procedures believed to be adverse to the Purchaser have been utilized in
selecting the Student Loans for inclusion therein.
(n) Title. It is the intention of the Seller that the transfer and
assignment from the Seller to the Purchaser herein contemplated constitute a
true sale of the Student Loans to the Purchaser and that neither the interest
in nor title to the Student Loans shall become or be deemed property of the
Seller for any purpose under state or federal law.
(o) Documents. The Seller shall furnish and file, if appropriate, any
document reasonably requested by the Purchaser to perfect the Purchaser's
ownership interest in the Student Loans.
(p) No Fraudulent Conveyance. The transactions contemplated by this
Agreement are and will be in the ordinary course of the Seller's business and
the Seller has valid business reasons for transferring the Student Loans rather
than obtaining a secured loan with the Student Loans as collateral. Both before
and immediately after giving effect to any transfer: (i) the Seller transferred
or will transfer the Student Loans to the Purchaser without any intent to
hinder, delay or defraud any current or future
16
creditor of the Seller; (ii) the Seller was not engaged and was not about to
engage, and will not engage, in any business or transaction for which any
property remaining with the Seller was or will constitute unreasonably small
capital in relation to the business of the Seller or the transaction; (iii) the
Seller did not intend or will not intend to incur, and did not believe or
reasonably should not have believed, or will not believe or reasonably shall not
have believed, that it would incur debts beyond its ability to pay as they
become due; and (iv) the Seller was not and will not be insolvent or did not or
will not become insolvent as a result of any transfer.
(q) Sales Not Subject to Bulk Transfer. Each sale, transfer,
assignment and conveyance of the Student Loans by the Seller pursuant to this
Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
(r) No Transfer Taxes Due. Each sale, transfer, assignment and
conveyance of the Student Loans (including all payments due or to become due
thereunder) by the Seller pursuant to this Agreement is not subject to and will
not result in any tax, fee or governmental charge payable by the Purchaser or
the Seller to any federal, state or local government ("Transfer Taxes") except
such Transfer Taxes as are paid by the Seller at the time of transfer,
assignment and conveyance and except UCC filing fees. In the event that the
Purchaser receives actual notice of any unpaid Transfer Taxes arising out of the
transfer, assignment and conveyance of the Student Loans, on written demand by
the Purchaser, or upon the Seller otherwise being given notice thereof, the
Seller shall pay, and otherwise indemnify and hold the Purchaser harmless
therefor. The Seller shall not be responsible for the Purchaser's income taxes.
7.3 Representations, Warranties and Covenants of Purchaser.
Purchase hereby represents, covenants and warrants to Seller that:
(a) Organization and Authority of Purchaser. Purchaser is a duly
organized, validly existing corporation in good standing under the laws of the
State of Nevada; Purchaser has, and its officers acting on its behalf have, all
necessary statutory power and authority to make and perform this Agreement,
including (without limitation) the power and authority to purchase Student Loans
from Seller under the terms and conditions of this Agreement.
(b) Legal and Binding Obligation. The execution, delivery and
performance of this Agreement by Purchaser have been duly authorized by all
necessary corporate action, and do not require any stockholder approval or
approval or consent of, or notice to, holders of indebtedness or obligations of
Purchaser, upon due execution and delivery by
17
the parties hereto, this Agreement will constitute the legal, valid and binding
obligation of Purchaser, enforceable in accordance with its terms.
(c) No Conflict. Neither the execution, delivery and performance
by Purchaser of this Agreement, nor the consummation or performance by Purchaser
of the transactions, contemplated hereby, will conflict with, result in a
violation of, or constitute a default (or an event which could constitute a
default with the passage of time or notice of both) under, (i) any of the terms
of Purchaser's charter or bylaws, or (ii) any indenture, mortgage, contract or
other agreement to which Purchaser is a party or by which it or its properties
are bound, or any law or regulation by which it or its properties are bound,
where, in the case of this clause (ii), such conflict, violation or default
could have a material adverse effect on Purchaser's ability to perform its
obligations hereunder. Purchaser is not a party to or bound by any agreement or
instrument or subject to any charter or other corporate restrictions or
judgment, order, writ, injunction, decree, law, rule or regulation which may
materially and adversely affect the ability of Purchaser to perform its
obligations under this Agreement.
(d) No Defaults or Violations. Purchaser is not in default under
any mortgage, deed of trust, indenture or other instrument or agreement to
which Purchaser is a party or by which it or its properties are bound, or in
violation of any law or regulation, which default or violation could have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder.
(e) No Consents. No consent, approval or authorization of any
government or governmental body is required in connection with the execution,
delivery and performance of this Agreement, or the consummation of the
transactions contemplated hereby.
(f) No Litigation. There are no pending or threatened actions or
proceedings by or before any court, administrative agency or arbitrator, that
could if adversely determined, materially and adversely affect the ability of
Purchaser to perform its obligations hereunder, and there are no presently
existing orders of any court, administrative agency or arbitrator that could
have a material and adverse affect on the ability of Purchaser to perform its
obligations hereunder.
(g) Continuing Obligation of Purchaser. Purchaser agrees that
during the term of this Agreement, it will (i) remain in good standing and
qualified to do business under the laws of the State of Nevada, and any other
jurisdictions in which it operates, (ii) conduct its business in accordance
with all applicable state and federal laws, and (iii) continue to be qualified
to carry out this Agreement.
18
ARTICLE VIII
MISCELLANEOUS
8.1 Communications and Notices. Unless otherwise expressly provided
herein, all notices, requests, demands or other instruments which may or are
required to be given by either party to the other 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 to be given, or upon expiration of
a period of 48 hours from and after the postmark thereof when mailed postage
prepaid by registered or certified mail, requesting return receipt, addressed
as follows:
If to Seller:
___________________________________
___________________________________
___________________________________
Attention: ________________________
Phone: (___) ______________________
Fax: (___) ________________________
If to Purchaser:
NHELP-I, Inc.
___________________________________
___________________________________
___________________________________
Attention: ________________________
Phone: (___) ______________________
Fax: (___) ________________________
Any party may change the address and name of the addressee to which subsequent
notices are to be sent to it, by notice to the others given as aforesaid, but
any such notice of change, if sent by mail, shall not be effective until the
5th day after it is mailed.
8.2 Forms of Instruments Proceedings. All instruments relating to the
sale and purchase of the Student Loans, and all proceedings to be taken in
connection with this Agreement and the transactions contemplated herein, shall
be in form and substance mutually satisfactory to Seller and Purchaser and
their respective counsel.
8.3 Payment of Expenses. Each party to this Agreement shall pay its
own expenses incurred in connection with the preparation, execution and
delivery of this
19
Agreement and the transactions herein contemplated, including, but not limited
to, the fees and disbursements of counsel.
8.4 NON-BUSINESS DAYS. If the date for taking any action required
hereunder is not a Business Day, then such action can be taken, without interest
or penalty, on the next succeeding Business Day, with the same force and effect
as if such action was taken on the required date.
8.5 AMENDMENTS, MODIFICATIONS AND WAIVERS. The provisions of this
Agreement cannot be amended, waived or modified unless such amendment, waiver
or modification be in writing and signed by the parties hereto. Inaction or
failure to demand strict performance shall not be deemed a waiver.
8.6 SEVERABILITY. If any provision of this Agreement shall be held, or
deemed to be or shall, in fact, be inoperative or unenforceable as applied in
any particular situation, such circumstance shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
situation or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatsoever. The invalidity
of any one or more phrases, sentences, clauses or paragraphs herein contained
shall not affect the remaining portions of this Agreement or any part hereof.
8.7 REMEDIES. Unless otherwise expressly provided herein, no remedy by the
terms of this Agreement conferred upon or reserved to the Purchaser is intended
to be exclusive of any other remedy, but each and every such remedy shall be
cumulative and in addition to every other remedy given under this Agreement or
existing at law or in equity (including, without limitation, the right to such
equitable relief by way of injunction), or statute on or after the date of this
Agreement.
8.8 ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred, in whole or in part, by one party without the prior written consent
of the other parties, which consent shall not unreasonably be withheld;
provided, however, that the Seller consents to assignment by the Purchaser of
rights hereunder to the Trustee on behalf of the Secured Creditors.
8.9 BINDING EFFECT. All covenants and agreements herein contained shall
extend to and be obligatory upon all successors of the respective parties
hereto.
8.10 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the internal laws of the State of Nebraska, without reference
to its conflicts-of-laws principles.
20
8.11 Entire Agreement. This Agreement embodies and constitutes the
entire understanding between the parties with respect to the transactions
contemplated by this Agreement, and all prior or contemporaneous agreements,
understandings, representations and statements between the parties, written or
oral, between the parties, are merged into and superseded by this Agreement.
8.12 Counterparts. This Agreement may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
8.13 Consolidation Reimbursement. If Purchaser acquires any Eligible
Loan from Seller through the consolidation procedures of Section 428C of the
Higher Education Act, Purchaser shall pay Seller an amount equal to ____% of
the Principal Balance of such Eligible Loans so acquired, plus accrued interest
to the date of consolidation.
8.14 Trustee as Eligible Lender; Third Party Beneficiaries. The
Trustee, as eligible lender under the Higher Education Act, shall take title to
all Eligible Loans to be purchased hereunder on behalf of and for the account
of the Purchaser. This Agreement shall inure to the benefit of the Trustee, the
Secured Creditors and their respective successors and assigns. Without limiting
the generality of the foregoing, all representations, covenants and agreements
in this Agreement which expressly confer rights upon the Purchaser shall run
directly to the Trustee and the Secured Creditors and the Trustee and the
Secured Creditors shall be entitled to rely on and enforce such
representations, covenants and agreements to the same extent as if they were a
party hereto. The foregoing creates a permissive right on behalf of the Trustee
and the Secured Creditors, and the Trustee and the Secured Creditors shall be
under no duties or obligations hereunder. All bills of sale and endorsements
shall be made to the Trustee on behalf of the Purchaser.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Sale
Agreement to be duly executed as of the day and year first written above.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
21
NHELP-I, INC.
----------------------------------
By: By:
---------------------------- -----------------------------
Title: Title:
---------------------------- -----------------------------
22
EXHIBIT B
FORM OF VALUATION AGENT AGREEMENT
FORM OF VALUATION AGENT AGREEMENT
among
[VALUATION AGENT],
as the Valuation Agent
NHELP-I, INC.,
as the Borrower
And
CONCORD MINUTEMEN CAPITAL COMPANY, LLC,
as the Lender
Dated as of ____________, ____
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms...................................................................... 1
Section 1.02. Computation of Time Periods................................................................ 5
ARTICLE II
VALUATION AGENT; FEES; TERM
OF AGREEMENT
Section 2.01. Appointment and Acceptance................................................................. 5
Section 2.02. Performance by Other Parties............................................................... 6
Section 2.03. Resignation and Discharge.................................................................. 6
Section 2.04. Valuation Agent Fees....................................................................... 6
Section 2.05. Term of Agreement.......................................................................... 6
ARTICLE III
CALCULATIONS
Section 3.01. Maximum Advance Percentage Calculations.................................................... 7
Section 3.02. Loan Valuation Percentage Calculations..................................................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES........................................................................... 8
ARTICLE V
INDEMNIFICATION.......................................................................................... 9
ARTICLE VI
MISCELLANEOUS
Section 6.01. Confidentiality............................................................................ 10
Section 6.02. Amendment.................................................................................. 10
Section 6.03. Governing Law.............................................................................. 10
Section 6.04. Notices.................................................................................... 10
Section 6.05. Third Party Beneficiary.................................................................... 12
Section 6.06. Assignment by the Lender................................................................... 12
TABLE OF CONTENTS
(continued)
Section 6.07. Submission to Jurisdiction; Waiver of Jury and Bond........................................ 12
Section 6.08. No Petition................................................................................ 13
Section 6.09. Limited Recourse Nature of Transactions.................................................... 13
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 ADVANCE PERCENTAGE CALCULATION REPORT
EXHIBIT B FORM OF VALUATION REPORT
EXHIBIT C FORM OF REQUEST FOR VALUATION REPORT
EXHIBIT D INITIAL LOAN SERVICING FEES
ii
THIS VALUATION AGENT AGREEMENT (the "Agreement") is made as of _____,
_____ by and among [VALUATION AGENT], a corporation duly organized under the
laws of the State of Delaware (the "Valuation Agent"); NHELP-1, INC, a
corporation duly organized under the laws of the State of Nevada (the
"Borrower"); and CONCORD MINUTEMEN CAPITAL COMPANY, LLC, a special purpose
finance company administered by the Liberty Hampshire Company, LLC ("Concord").
PRELIMINARY STATEMENTS
WHEREAS the Borrower, Concord and Norwest Bank Minnesota, National
Association (the "Trustee") have entered into a Warehouse Loan and Security
Agreement dated as of September 30, 1998 (the "Loan Agreement"), pursuant to
which Concord has agreed to make loans to the Borrower from time to time subject
to the conditions set forth therein for the purpose of financing the purchase of
certain types of education loans (the "Student Loans", and when financed under
the Loan Agreement, the "Financed Loans");
WHEREAS Concord has entered into a Liquidity Agreement dated as of
September 30, 1998 (the "Liquidity Agreement") pursuant to which Concord may
assign to the Liquidity Providers (as defined in the Loan Agreement) its right,
title and interest to the whole or part of the loans made by Concord;
WHEREAS the Loan Agreement and the Liquidity Agreement provide 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 Concord
and the Liquidity Providers, a security interest in the Financed Loans, all
revenues and recoveries of principal from the Financed Loans and any other
collections, funds and accrued earnings held thereon held in the various funds
and accounts created under the Loan Agreement (collectively, the "Pledged
Collateral");
WHEREAS the maximum amount of funds the Lender and the Agent will make
available to the Borrower from time to time for the purpose of financing Student
Loans is in part based upon the characteristics of the Financed Loans and
certain other assumptions as described herein; and
WHEREAS the Valuation Agent has agreed to perform certain calculations
relating to the Pledged Collateral, in accordance with the assumptions and
procedures described herein and at the times and under the circumstances
specified in the Loan Agreement
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS. As used in this Agreement and its
exhibits, the terms set forth above and in this Section 1.01 shall have the
meanings ascribed thereto (such meanings to be equally applicable to both the
singular and plural forms of the terms defined)
unless a contrary definition is given to such term in the Loan Agreement, in
which case the definition in the Loan Agreement shall be controlling.
"Advance Percentage Calculation Assumptions" means the following cash
flow and related assumptions to be used by the Valuation Agent in connection
with its preparation of each Advance Percentage Calculation Report:
(a) The 91-day Treasury ▇▇▇▇ rate shall equal Current T-▇▇▇▇;
(b) LIBOR shall be a rate per annum equal to the sum of: (i)
Current T-▇▇▇▇, (ii) the Current ▇▇▇ Spread, and (iii) 0.20%;
(c) the Cost of Funds shall be a rate per annum equal to the sum
of (i) LIBOR, and (ii) 0.225%;
(d) the Discount Rate to be applied to the Net Revenues shall be a
rate per annum equal to the sum of (i) the Cost of Funds, and (ii) 0.80%;
(e) interest earnings on short-term balances shall be a rate per
annum equal (i) LIBOR, less (ii) 0.10%;
(f) the cumulative default rate shall be 15%;
(g) default occurrences shall be spread out evenly over each year
of repayment in accordance with the following schedule: 70% in the first year of
repayment; 20% in the second year of repayment; 10% in the third year of
repayment; and 0% thereafter;
(h) the principal balance of Student Loans that receive an
interest rate reduction pursuant to any Borrower Incentive Program will equal
the product of: (i) the aggregate principal balance (not including any
capitalized interest) of Student Loans eligible to participate in any such
program, and (ii) 20%;
(i) servicing fees for Student Loans will be based upon the fees
stated in the applicable Servicing Agreements covering the Financed Loans that
are then in effect. The presently effective servicing fees for UNIPAC Service
Corporation ("UNIPAC") and Great Lakes Higher Education Servicing Corporation
("Great Lakes") are attached hereto as Exhibit D;
(j) fees payable to the U.S. Department of Education on
Consolidation Loans made after October 1, 1993 will be charged at a rate of
1.05% (or such other rate as may be provided for under applicable law) per annum
on the outstanding principal balance of such loans, payable monthly; and
(k) the Portfolio Administration Fee shall be 0.45% per annum,
payable monthly in arrears based upon the unpaid principal balance of Financed
Loans at the end of the prior month.
2
Pursuant to the terms of the Loan Agreement, the assumptions in
paragraphs (a) through (k) above may be amended from time to time with the
mutual consent of the Borrower, the Required Lenders and the Agent (with notice
to the Valuation Agent stating the specific nature of such changes and that any
and all consents and approvals necessary to effect such changes have been
obtained). All other assumptions regarding Financed Loans shall be as set forth
in the Portfolio Characteristics.
"Advance Percentage Calculation Report" has the meaning set forth in
the Loan Agreement, and is to be provided by the Valuation Agent to the
Borrower, Concord, the Agent and the Trustee prior to each new financing of
Student Loans, in the form attached hereto as Exhibit A.
"Borrower Incentive Program" means any interest rate reduction program
applicable to any Financed Loans or Student Loans to be financed.
"Cash Flow Projections" mean the estimates prepared by the Valuation
Agent for the period commencing on the most recent date for which the Valuation
Agent has received the Portfolio Characteristics illustrating: (a) the income
to be received from the Financed Loans (excluding borrower interest, federal
interest subsidy and federal special allowance payments accrued thereon and
unpaid as of the date of the Portfolio Characteristics) and Permitted
Investments, including borrower principal and interest payments, federal
interest subsidy payments, federal special allowance payments, guaranty
payments, sale proceeds and investment earnings (collectively, the "Revenues"),
(b) the costs incurred in the financing of such Financed Loans, including
acquisition fees, debt service, servicing fees, valuation fees, trustee fees,
administrative fees, consolidation loan rebate and any other charges relating
to the financing, servicing and administration of such loans (collectively, the
"Expenses"), and (c) the periodic and cumulative Revenues less the periodic and
cumulative Expenses (the "Net Revenues").
"Cost of Funds" means the interest rate per annum used by the Valuation
Agent in the Cash Flow Projections for computing debt interest expense.
"Current LIBOR" means the most recent interest rate per annum
available to the Valuation Agent for one-month eurodollar deposits, as
published in The Wall Street Journal.
"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 published in The Wall Street Journal.
"Current ▇▇▇ Spread" means (a) Current LIBOR, less (b) Current T-▇▇▇▇.
"Discount Rate" means the rate of discount per annum stipulated in the
Advance Percentage Calculation Assumptions and the Valuation Report
Assumptions, as applicable, to be used by the Valuation Agent in connection
with its determination of the present value of Net Revenues.
"Loan Valuation Percentage" has the meaning set forth in the Loan
Agreement, and is to be determined by the Valuation Agent by: (a) dividing (i)
the present value of the Net Revenues
3
(using the Portfolio Characteristics and the Valuation Report Assumptions) by
(ii) the outstanding principal balance of Student Loans, and (b) adding 100% to
the resulting percentage.
"Net Revenues" means the projected net income to be received from the
Student Loans after taking into account financing costs, loan defaults and
delinquencies, fees and other charges, all as set forth in the Advance
Percentage Calculation Assumptions and the Valuation Report Assumptions, as
applicable.
"Portfolio Characteristics" means the information contained in the
reports provided to the Valuation Agent by or at the direction of the Borrower,
in a form acceptable to the Valuation Agent (such form could also include a
computer tape provided by any Servicer), prior to: (a) each proposed financing
of new Student Loans, and (b) each Valuation Date. Such reports shall set forth
all of the particular characteristics of Student Loans to be financed or
Financed Loans, as the case may be, necessary in order that the Valuation Agent
shall be able to perform the calculations required hereunder or under the Loan
Agreement, including, but not limited to breakdowns by loan type, borrower
interest rate, borrower status, special allowance margin, disbursement date,
remaining term by status, applicable loan servicer, guarantee level and
eligibility for, level of participation in and terms of any Borrower Incentive
Program.
"Valuation Agent Fees" means the fees payable to the Valuation Agent,
pursuant to Section 3.01 hereof and Section 2.06(c)(ix) of the Loan Agreement,
in such amounts and on such dates equal to 0.025% times the average outstanding
principal balance of Advances during each Calculation Period.
"Valuation Report" means a report furnished by the Valuation Agent to
the Required Lenders, the Borrower and the Trustee pursuant to Section
5.09(a)(i) of the Loan Agreement, in the form attached hereto as Exhibit B.
"Valuation Report Assumptions" means the following cash flow and
related assumptions to be used by the Valuation Agent in connection with its
preparation of each Valuation Report required under the Loan Agreement:
(a) T-▇▇▇▇ shall equal Current T-▇▇▇▇;
(b) LIBOR shall be a rate per annum equal to the sum of:
(i) Current T-▇▇▇▇, and (ii) the Current ▇▇▇ Spread;
(c) the Cost of Funds shall be a rate per annum equal to
the sum of (i) LIBOR, and (ii) 0.20%;
(d) the Discount Rate to be applied to the Net Revenues
shall be a rate per annum equal to the sum of (i) the Cost of Funds,
and (ii) 0.80%;
(e) interest earnings on short-term balances shall be a
rate per annum equal to: (i) LIBOR, less (ii) 0.10%;
(f) the cumulative default rate shall be 15%;
4
(g) default occurrences shall be spread out evenly over each
year of repayment in accordance with the following schedule: 70% in
the first year of repayment; 20% in the second year of repayment; 10%
in the third year of repayment; and 0% thereafter;
(h) the principal balance of Student Loans that receive an
interest rate reduction pursuant to any Borrower Incentive Program
will equal the product of: (i) the aggregate principal balance of
Student Loans receiving any such reduced interest rate as shown in the
Portfolio Characteristics, and (ii) 105%;
(i) servicing fees for Student Loans will be based upon the
fees stated in the applicable Servicing Agreements covering the
Financed Loans that are then in effect. The presently effective
servicing fees for UNIPAC Service Corporation ("UNIPAC") and Great
Lakes Higher Education Servicing Corporation ("Great Lakes") are
attached hereto as Exhibit D;
(j) fees payable to the U.S. Department of Education on
Consolidation Loans made after October 1, 1993 will be charged at a
rate of 1.05% per annum (or such other rate as may be provided for
under applicable law) on the outstanding principal balance of such
loans, payable monthly; and
(k) the Portfolio Administration fee shall be 0.45% per
annum, payable monthly in arrears based upon the unpaid principal
balance of loans at the end of the prior month.
(l) Pursuant to the terms of the Loan Agreement, the
assumptions in paragraphs (a) through (k) above may be amended from
time to time with the mutual consent of the Borrower, the Required
Lenders and the Agent (with notice to the Valuation Agent stating the
specific nature of such changes and that any and all consents and
approvals necessary to effect such changes have been obtained). All
other assumptions regarding Financed Loans shall be as set forth in
the Portfolio Characteristics.
SECTION 1.02. COMPUTATION OF TIME PERIODS. Unless otherwise stated
in this Agreement, in the computation of a period of time from a specified date
to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
ARTICLE II
VALUATION AGENT; FEES; TERM OF AGREEMENT
SECTION 2.01 APPOINTMENT AND ACCEPTANCE. The Borrower and the Lender
hereby appoint [VALUATION AGENT] as Valuation Agent under this Agreement in
connection with the Loan Agreement and [VALUATION AGENT] hereby accepts such
appointment. For purposes of this Valuation Agent Agreement the principal
office of [VALUATION AGENT] shall be _______________________, unless otherwise
indicated to the other parties hereto and the Agent in writing by [VALUATION
AGENT].
5
SECTION 2.02. PERFORMANCE BY OTHER PARTIES. The Valuation Agent shall
be obligated to perform hereunder only upon performance in all material
respects by the Borrower (a) to provide statistical information to the Valuation
Agent at the times and in the manner described in the Loan Agreement, and (b)
of its duties and responsibilities hereunder.
SECTION 2.02. RESIGNATION AND DISCHARGE.
(a) The Valuation Agent may at any time resign and be
discharged of the duties and obligations created by this Agreement by
giving at least sixty (60) days' written notice to the Borrower,
Concord, the Trustee and the Agent.
(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 Required Lenders, by
an instrument signed by the Borrower and filed with the Valuation
Agent, Concord, the Trustee and the Agent. Upon the occurrence of an
Event of Default (as defined in the Loan Agreement), the Required
Lenders 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 Concord and the Agent, which shall not be
unreasonably withheld, or by the Required Lenders after an Event of Default (as
defined in the Loan Agreement), provided that such resignation by the Valuation
Agent shall be effective upon sixty days' written notice whether or not a
successor has been appointed if and when the Valuation Agent reasonably
determines that one of the following shall occur: (i) the Borrower is not
diligently pursuing the appointment of a successor Valuation Agent at the level
of compensation generally paid in the marketplace for the services to be
performed by the Valuation Agent, (ii) the Loan Agreement or the Liquidity
Agreement has been amended or modified in such a manner as would affect the
Valuation Agent in general or its ability to properly perform its duties
hereunder without the consent of the Valuation Agent, or (iii) any condition to
performance by the Valuation Agent hereunder or under the Loan Agreement has not
been satisfied.
SECTION 2.04. VALUATION AGENT FEES. In accordance with the priorities
set forth in Section 2.06 of the Loan Agreement, the Borrower agrees to cause
the Trustee to pay to the Valuation Agent, on each Settlement Date, the
Valuation Agent Fee. Such fees should be remitted to the Valuation Agent in
immediately available funds using the following instructions:
----------------
----------------
----------------
----------------
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SECTION 2.05. TERM OF AGREEMENT. Unless otherwise terminated pursuant
to the provisions of Section 2.03 hereof, this Agreement shall terminate on
September 30, 2003, unless extended to such later date as mutually agreed to in
writing by the Borrower and the Valuation Agent, with the consent of the
Required Lenders and the Agent.
6
ARTICLE III
CALCULATIONS
SECTION 3.01. MAXIMUM ADVANCE PERCENTAGE CALCULATIONS.
(a) Pursuant to the terms and at the times required in the Loan
Agreement, the Valuation Agent shall compute the Maximum Advance Percentage by
undertaking certain analytical procedures with respect to the Student Loans to
be financed thereunder. The Maximum Advance Percentage shall be determined by:
(i) dividing (A) the present value of the Net Revenues (using the Portfolio
Characteristics and the Advance Percentage Calculation Assumptions) by (B) the
outstanding principal balance of Student Loans, and (ii) adding 100% to the
resulting percentage.
(b) Not later than three Business Days prior to each Advance that does
not constitute a Rollover Advance, and in any case not later than the fourth
Business Day preceding each January 31, April 30, July 31 and October 31, the
Valuation Agent shall:
(i) perform Cash Flow Projections based upon the Portfolio
Characteristics and the Advance Percentage Calculation Assumptions
(both as defined herein);
(ii) calculate the Maximum Advance Percentage (as defined
herein and in the Loan Agreement) using the results of the Cash Flow
Projections described in Section 3.01(b)(i) above; and
(iii) submit a report to the Lender, the Agent, the Borrower
and the Trustee in the form of Exhibit A attached hereto.
SECTION 3.02. LOAN VALUATION PERCENTAGE CALCULATIONS.
(a) Pursuant to the terms and at the times required in the Loan
Agreement, the Valuation Agent shall compute the Loan Valuation Percentage by
undertaking certain analytical procedures with respect to the Financed Loans.
(b) Within 30 days after the Valuation Agent's receipt of a written
request for a Valuation Report from any of Concord, the Agent or the Borrower,
in the form of Exhibit C attached hereto, and in any case not later than the
fourth Business Day preceding each January 31, April 30, July 31, and October
31, (each a "Valuation Date") the Valuation Agent shall:
(i) perform Cash Flow Projections based upon the Portfolio
Characteristics and the Valuation Report Assumptions (both as defined
herein);
(ii) calculate the Loan Valuation Percentage using the results
of the Cash Flow Projections describe in Section 3.02(b)(i) above; and
7
(iii) submit a report to Concord, the Agent, the Borrower and the
Trustee in the form of Exhibit B attached hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Valuation Agent represents and warrants as follows:
(a) The Valuation Agent is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
qualified to do business, and is in good standing, in every jurisdiction in
which the nature of its business requires it to be so qualified.
(b) The execution, delivery and performance by the Valuation Agent of
this Agreement is within the Valuation Agent's organizational powers, has been
duly authorized by all necessary organizational action, does not contravene
(i) the Valuation Agent's Articles of Incorporation or bylaws, (ii) any law,
rule or regulation applicable to the Valuation Agent, (iii) any contractual
restriction binding on or affecting the Valuation Agent or its property or
(iv) any order, writ, judgment, award, injunction or decree binding on or
affecting the Valuation Agent or its property. This 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 Agreement.
(d) This Agreement constitutes the legal, valid and binding obligations
of the Valuation Agent enforceable against the Valuation Agent in accordance
with its terms, subject to (i) applicable bankruptcy, insolvency, moratorium,
or other similar laws affecting the rights of creditors, and (ii) general
principals of equity, whether such enforceability is considered in a proceeding
in equity or at law.
(e) There is no pending or, to the knowledge of the Valuation Agent,
threatened, action or proceeding affecting the Valuation Agent before any court,
governmental agency or arbitrator that may materially adversely affect the
financial condition of the Valuation Agent or the ability of the Valuation
Agent to perform its obligations under this Agreement. The Valuation Agent is
not in default with respect to any order of any court, arbitrator or any other
Governmental Authority.
(f) Each document and report delivered by, or to be delivered by, the
Valuation Agent pursuant to the terms of Articles II or III hereof shall be
executed on behalf of the Valuation Agent by a duly authorized officer of the
Valuation Agent.
8
ARTICLE V
INDEMNIFICATION
(a) Without limiting any other rights which the Lender, the
Borrower or any of their respective Affiliates may have hereunder or under
applicable law, and notwithstanding any limitation on recourse to the Valuation
Agent set forth in this Agreement, the Valuation Agent hereby agrees to
indemnify Concord, the Borrower and each of their respective officers,
directors, employees, agents, attorneys-in-fact, Affiliates and assigns
(including without limitation the Liquidity Providers) from and against any and
all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or as a result of this Agreement,
excluding, however, Indemnified Amounts to the extent resulting from the gross
negligence or willful misconduct of the Person seeking indemnification. Without
limiting the foregoing, the Valuation Agent shall indemnify the Lender, the
Borrower and each of their respective officers, directors, employees, agents,
attorneys-in-fact, Affiliates and assigns (including without limitation the
Liquidity Providers) for Indemnified Amounts relating to or resulting from:
(i) any representation or warranty made or deemed made by
the Valuation Agent, under or in connection with this Agreement, which
shall have been false or incorrect when made or deemed made or
delivered;
(ii) the failure by the Valuation Agent to comply with any
term, provision or covenant contained in this Agreement; and
(iii) any failure of the Valuation Agent to perform its
duties or obligations in accordance with the provisions of this
Agreement.
(b) Without limiting any other rights which the Valuation Agent
or any of its respective Affiliates may have hereunder or under applicable law,
and notwithstanding any limitation on recourse to the Borrower set forth in
this Agreement, the Borrower hereby agrees to indemnify the Valuation Agent
and each of its officers, directors, employees, agents, attorneys-in-fact and
Affiliates from and against any and all damages, losses, claims, liabilities
and related costs and expenses, including reasonable attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising out
of or as a result of this Agreement, excluding, however, Indemnified Amounts to
the extent resulting from the gross negligence or willful misconduct of the
Valuation Agent or its Affiliates. Without limiting the foregoing, the
Borrower shall indemnify the Valuation Agent and each of its respective
officers, directors, employees, agents, attorneys-in-fact and Affiliates for
Indemnified Amounts relating to or resulting from:
(i) any representation or warranty made or deemed made by
the Borrower under or in connection with this Agreement, which shall
have been false or incorrect when made or deemed made or delivered;
9
(ii) the failure by the Borrower to comply with any
term, provision or covenant contained in this Agreement; and
(iii) any failure of the Borrower to perform its
duties or obligations in accordance with the provisions of
this Agreement.
Any amounts determined by a court of competent jurisdiction as a result of a
proceeding brought which is subject to the indemnification provisions of this
Article V shall be paid by the Valuation Agent to Concord, the Borrower or
their respective officers, directors, employees, agents, attorneys-in-fact,
Affiliates or the Liquidity Providers, or by the Borrower to the Valuation
Agent or its officers, directors, employees, agents, attorneys-in-fact or
Affiliates, as the case may be, for the benefit of the applicable payee, within
two Business Days following written demand therefor.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. CONFIDENTIALITY. Except as permitted by the Loan
Agreement, the Valuation Agent, Concord and the Borrower each agree to keep
confidential and not to disclose any non-public information, calculations,
exhibits or documents related to this Agreement or the Loan Agreement, without
the express written consent of the other parties thereto.
SECTION 6.02. AMENDMENT. This Valuation Agent Agreement may be
amended only by a written agreement signed by those parties hereto and with the
prior written consent of the Agent.
SECTION 6.03. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
SECTION 6.04. NOTICES.
(a) Concord agrees to provide written notice to the
Valuation Agent within three Business Days of the following: (i) a new
Agent, (ii) a new Liquidity Fee, and (iii) the assignment by the
Secured Creditors of the Investment of Concord in the Advances to the
Borrower, such notice to include the amount of such assignment and the
Liquidity Interest Rate applicable to such assignment.
(b) All notices, requests or other communications to the
Valuation Agent, Borrower, Trustee, Lender and Agent, including the
notices required in paragraph (a) above, shall be in writing (unless
otherwise specified herein) and shall be deemed to have been validly
given or made when delivered (via telecopy or by hand) or mailed,
registered or certified mail, return receipt requested and postage
prepaid, addressed as follows:
10
If to the Valuation Agent,
addressed to: ____________________________________________________
____________________________________________________
____________________________________________________
Attn.:______________________________________________
Telephone:__________________________________________
Facsimile:__________________________________________
If to the Borrower,
addressed to it at: NHELP-1, INC.
c/o National Higher Education Loan Program
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lender, Concord Minutemen Capital Company, LLC
addressed to it at: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Agent,
addressed to it at: Mellon Bank, N.A.
One Mellon Bank Center, Room 410
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee,
addressed to it at: Norwest Bank Minnesota, National Association
▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Corporate Trust Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each entity listed above may change the address for service of notice upon
it by a notice in writing to the other entities named above. Each such notice,
request or communication shall be effective when delivered to the address
specified herein.
11
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 (as defined in the Loan
Agreement) all of the Borrower's right, title and interest in, to and under
this Agreement. The Valuation Agent consents to the grant of such security
interest and agrees (a) that the representations, warranties, covenants and
other agreements of the Valuation Agent contained herein (including, but not
limited to, the Valuation Agent's indemnity obligations hereunder) shall run
directly to the Trustee and Secured Creditors and (b) that the Trustee and the
Secured Creditors shall be entitled to rely on and enforce such
representations, warranties, covenants and other agreements (including, but not
limited to, the Valuation Agent's indemnity obligations hereunder) to the same
extent as if they were a party hereto. The foregoing creates a permissive right
on behalf of the Trustee and the Secured Creditors, and the Trustee and the
Secured Creditors shall be under no duties or obligations hereunder.
SECTION 6.06. ASSIGNMENT BY THE LENDER. The Valuation Agent and the
Borrower acknowledge and agree that to the extent of any assignment by Concord
of its right, title and interest in and to the Investment of Concord in the
Advances to the Borrower pursuant to the terms of the Liquidity Agreement, the
Agent shall succeed to the rights and obligations of Concord hereunder and
Concord shall be released from such obligations without any further act by the
Borrower or the Valuation Agent.
SECTION 6.07. SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND.
EACH OF THE BORROWER, CONCORD AND THE VALUATION AGENT HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF ▇▇▇▇, STATE OF ILLINOIS, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS, AND
THE BORROWER, THE LENDER AND THE VALUATION AGENT EACH WAIVE ANY OBJECTION WHICH
IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF
ANY PROCEEDING IN ANY PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE ADDRESS SET FORTH
HEREIN THAT SERVICE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT OR FIVE DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO SUCH ADDRESS.
EACH OF THE BORROWER, CONCORD AND THE VALUATION AGENT ACKNOWLEDGE THAT
THE TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE
REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW,
TRIAL BY JURY IN ANY CLAIM OR CAUSE OF ACTION (INCLUDING ANY COUNTERCLAIM)
ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT EXECUTED AND/OR
DELIVERED IN CONNECTION HEREWITH OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE,
AND WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR
THIS WAIVER, BE REQUIRED OF THE LENDER. NOTHING CONTAINED IN THIS SECTION 6.07
SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY
12
OTHER MANNER PERMITTED BY LAW. EACH OF THE VALUATION AGENT, CONCORD AND THE
BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
SECTION 6.08. NO PETITION. Each of the Borrower and the Valuation
Agent hereby covenants and agrees that prior to the date which is one year and
one day after the payment in full of all outstanding commercial paper of
Concord, it will not institute against or join any other person or entity in
instituting against Concord, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceeding under the
laws of the United States or any state of the United States.
SECTION 6.09. LIMITED RECOURSE NATURE OF TRANSACTIONS. Each of the
Borrower and the Valuation Agent hereby acknowledges and agrees that all
transactions with Concord hereunder shall be without recourse of any kind to
Concord. Concord shall have no obligation to pay any amounts owing hereunder
unless and until Concord has received such amounts pursuant to the Financed
Loans. In addition, each of the Borrower and the Valuation Agent agrees that
Concord shall have no obligation to pay any amounts constituting fees, a
reimbursement for expenses or indemnities (collectively, "Expense Claims") and
such Expense Claims shall not constitute a claim against Concord (as defined in
Section 101 of Title 11 of the United States Bankruptcy Code), unless or until
Concord has received amounts sufficient to pay such Expense Claims pursuant to
the Financial Loans and such amounts are not required to pay the commercial
paper of Concord.
SECTION 6.10. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall constitute an original, but such counterparts together shall
constitute but one and the same instrument.
SECTION 6.11. SEVERABILITY. In the event any one or more of the
provisions of this Agreement shall for any reason be held to be illegal or
invalid, such illegality or invalidity shall not affect any other provisions of
this Agreement, and this Agreement shall be construed and enforced as if such
illegal or invalid provisions had not been contained herein.
SECTION 6.12. SECTION TITLES. The section titles contained in this
Agreement are for convenience of reference only and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
Agreement among the parties hereto.
SECTION 6.13. ENTIRE AGREEMENT. This Agreement, including all
Exhibits attached hereto or incorporated by reference therein constitutes the
entire Agreement among the undersigned with respect to the subject matter
hereof and supersedes all other negotiations, understandings and
representations, both oral and written, with respect to the subject matter
hereof.
13
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE VALUATION AGENT:
[VALUATION AGENT]
By_______________________________________
Name:
Title:
THE BORROWER:
NHELP-1, INC.
By_______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
CONCORD:
CONCORD MINUTEMAN CAPITAL
COMPANY, LLC
By_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
14
EXHIBIT A
FORM OF ADVANCE PERCENTAGE CALCULATION REPORT
In accordance with the Valuation Agreement among [VALUATION AGENT],
NHELP-1, INC. and Concord Minutemen Capital Company, LLC dated as of ________,
_____, [VALUATION AGENT] has acted as Valuation Agent for purposes of preparing
this Advance Percentage Calculation Report. Based upon the Portfolio
Characteristics and the Advance Percentage Calculation Assumptions (both as
defined therein), we hereby submit the following summary of our calculations:
Date of Report:
Date of Proposed Advance:
Cut-off Date for Portfolio Characteristics:
A. Principal of loans $
B. Total Revenues $
C. Total Expenses $
D. Total Net Revenues (B - C) $
E. Present value of Net Revenues ("PV") $
F. PV AS A % OF LOAN PRINCIPAL BALANCE (E / A),
PLUS 100% ("MAXIMUM ADVANCE PERCENTAGE") %
EXHIBIT B
FORM OF VALUATION REPORT
In accordance with the Valuation Agreement among [VALUATION AGENT],
NHELP-1, INC. and Concord Minutemen Capital Company, LLC dated as of _________,
____, [VALUATION AGENT] acted as Valuation Agent for purposes of preparing this
Valuation Report. Based upon the Portfolio Characteristics and the Valuation
Report Assumptions (both as defined therein), we hereby submit the following
summary of our calculations.
Valuation Date:
Date of Report:
Cut-off Date for Portfolio Characteristics:
A. Principal balance of loans $
B. Total Revenues $
C. Total Expenses $
D. Total Net Revenues (B - C) $
E. Present value of Net Revenues ("PV") $
F. PV AS A % OF LOAN PRINCIPLE BALANCE (E / A), PLUS
100% ("LOAN VALUATION PERCENTAGE") %
EXHIBIT C
FORM OF REQUEST FOR VALUATION REPORT
[VALUATION AGENT]
_______________________________________
_______________________________________
_______________________________________
Attn.:_________________________________
[and, if requested by the Lender or the Agent:
NHELP-1, INC.
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ]
Ladies and Gentlemen:
Pursuant to the terms of the Valuation Agent Agreement among [VALUATION
AGENT], NHELP Trust Inc. (the "Borrower") and Concord Minutemen Capital
Company, LLC (the "Lender") dated as of ______________, __, and in particular
Section 2.02(b) thereof, we hereby request that you provide us with a Valuation
Report.
[Such notice is also being provided at this time to the Borrower, in order
that they can prepare the Portfolio Characteristics and other information
required by you to compute the Aggregate Market Value and Liabilities.]
or, if requested by the Borrower:
[The information required for you to prepare the Valuation Report, including
the Portfolio Characteristics and other information required to compute the
Aggregate Market Value and Liabilities is attached hereto.]
In accordance with the terms of the Valuation Agent Agreement, please submit
your report to us on or before [insert date], which is 30 days from the date
this notice has been provided to you.
Sincerely,
[Concord Minuteman Capital Company, LLC], or
[Agent], or
[NHELP-1, INC.]
02-16403.01
EXHIBIT D
INITIAL LOAN SERVICING FEES
I. STUDENT LOANS SERVICED BY UNIPAC SERVICE CORPORATION
▇▇▇▇▇▇▇▇, SLS CONSOLIDATION
PER ACCOUNT SERVICING FEES & PLUS LOANS LOANS
Enrolled $1.50 per month N/A
Grace $3.20 per month N/A
Deferment $3.20 per month $3.75
Forbearance $3.20 per month $3.75
Repayment (Current) $3.20 per month $3.75
Repayment (more than 30 days past due) $5.45 per month $6.00
Default claim filing $20 per claim filed $20 per claim filed
II. STUDENT LOANS SERVICED BY GREAT LAKES HIGHER EDUCATION SERVICING
CORPORATION
▇▇▇▇▇▇▇▇, SLS
PER ACCOUNTING SERVICING FEES & PLUS LOANS
Enrolled $1.45 per month
Grace $3.05 per month
Deferment $3.05 per month
Forbearance $3.05 per month
Repayment (Current; months 1 through 12) $3.23 per month
Repayment (Current; months 13+) $2.86 per month
Repayment (More than 30 days past due;
months 1 through 12) $3.55 per month
Repayment (More than 30 pays past due; months 13+) $3.18 per month
Default claim filing $15.90 per claim filed
EXHIBIT C
DRAW NOTICE
NHELP-I, INC. 1998 WAREHOUSING FINANCING
WITH CONCORD MINUTEMEN CAPITAL COMPANY, LLC, AS THE LENDER
DRAW NOTICE
EXHIBIT C
Date: [3 Business Days prior to date Advance is to be made]
In accordance with Section 2.02 of the
Warehouse Loan and Security Agreement
dated as of September 30, 1998 (the "Agreement"), by and among NHELP-I, Inc.
(the "Borrower"), Norwest Bank Minnesota, National Association (the "Trustee")
and Concord Minutemen Capital Company, LLC, the Borrower hereby requests an
Advance in the amount and as of the date provided below. This request is
accompanied by an Advance Percentage Calculation Report as required pursuant to
Section 3.02 of the Agreement.
Date of Borrowing _____________
Additional Borrowings/Rollover Amounts:
Total Required Additional Borrowings/Rollover Amounts as required
pursuant to Exhibit D of the Agreement _____________
NEW BORROWINGS FOR THE FUNDING OF STUDENT LOANS:
Aggregate Amount of Student Loans to be Financed Principal _____________
Maximum Advance Percentage, as provided
in the Advance Percentage Calculation Report
for the most recently ended quarter _______%
Requested Advance Percentage, not to exceed
the Maximum Advance Percentage provided above _____________%
Amount of borrowing required for principal funding
(Student Loan Principal multiplied by Requested Advance %) _____________
Amount of borrowing required for interest funding _____________
Total Amount of New Borrowing =============
TOTAL BORROWINGS TO BE ADVANCED =============
(Sum of Additional Borrowings/Rollover Amounts and
Amount of New Borrowing, provided above)
If a Liquidity Advance, the requested Applicable
Liquidity Interest Rate Not Applicable%
_______________
TEST OF FACILITY AMOUNT:
Total available Facility Amount 500,000,000
Less the sum of:
Total outstanding Advances _______________
Total projected Yield due on all outstanding Advances _______________
Total outstanding Advances & Yield ____________
Remaining facility amount ============
Capitalized terms not otherwise defined herein shall have the meanings assigned
to them in the Agreement.
Please consider this proper authorization to transfer the Total Borrowings to
be Advanced in the Amount noted above to the Collection Account held by the
Trustee on [DATE OF BORROWING]. Pursuant to Article III of the Agreement, I
hereby certify that NHELP-I, Inc. has met the Conditions precedent to all
borrowings as required and as described in such section. I further certify that
to the best of my knowledge and belief, the amounts provided above are accurate
and complete.
NHELP-I, Inc.
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
C-2
EXHIBIT D
MONTHLY REPORT
NHELP-l Inc. 1998 Warehousing Financing
with Concord Minutemen Capital Company, LLC, as the Lender
Monthly Report
Exhibit D
Calculation Date: [4th Business Day preceding the end of each month]
Calculation Period: [Calendar month in which calculation date occurs]
Settlement Date: [First Business Day of each month]
Collection Date: [6th Business Day preceding the end of each month]
INTEREST PRINCIPAL
COLLECTIONS COLLECTIONS TOTAL
----------- ----------- -----
Collections:
Interest Payments received by Servicers ___________ ___________ __________
Government Interest & Special Allowance Payments received (from DOE) ___________ ___________ __________
Interest on Collection Account ___________ ___________ __________
Interest on Cash Reserve Account ___________ ___________ __________
Principal Payments received by Servicer ___________ ___________ __________
Reimbursement of Origination Fees (DOE) ___________ ___________ __________
Reimbursement of Guarantee Fees (guarantor or prior lender) ___________ ___________ __________
Adjustments & Misc. ___________ ___________ __________
Total Interest & Principal Collections received during the period from the
prior Collection Date to the current Collection Date occurring during this ___________ ___________ __________
Calculation Period =========== =========== ==========
Required Additional Borrowings __________
TOTAL COLLECTIONS AND ADDITIONAL BORROWINGS ==========
Payment Waterfall:
1. Estimated Taxes payable prior to the next Settlement Date
2. Accrued and unpaid Servicer Fees and Custodian Fees as of the prior
Calculation Period __________
3. Accrued and unpaid Yield due and owing as of such Settlement Date __________
4. Maturing Principal Amount of Advances which are due as the Settlement Date ____________ __________
Borrower designated Principal Reductions or Additions ____________
Total Net Rollover Amount of Advances ____________
5. Accrued and unpaid Liquidity Fees as of the current Calculation Period __________
6. Accrued and unpaid fees and expenses with respect to the Financed Loans as
of the prior Calculation Period __________
7. Accrued and unpaid Trustee Fees as of the prior Calculation Period __________
8. Amounts necessary to restore the Cash Reserve Account to the Cash Reserve
Requirement or amounts allowed to be withdrawn from the Cash Reserve Account __________
9. Accrued and unpaid Portfolio Administration Fees as of the current
Calculation Period
10. Accrued and unpaid Valuation Agent Fees as of the current Calculation Period __________
11. Amounts due for fees incurred in connection with the payment of Advances in
excess of $10,000,000. __________
12. On the Settlement Date immediately following each Valuation Date, amounts
Calculated pursuant to the provisions of Exhibit E, and as further directed
by the Borrower __________
Total Required Payments pursuant to Section 2.06(c) of the Agreement __________
==========
As an authorized representative of NHELP-I, Inc., I hereby certify that to the
best of my knowledge and belief the amounts provided above are accurate and
complete as determined on the Calculation Date and in accordance with the
provisions of the
Warehouse Loan and Security Agreement dated as of September
30, 1998 (the "Agreement"), by and among NHELP-I, Inc., the Lender and Norwest
Bank Minnesota, National Association.
Capitalized terms not defined herein shall have the meanings assigned to them
in the Agreement.
NHELP-I, Inc.
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Date:__________________________
D-2
EXHIBIT E
FORMS OF ASSET COVERAGE RATIO AND CASH RELEASE CERTIFICATE
NBELP-l, Inc. 1998 Warehousing Financing
with Concord Minutemen Capital Company, LLC, as the Lender
Asset Coverage Ratio
Exhibit E
Aggregate Market Value*:
(i) Outstanding principal balance of Financed Loans, multiplied
by the Loan Valuation Percentage
(ii) Accrued and unpaid borrower interest, federal interest
subsidies and special allowance payments
(iii) Outstanding principal balance of Permitted Investments,
including accrued and unpaid interest thereon
(iv) Payments on Financed Loans or other assets received by the
Servicer or the Borrower and not yet transferred to the
Trustee
(v) The unamortized value of any prepaid expenses
TOTAL AGGREGATE MARKET VALUE
Liabilities*:
(i) Facility Amount Advances
(ii) Accrued and unpaid Yield and Liquidity Fees
(iii) Any other accrued and unpaid fees:
(a) Custodian Fees
(b) Liquidity Fees
(c) Servicing Fees
(d) Trustee Fees
(e) Portfolio Administration Fees
(f) Other
Total Fees
TOTAL LIABILITIES
ASSET COVERAGE RATIO (TOTAL AGGREGATE MARKET VALUE/TOTAL LIABILITIES) %
* Certain summary reports have been attached providing detailed calculations
for the amounts provided above, or are available upon request.
As an authorized representative of NHELP-I, Inc., I hereby certify that to the
best of my knowledge and belief the calculation of the Asset Coverage Ratio is
accurate and complete as determined on the Calculation Date and in accordance
with the provisions of the
Warehouse Loan and Security Agreement dated as of
September 30, 1998 (the "Agreement"), by and among NHELP-I, Inc., the Lender and
Norwest Bank Minnesota, National Association.
All capitalized terms not defined herein shall have the meanings assigned to
them in the Agreement.
NHELP-I, Inc.
________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Date: __________________________
NHELP-I, Inc. 1998 Warehousing Financing
with Concord Minutemen Capital Company, LLC, as the Lender
Form of Cash Release Certificate
Exhibit E
Calculation Date (Quarterly): [4th Business Day preceding the end of each
January 31, April 30, July 31, and October 31]
Settlement Date following each Quarterly Valuation Date:
[February 1, May 1, August 1, November 1]
Corporate Trust Officer
Norwest Bank Minnesota, National Association
6th & Marquette
Minneapolis, MN
Pursuant to Section 2.06(c)(x) of the
Warehouse Loan and Security Agreement
dated as of September 30, 1998 (the "Agreement"), by and among NHELP-I (the
"Borrower"), Norwest Bank Minnesota, National Association and the Lender, you
are hereby instructed to release funds in the amount of $_____________ (the
"Cash Release Amount") to be transferred to the Borrower or any other Person as
directed by the Borrower (by wire transfer as directed by the Borrower) on the
Settlement Date of__________. The Cash Release Amount is the amount of funds
permitted to be withdrawn pursuant to Exhibit D to the Agreement and as further
permitted by the calculation of the Asset Coverage Ratio, included herewith.
Provided below is the calculation of the restated Asset Coverage Ratio following
the withdrawal of the Cash Release Amount. Additionally, provided in connection
with this Cash Release Certificate is the Asset Coverage Ratio and the Valuation
Report. As an authorized representative of NHELP-I, Inc., I hereby certify that
to the best of my knowledge and belief the calculation of the Cash Release
Amount and the restated Asset Coverage Ratio are accurate and complete as
determined on the Calculation Date; and I further certify that any transfer
hereunder shall not result in an Event of Default or a required collateral call
pursuant to the provisions of the Agreement.
All capitalized terms not defined herein shall have the meanings assigned to
them in the Agreement.
RESTATED ASSET COVERAGE RATIO:
Total Aggregate Market Value
Less: Permitted Cash Release Amount ( )
Total Restated Aggregate Market Value
Total Liabilities calculated pursuant to Exhibit _____
RESTATED ASSET COVERAGE RATIO %
Required Release Ratio 101.25%
NHELP-I, Inc.
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Date:______________
E-2
EXHIBIT F
TRUSTEE'S FEE LETTER AGREEMENT
[NORWEST BANKS LETTERHEAD]
August 26, 1998
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
NHELP, Inc.
▇▇▇▇ "▇" ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NHELP TRUST, INC.
1998 EDUCATIONAL LOAN WAREHOUSING FACILITY
Dear ▇▇. ▇▇▇▇▇▇:
On behalf of Norwest Bank I am pleased to provide this fee letter to serve as
Indenture Trustee and Eligible Lender Trustee on the referenced transaction.
Norwest Corporate Trust Services appreciates its present relationship with
NEBHELP and affiliates, and we value the opportunity to expand this relationship
through this credit facility.
Norwest Corporate Trust Services' fee schedule relating to the 1998 Educational
Loan Warehousing Facility are as follows:
I. INITIAL FEE: $4,500.00
This fee covers all initial services in connection with acceptance of
the Trust, including the examination and execution of the Trust
agreement and all supporting documents, and establishing the necessary
accounts and records. THIS FEE ALSO INCLUDES AN ENFORCEABILITY OPINION
FROM IN-HOUSE LEGAL COUNSEL ASSOCIATED WITH REVIEW OF THE ORIGINAL
DOCUMENTS. Should other opinions be required, notice will be given in
advance concerning the billing of additional amounts. This is a
one-time fee payable at closing.
LEGAL EXPENSES INCURRED RELATING TO THE PREPARATION OF AMENDMENTS TO
EXISTING GUARANTEE AGREEMENTS WILL BE BILLED TO NHELP AT COST.
II. ADMINISTRATION FEE: $750.00 / MONTH
For ordinary services of the Trustee typical of commercial paper
facilities. This fee is payable monthly in arrears.
Management and distribution fees are charged on all Mutual Fund sweep
vehicles as disclosed in each individual prospectus. These fees are
deducted from the yield of the fund before the yield to the investor is
stated.
III. ELIGIBLE LENDER TRUSTEE 1.0 BASIS POINTS PER ANNUM
Eligible lender fees are compensation for the duties and responsibilities,
as well as risks associated with the use of Norwest Bank's Department of
Education Eligible Lender number. This fee is based on the number of loans
outstanding utilizing Norwest Bank's Eligible Lender number. The fee is
payable monthly.
IV. EXTRAORDINARY FEES
Fees and expenses for extraordinary services will be billed as incurred
including, without limitation, (i) losses and damages suffered in
connection with any legal action brought against the Trustee, whether
threatened or filed and whether settled or adjudicated, not resulting from
the Trustee's negligence or willful misconduct, (ii) legal or other
professional fees and expenses incurred or added administrative time
involved in carrying out the Trustee's duties after an event of default or
an event which, with the passage of time, would become an event of default;
and (iii) legal or other fees incurred as a result of collection
proceedings.
Finally, please note that this pricing and our commitment to serve as Trustee on
this facility in contingent on final review and approval of the governing
documents.
▇▇. ▇▇▇▇▇▇, again Norwest is pleased to provide this fee letter. I look forward
to working with you on this transaction.
Sincerely,
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
EXHIBIT G
COPIES OF SERVICING AND CUSTODIAN AGREEMENTS
UNIPAC SERVICE CORPORATION
GUARANTEED STUDENT LOAN PROGRAM
SERVICING AGREEMENT
THIS AGREEMENT entered into and effective as of the 30th day of September, 1998,
by and between UNIPAC SERVICE CORPORATION, a Nebraska corporation, Aurora,
Colorado, herein referred to as "UNIPAC", and NHELP-I, INC. herein referred to
as "NHELP".
WHEREAS, UNIPAC is in the loan servicing business in the State of Colorado,
and in the ordinary course of such business has processed and serviced loans to
student/parent borrowers (the "Education Loans") which are made and guaranteed
in accordance with the provisions of the Higher Education Act of 1965, as
amended (the "Education Act") (references hereinafter to the "Education Act"
include rules and regulations promulgated thereunder as in effect from time to
time) including, but not limited to, the due diligence requirements established
from time to time thereunder regarding the activities required to be performed
by or on behalf of a lender with respect to delinquent or defaulted loans,
including the requirements set forth in 34 C.F.R. Section 682.411 (the "Due
Diligence Requirements"); and
UNIPAC has developed and/or has available to it the systems and services to
enable it to process and service Education Loans in accordance with (i) the
Education Act; and (ii) the rules, regulations and requirements of any entity
authorized under the Higher Education Act to guarantee the Education Loans that
UNIPAC and NHELP mutually agree as the guarantor of the Education Loans owned by
NHELP and serviced by UNIPAC pursuant to this Agreement (each a "Guarantor" and
the rules, regulations and requirements of such Guarantor being hereafter called
the Regulations); and
NHELP in the ordinary course of its business acquires Education Loans; and
NHELP desires to retain UNIPAC to process and service certain of its
Education Loans.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties agree as follows:
1. TERM.
1.1 The term of the Agreement shall be from the date of this Agreement for
a period of five (5) years ("Initial Term") with respect to certain of NHELP's
Financed Loans that are funded with advances made pursuant to that certain
Warehouse Loan and Security Agreement dated as of September 30, 1998 (the "Loan
Agreement"), among NHELP, Norwest Bank Minnesota, National Association (the
"Trustee") and Concord Minutemen Capital Company, LLC, including its assigns and
successors, ("Concord"), (the "Finance Loans") subject to earlier termination as
provided for in Section 15. This Agreement may be renewed for an additional five
(5) year term ("Additional Term") provided, (a) NHELP gives written notice not
less than Ninety (90) days and not more than One Hundred Twenty (120) days prior
to expiration of the Initial Term to UNIPAC of its intent to renew and (b) after
delivery of such notice and prior to expiration of the Initial Term, UNIPAC and
NHELP mutually agree on the fees to be charged pursuant to Section 8 hereof for
the services to be provided by UNIPAC during the Additional Term. Upon
expiration of the Initial or Additional Terms of this Agreement, all terms and
conditions
-CONFIDENTIAL-
PROPRIETARY PROPERTY OF
UNIPAC SERVICE CORPORATION
of this Agreement (except for the fees to be charged pursuant to Section 8
hereof for the services to be provided by UNIPAC, which shall be subject to
redetermination by UNIPAC as provided below) shall continue on a month to month
basis until such time that either party may terminate this Agreement, with or
without cause, upon Sixty (60) days' prior written notice to the other party.
Should this Agreement continue in force on a month to month basis after
expiration, UNIPAC reserves the right to, at any time, increase, decrease,
modify and/or change the Service Fee as provided for in Section 8 and Schedule A
attached hereto, in such manner as UNIPAC may determine upon Sixty (60) days'
prior written notice to NHELP.
1.2 (a) Upon the termination of this Agreement, UNIPAC shall turn over to
NHELP all Financed Loan files complete with all information contained therein
and all current computer information on the Financed Loans under service
pursuant to this Agreement in such form or fashion as NHELP shall reasonably
specify. At such deconversion, a fee of $12.00 per account plus any other
reasonable expenses incurred in connection with the transfer of such files and
other information shall be paid by NHELP.
(b) UNIPAC and NHELP specifically agree that the format used to transfer NHELP's
data contains confidential and proprietary trade secret information which is the
exclusive property of UNIPAC. UNIPAC and NHELP agree, however, that all aspects
of the underlying computer program, algorithms, methods of processing, specific
design and layout, report format, and the unique processing techniques and
interactions of the various aspects of UNIPAC's computer program are trade
secrets of, proprietary to, and owned exclusively by UNIPAC. The confidentiality
provisions of this Section 1.2(b) shall survive any termination or expiration of
this Agreement. NHELP covenants and agrees to keep confidential all such
information, processes, designs, layouts, and ideas described in this Section
2(b) and all Trade Secrets (as defined in Section 11 below and, collectively
with the information described in this Section 2(b), the "UNIPAC Proprietary
Information") and to disclose UNIPAC Confidential Information only with the
prior written consent of UNIPAC. Notwithstanding the foregoing, NHELP shall be
permitted (without UNIPAC's prior consent) to disclose UNIPAC Proprietary
Information to any third party lender or credit provider that has an interest in
the Education Loans serviced by UNIPAC hereunder or for whose benefit any such
loans are pledged as collateral to secure obligations of NHELP (each a "NHELP
Lender"), provided that, prior to such disclosure, such NHELP Lender delivers to
NHELP (for the benefit of UNIPAC) its written acknowledgment of the proprietary
nature of the UNIPAC Proprietary Information and its agreement to keep such
information confidential and executes a UNIPAC non-disclosure agreement. The
specific data contained in any reports or computer printouts produced by UNIPAC
shall not constitute UNIPAC Proprietary Information and all such data is and
shall remain the exclusive property of NHELP.
1.3 NHELP shall have the right to transfer and assign all rights under this
servicing agreement to any affiliate, trustee or other party of interest,
including, but not limited to one or more NHELP Lenders, for the purpose of
securing servicing arrangements for student loans financed through the issuance
of debt instruments or other financing arrangements.
2. DELIVERY OF FINANCED LOANS FOR SERVICING AND COLLECTION. Subject to
UNIPAC's scheduling requirements, NHELP may from time to time deliver or cause
to
Page 2
be delivered to UNIPAC, Financed Loans with respect to which loan processing
has been completed and loan proceeds have been disbursed to the student/parent
borrowers prior to the date of delivery to be serviced pursuant to the terms of
this Agreement. NHELP shall transmit to UNIPAC all such loan documentation as
required by UNIPAC to enable it to service the Financed Loans as provided
herein.
3. SERVICING OF FINANCED LOANS. Upon acceptance of any Financed Loan into
UNIPAC's computer system and after the sale date (if applicable) of the Financed
Loan to NHELP, UNIPAC shall service such Financed Loan in accordance with the
Education Act, the Regulations, and except to the extent contrary to the
Education Act or the appropriate Regulations, in accordance with the provisions
of this Agreement, including the following:
(a) UNIPAC shall take all steps necessary to maintain the insurance on
Financed Loans in full force at all times.
(b) UNIPAC shall prepare and mail directly to the student/parent borrower
all required statements, notices, disclosures and demands.
(c) UNIPAC shall retain records (tracked by Financed Loan) of contacts,
follow-ups, collection efforts and correspondence regarding each
Financed Loan.
(d) UNIPAC shall maintain books of account which shall reflect for each
Financed Loan all transactions related thereto, including, but not
limited to, accounting for all payments of principal and interest upon
such Financed Loans.
(e) UNIPAC shall process all deferments and forbearances.
(f) UNIPAC shall process all address changes and update address changes
accordingly.
(g) UNIPAC shall retain all documents received by UNIPAC pertaining to
each Financed Loan.
(h) When necessary and allowable by the Education Act, UNIPAC shall take
all steps necessary to file a claim for loss with Guarantor, and shall
be responsible for all communication and contact with that agency
necessary or appropriate to accomplish the same.
(i) UNIPAC shall provide a Lender's Manifest of Financed Loans on all new
accounts, accounts paid in full or converted to repayment, and provide
any other information required by Guarantor.
(j) UNIPAC shall process and add to the UNIPAC Servicing System repurchased
loans from the Guarantor as required by the Regulations or upon the
request of NHELP. The Repurchase Fee as provided in Schedule A shall
apply. This fee will be waived if such repurchase is due to a UNIPAC
servicing error or violations by UNIPAC of the Due Diligence
Requirements.
(k) UNIPAC shall provide such other services as UNIPAC customarily provides
and deems appropriate or as shall be necessary to maintain at all times
the eligibility under the Education Act and the Regulations of the
Education Loans for all subsidies, benefits, guarantees and insurance
payments.
Page 3
4. ADDITIONAL SERVICING ACTIVITIES. At NHELP's request UNIPAC agrees to
perform additional servicing activities not required under the terms of this
Agreement for those Financed Loans transferred to UNIPAC which have not been
previously serviced in accordance with the Education Act and Regulations, and
which require additional servicing activity to attempt to maintain or reinstate
the loans' principal and interest guarantee from the Guarantor ("Cure
Procedures"). UNIPAC, utilizing Cure Procedures approved by the Guarantor, will
use its best efforts to cure all defects caused by NHELP. UNIPAC makes no
representation or warranty that the guarantee on each Financed Loan will be
reinstated regardless of UNIPAC following the Cure Procedures as approved by
the Guarantor. NHELP agrees to pay UNIPAC those fees for Cure Services
described in Schedule A under the topic entitled "Additional Servicing
Activity".
5. PORTFOLIOS SUBJECT TO REJECTION BY UNIPAC. NHELP acknowledges that
certain loan portfolio types pose a risk of financial hardship for UNIPAC to
service under this Agreement. UNIPAC may in its discretion, prior to placing
such loans in the UNIPAC system, reject certain loans or loan portfolios
("Rejected Loans"). UNIPAC shall provide NHELP with reasonable advance notice
as to any Rejected Loans which UNIPAC declines to place on its system. UNIPAC
shall have no right to reject or decline loans after the loans are transferred
to the UNIPAC system.
6. REPORTS TO NHELP. (a) On or before the 15th day of each month,
unless some other time is provided herein, UNIPAC shall prepare and deliver to
NHELP, or to such other person as NHELP may designate, the following reports
with respect to activity during the preceding month:
(i) As of the last day of each month, an unaudited statement, in
reasonable detail, of all transactions during that month on Financed
Loans serviced by UNIPAC for NHELP;
(ii) Processing Status Report (daily);
(iii) Check Register (daily);
(iv) Posting Ledger (daily/monthly);
(v) Statistical Report (monthly);
(vi) Loan ledger/Alpha Report (monthly);
(vii) Guarantor Manifest (monthly);
(viii) Delinquency Report (daily/monthly);
(ix) Claims Activity Report (monthly).
NHELP shall receive at no cost one copy of each of the foregoing reports.
UNIPAC will provide extra copies at the request of NHELP. NHELP shall reimburse
UNIPAC its cost in producing such extra copies.
(b) UNIPAC will provide to NHELP; (i) as soon as available and in any
event within 120 days after the end of each fiscal year, copies of consolidated
financial statements for it and its subsidiaries prepared in accordance with
generally accepted accounting principles, duly certified by independent
certified public accountants of recognized standing selected by UNIPAC,
including consolidating statements, which shall set forth
Page 4
therein or in the footnotes thereto UNIPAC's estimate of the amount of losses
which could be incurred from known and potential errors on Education Loans
currently serviced by UNIPAC, as well as the amount charged off or expensed for
such losses during the year; (ii) on annual basis within ten (10) days after
receipt thereof, copies of SAS 70 reports and any other annual compliance audit
required by the Education Act; and (iii) to the extent not provided in (i) and
(ii) above on an annual basis, its error rate in complying with the Due
Diligence Requirements as such error rate is determined by the annual compliance
audit referred to in clause (b) hereof.
(c) NHELP covenants and agrees to keep confidential all financial
statements and other information provided to it pursuant to Section 7(b)
(collectively, "UNIPAC Financial Information") and to disclose UNIPAC Financial
Information only with the prior written consent of UNIPAC. Notwithstanding the
foregoing, NHELP shall be permitted (without UNIPAC's prior consent) to disclose
UNIPAC Financial Information to any NHELP Lender, provided that, prior to such
disclosure, such NHELP Lender delivers to NHELP (for the benefit of UNIPAC) its
written acknowledgement of the proprietary nature of the UNIPAC Financial
Information and its agreement to keep such information confidential by execution
of a UNIPAC non-disclosure agreement.
7. INTEREST COMPUTATION. UNIPAC shall provide on a quarterly basis
statistical data for the computation of interest and special allowance billable
to the U.S. Department of Education for NHELP's Financed Loans. Data will be
computed commencing with the date Financed Loans appear on the records of
UNIPAC.
8. SERVICE FEE TO UNIPAC.
(a) NHELP shall pay to UNIPAC, but solely from moneys on deposit in the
Collection Account held pursuant to the Loan Agreement, within fifteen
(15) days of billing statement, for and in consideration of the
services performed by UNIPAC hereunder for the preceding month, the
fee provided for in Schedule A of this Agreement, as follows:
(i) The Servicing Fee shall be as described in Schedule A of
this Agreement which is attached hereto and incorporated
herein by this reference.
(b) In the event Servicing Fees are not paid within Forty-Five (45) days
of the billing statement, (except in the event NHELP has a bona fide
dispute with the accuracy of said billing statement), NHELP agrees
UNIPAC will have the following rights to (a) withhold reports
otherwise due; (b) impose a late charge of one and one-half percent
(1 1/2%) per month against the entire outstanding balance of the
account including any prior late charge; and (c) terminate services
without notice if nonpayment persists for sixty (60) days from billing
or more.
(c) The parties agree that should UNIPAC be required to make system wide
substantive or material changes to its current lender servicing
practices or servicing system due to changes to the Education Act, or
Regulations or to other costs beyond UNIPAC's control, UNIPAC may
renegotiate the Servicing Fees with NHELP to reasonably reflect the
financial impact on UNIPAC due to these events at any time during the
term of this Agreement.
9. LOAN PAYMENTS. Student/parent borrowers will make all loan payments to a
third party lockbox established by UNIPAC. All cash receipts will be remitted
daily to the
Page 5
Trustee or as NHELP may otherwise reasonably request. UNIPAC shall not be
entitled to any lien or charge on, or right to set off against any Financed
Loans or proceeds therein coming into its possession or otherwise.
10. DISCLOSURE OF INFORMATION. All data, information, records,
correspondence, reports or other documentation received by UNIPAC pursuant to
this Agreement from NHELP or the school which the student attended or from the
student/parent borrower, or prepared and maintained by UNIPAC in the course of
its activities under this Agreement shall be released or divulged only to NHELP,
or with respect to information or documents relating to a particular
student/parent borrower, to that student/parent borrower, or to such other
parties as UNIPAC may be directed in writing by NHELP or such student/parent
borrower.
11. INTELLECTUAL PROPERTY PROTECTION. Notwithstanding anything in this
Agreement to the contrary, it is the express intention of the parties to this
Agreement that all right, title and interest of whatever nature in UNIPAC's user
manuals, training materials, all computer programs, routines, structures,
layout, report formats, together with all subsequent versions, enhancements and
supplements to said programs, all copyright rights (including both source and
object code) and all oral or written information relating to UNIPAC's programs
conveyed in confidence by UNIPAC to NHELP pursuant to this Agreement which is
not generally known to the public and which give UNIPAC an advantage over its
competitors who do not know or use such information (hereinafter collectively
referred to as "Trade Secrets"), and all other forms of intellectual property of
whatever nature is and shall remain the sole and exclusive property of UNIPAC.
12. INQUIRIES; INSPECTIONS. (a) UNIPAC shall answer all inquiries received
by it (including, but not limited to, from NHELP Lenders) pertaining to Financed
Loans, school status or refunds, and NHELP shall cooperate to the extent
necessary to gather the information needed to answer such inquiries. Such
inquiries may be referred to the school which the Student Borrower attended or
is attending, if necessary. UNIPAC shall have no responsibility for any disputes
between student/parent borrowers and schools regarding tuition, registration,
attendance, or quality of education/training.
(b) NHELP, any of NHELP's Lenders or any of their respective designated
representatives may at any time during UNIPAC's regular business hours examine,
at its or their sole cost and expense, the records which UNIPAC maintains on
the Education Loans serviced by UNIPAC hereunder.
13. AGENT AUTHORIZATION. NHELP hereby authorizes UNIPAC to act on behalf
of and as NHELP's Agent in the servicing of certain of NHELP's Financed Loans.
Such authorization will include but not be limited to all correspondence and
liaison necessary with Guarantor regarding NHELP's Financed Loans, assignment of
claims to Guarantor and any/or all other communications, correspondence,
signatures or other acts appropriate to service NHELP's Financed Loans in
accordance with the Education Act and/or Regulations.
14. LIABILITY OF UNIPAC. UNIPAC assumes no responsibility or liability for
failure of NHELP to exercise reasonable care and due diligence and the results
thereof, in making or servicing a Financed Loan prior to placing of the
Financed Loan on UNIPAC's system and prior to the date NHELP holds ownership of
the Financed Loan. UNIPAC also assumes no liability for the failure of any
student/parent borrower to repay his or her loan, nor the failure of the United
States government to pay any principal, interest, subsidy or special allowance,
nor for the failure of Guarantor to make payment of any principal and/or
interest on any of NHELP's Financed Loans. UNIPAC shall not be responsible
Page 6
for consequences of unreasonable acts of any Guarantor. In the event UNIPAC
shall take any action or fail to take any action which causes any Financed Loan
in NHELP's portfolio to be denied the benefit of any applicable guarantee,
UNIPAC shall have a reasonable time to cause the benefits of the guarantee to be
reinstated. If the guarantee is not reinstated within twelve (12) months of
denial by Guarantor, UNIPAC shall pay NHELP an amount equal to the outstanding
principal balance plus all accrued interest and other fees due on the Education
Loan to the date of purchase ("Reimbursed Education Loan"), up to the amounts
the applicable Guarantor would have paid under the Education Act, as amended and
the Regulations (as well as the Guarantor's reinsurance agreement with the U.S.
Secretary of Education), but for the action or inaction of UNIPAC relating to
servicing errors of UNIPAC, and thereupon UNIPAC shall be authorized by NHELP,
without limitation, the right to collect on the Reimbursed Education Loan, the
right to federal subsidies otherwise entitled to NHELP, and agency authorization
to utilize litigation in its collection efforts. For any Reimbursed Education
Loan for which the guarantee is fully reinstated by Guarantor, NHELP shall pay
UNIPAC an amount equal to the then outstanding principle balance plus all
accrued interest due thereon, up to the amounts the applicable Guarantor would
have paid under the Education Act, as amended and the Regulations (as well as
Guarantor's reinsurance agreement with the U.S. Secretary of Education), but for
the servicing errors of UNIPAC, whereupon the aforementioned authorization of
UNIPAC shall terminate.
15. TERMINATION OPTION. If at any time during the term of this Agreement
either party refuses or fails to perform in a material fashion any portion of
this Agreement, and fails or refuses to correct said action or lack of action
within Thirty (30) days after receipt of written notice, the other party may,
upon an additional Thirty (30) days' written notice to NHELP, the NHELP Lender
and the Trustee, terminate this Agreement, but only so long as a Servicer has
been appointed pursuant to the terms of the Loan Agreement.
16. INDEMNIFICATION. NHELP shall indemnify and hold UNIPAC harmless from
and against all claims, liabilities, losses, damages, costs and expenses
(including reasonable attorney's fees)("Losses") asserted against or incurred by
UNIPAC as a result of UNIPAC complying with any instruction or directive by
NHELP and UNIPAC shall in like manner indemnify NHELP for any miscompliance with
any such instruction or directive by UNIPAC.
17. STATUTE OF LIMITATIONS. Any action for the breach of any provisions of
this Agreement shall be commenced in accordance with any limitation on actions
for contracts under Nebraska law.
18. THIRD PARTY BENEFICIARIES. The parties hereto acknowledge and agree
that Concord, the NHELP Lenders and the Trustee shall be third party
beneficiaries of this Agreement with the power and right to enforce the
provisions of this Agreement against the parties hereto and that a security
interest in the Financed Loans has been granted to the Trustee, the NHELP
Lenders and Concord pursuant to the terms of the Loan Agreement. In the event
that either Concord, the NHELP Lenders or the Trustee become the assignee or
successor of NHELP (under the circumstances contemplated in the Loan Agreement)
and, as such assignee or successor of NHELP, enforces this Agreement against
UNIPAC, Concord, and the NHELP Lenders or the Trustee shall succeed to the
duties and obligations of NHELP under this Agreement.
19. NOTICES. All notices or communications by one of the parties hereto to
the other shall respectively be addressed as follows: UNIPAC Service
Corporation, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
NHELP-I, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or to
such other address as may be indicated
Page 7
from time to time by one of the parties to the other party. Except as otherwise
expressly provided, any notice shall have been deemed to have been given upon
mailing thereof when mailed by registered or certified mail, and upon receipt in
every other case.
20. GOVERNING LAW. This Agreement is executed and delivered within the
State of Nebraska, and the parties hereto agree that is shall be construed,
interpreted and applied in accordance with the internal laws of that State
without reference to its conflicts of law principles, and that the courts and
authorities within the State of Nebraska shall have sole jurisdiction and venue
over all controversies which may arise with respect to the execution,
interpretation and compliance with this Agreement.
21. CHANGES IN WRITING. This Agreement, including this provision hereof,
shall not be modified or changed in any manner except only by a writing signed
by all parties hereto.
22. SEVERABILITY. In the event a court of competent jurisdiction finds any
of the provisions of this Agreement to be so overly broad as to be unenforceable
or invalid for any other reason, it is the parties' intent that such invalid
provisions be reduced in scope or eliminated by the court, but only to the
extent deemed necessary by the court to render the provisions of this Agreement
reasonable and enforceable.
23. PERSONS BOUND. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their legal representatives, heirs, successors
and assigns.
24. ASSIGNMENT. Except as provided in Section 1.3 hereof, this Agreement
shall not be assigned by either party without the prior written consent of the
other party which consent shall not be unreasonably withheld.
25. TITLES. The titles used in this Agreement are intended for convenience
and reference only. They are not intended and shall not be construed to be a
substantive part of this Agreement or in any other way to affect the validity,
construction or effect of any of the provisions of this Agreement.
26. WAIVER. The waiver of failure of either party to exercise in any
respect any right provided for herein shall be in writing, and shall not be
deemed a waiver of any further right hereunder.
27. CONTINUITY OF LOAN SERVICING.
27.1 In the event NHELP desires to sell any of its Financed Loans, NHELP
shall sell the Financed Loans, subject to this Agreement, to a lender also
maintaining an agreement with UNIPAC, in order for the sale to cause no
disruption in service, or change in UNIPAC for the Borrower. If NHELP elects for
any reason to remove from the servicing system of UNIPAC all or any of the
Financed Loans that NHELP now owns or hereafter acquires, NHELP shall give
UNIPAC written notice of such election at least Ninety (90) days prior to the
date NHELP intends to remove such Financed Loans. NHELP hereby grants to UNIPAC
or its designee the option then to purchase from NHELP all or any portion of the
Financed Loans that NHELP owns on any date selected by UNIPAC prior to such
removal, at a purchase price equal to the fair market value of the Financed
Loan(s) as established by third party certification on the date of purchase.
UNIPAC's option to purchase may be exercised by sending written notice thereof
to NHELP within ninety (90) days after UNIPAC's receipt of NHELP's notice of
election to remove Financed Loans from the UNIPAC servicing system. The option
to purchase referred to above shall not apply or be available to UNIPAC in the
event UNIPAC terminates the
Page 8
servicing agreement for any reason other than non-payment of servicing fees
applicable under this Agreement.
27.2 Section 27.1 will not apply in (i) the event of UNIPAC breach or
default, (ii) with respect to a sale of the Financed Loan to a holder of other
loans for the same borrower, or (iii) upon a sale of a Financed Loan by the
Trustee if an Event of Default has occurred under the Loan Agreement.
27.3 The intent of this Section 27 is to assure that every Financed Loan will
remain with UNIPAC for servicing for the life of the loan.
27.4 The foregoing provisions of this Section 27 are and shall at all times
remain subordinate and inferior to the rights and interests of any NHELP Lender
in the Education Loans of NHELP and, in the event of a foreclosure of ownership
of the Education Loans of NHELP pursuant to any security interest held for the
benefit of an NHELP Lender, the foregoing provisions shall terminate and shall
have no force or effect.
28. REMOVAL FEE. Should NHELP remove any of its Financed Loans from the
UNIPAC system prior to a scheduled termination or breach of this Agreement,
NHELP agrees to pay to UNIPAC a removal fee of Fifteen Dollars ($15.00) per loan
transferred off the UNIPAC computer system. This removal fee shall be exclusive
of those charges described in Section 1.2 of this Agreement.
29. FORCE MAJEURE. The foregoing provisions of this Agreement are subject to
the following limitation: If by reason of a force majeure UNIPAC is unable in
whole or in part to carry out any agreement on its part herein contained, UNIPAC
shall not be deemed in default during the continuance of such inability. The
term "force majeure" as used herein shall mean, without limitation, the
following: acts of God; acts of public enemies; insurrections; riots;
landslides; earthquakes; fires; storms; droughts; floods; explosions.
UNIPAC shall at all times during the term of this Agreement, maintain a business
continuance or disaster recovery plan. NHELP and Concord shall have the right to
inspect such plan at any time upon request by NHELP.
30. HIRING. NHELP agrees that during the term of this Agreement and any
extensions or renewals thereof, and for one year thereafter, NHELP shall not
solicit for hire, or knowingly allow its employees to solicit for hire, any
employees of UNIPAC.
31. ENTIRE AGREEMENT. This is the entire and exclusive statement of the
Agreement between the parties, which supersedes and merges all prior proposals,
understandings and all other agreements oral and written, between the parties
relating to this Agreement.
32. CONSENTS AND APPROVALS. The parties acknowledge that this Agreement is
subject to certain consents and approvals from Concord and that the Education
Loans of NHELP being serviced hereunder shall in part be pledged as collateral
security to or for the benefit of NHELP Lenders. The parties consent to the
pledge of such Education Loans as collateral security and agree that, after any
assignment, transfer or foreclosure of ownership of the Education Loans pursuant
to such collateral security arrangements, an NHELP Lender shall, without further
action or approval from UNIPAC, succeed to the rights and obligations of NHELP
under this Agreement (except those obligations in Section 27 above) in respect
of the transferred Education Loans. In addition, subsequent to the execution of
this Agreement, the parties shall use their best efforts in good faith to obtain
any required consents and approvals; provided however, that the parties shall
Page 9
amend or modify this agreement to the extent necessary to obtain any required
consent or approval.
Page 10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
UNIPAC SERVICE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
Date: September 30, 1998
NHELP-I INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Date: September 30, 1998
Page 11
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SCHEDULE "A"
-------------------------------------------------------------------------------
A. Conversion Fee.
Five Dollars ($5.00) per account acquired by NHELP and added to the UNIPAC
Servicing System during the period of time the borrower is in school. For
periods of time other than when the borrower is in school, the fee will be
Ten Dollars ($10.00) per account. Notwithstanding the foregoing, no fee will
be assessed for the first twenty thousand Financed Loans converted to UNIPAC
for full servicing after execution of this Agreement. All on-system
conversions to or from a full service client of UNIPAC will be performed at
no charge to NHELP.
Notwithstanding the foregoing, should any portfolio present an
"Extraordinary Conversion", requiring additional conversion services
materially beyond that customarily provided for a normal acquisition of
Financed Loans, then NHELP agrees to pay a conversion fee mutually agreed to
between NHELP and UNIPAC.
For purposes of this Agreement, whether a portfolio presents an
Extraordinary Conversion shall be determined after the data analysis, and
file review, have been conducted of the portfolio by UNIPAC. Factors to
consider in determining whether a portfolio presents an Extraordinary
Conversion are as follows:
1. Unprocessed data.
2. Degree to which the conversion may be automated versus manual.
3. Integrity of the documentation. Are the files complete? Does the data
match the file content?
4. Presence of backlogged processing in the portfolio
5. Whether prior servicing had substantial noncompliance with the
Education Act and Regulations.
After consideration of the foregoing factors, NHELP and UNIPAC agree to come
to mutual agreement at the beginning and once again at the end of the
conversion of a particular portfolio as to whether they need to negotiate a
mutually agreeable conversion fee.
B. Monthly Servicing Fee - GSL (▇▇▇▇▇▇▇▇) Loans in School Status.
One Dollar and Fifty Cents ($1.50) per in-school account per month.
C. Monthly Servicing Fee - GSL (▇▇▇▇▇▇▇▇, PLUS, SLS) Loans in Other Than
School Status.
Three Dollars and Twenty Cents ($3.20) per account per month.
D. Consolidation Loans.
Page 12
Three Dollars and Seventy-Five Cents ($3.75) per account per
month.
E. Billing for Servicing Fees.
The full monthly servicing fee shall be paid commencing with the
calendar month an account is disbursed on or converted to the
UNIPAC system.
F. Additional Servicing Activity.
Thirty-Five Dollars ($35.00) per Financed Loan referred for such
cure services, plus ten percent (10%) of all sums made eligible
for reinstatement of guarantee (including principal, interest and
special allowance) as a result of successful performance of the
Cure Procedures required by Guarantor. (This fee shall not apply
to loans that have lost their guarantee due to an error or
omission of UNIPAC.)
G. Delinquency Fee.
A surcharge of Two Dollars and Twenty-Five Cents ($2.25) for each
account thirty (30) or more days past due through date of claim
payment by Guarantor, or until account becomes current.
H. Appeal Fee.
A fee of Ten Dollars ($10.00) per month per account will be
assessed for UNIPAC to research and appeal accounts which are
rejected or returned by the guarantor due to acts, errors or
omissions that occurred on the account prior to servicing by
UNIPAC.
I. Minimum Monthly Fee.
There will be a minimum monthly fee of Seven Hundred and Fifty
Dollars ($750.00) per month.
J. Repurchase Fee. Twenty Dollars ($20.00) per account repurchased
from the Guarantor and added to the UNIPAC Servicing System.
K. Removal Fee. Loans transferred off the UNIPAC Servicing System
prior to termination of this Agreement will be assessed a fee of
Fifteen Dollars ($15.00) per account.
L. Deconversion Fee. Loans transferred off the UNIPAC Servicing
System on or after termination of this Agreement will be assessed
a fee of Twelve Dollars ($12.00) per account.
M. PLUS (or Other Loan) Loan Credit Checks. Fees for obtaining a
credit bureau report and evaluation will be Two Dollars and Fifty
Cents ($2.50) per loan application. An additional fee of Fifty
Cents ($.50) will be charged for those applications in which
written authorization must first be obtained prior to pulling a
credit bureau report
Page 13
N. Other Services
For services requested by NHELP that are beyond the scope of
those described in this Agreement, the fees shall be as quoted
and mutually agreed in accordance with the following guidelines:
(1) Supplies Cost
(2) Training $40.00 per hour
(3) Programming $70.00 per hour
(4) Consulting $80.00 per hour
Projects and services of this type shall be provided only after
request by NHELP and after time and total cost estimate is
provided by UNIPAC.
O. Legal Opinions
Cost of the opinion.
Page 14
GREAT LAKES HIGHER EDUCATION CORPORATION
STUDENT LOAN SERVICING AGREEMENT
THIS AGREEMENT, is made as of September 30, 1998, between the GREAT LAKES
HIGHER EDUCATION SERVICING CORPORATION ("Great Lakes"), a non-profit
corporation, and NHELP-I, INC., (the "Lender"), Lender #833501, an eligible
institution engaged in providing loans ("Loans") to students and parents under
Title IV, Part B of the Higher Education Act of 1965, as amended (hereinafter
the "Act").
W I T N E S S E T H:
WHEREAS, Great Lakes has established a program for originating and servicing
Loans under the Act; and
WHEREAS, the Lender desires that Great Lakes service certain Loans which are
made or purchased by the Lender with advances made pursuant to that certain
Warehouse Loan and Security Agreement dated as of September 30, 1998 (the "Loan
Agreement") among the Lender, Norwest Bank Minnesota, National Association (the
"Trustee") and Concord Minutemen Capital Company LLC (including its assigns or
successors "Concord"), and which are covered by the Act, according to the terms
and conditions set forth herein.
NOW THEREFORE, in consideration of the promises and the terms and conditions
set forth herein, the Lender agrees as follows:
1. LOANS TO BE SERVICED. Great Lakes and the Lender agree that Great Lakes
shall service all Loans covered by the Act which are made or purchased by the
Lender pursuant to the terms of the Loan Agreement and which are guaranteed by
Great Lakes Higher Education Guaranty Corporation ("GLHEGC"), and which are
submitted to Great Lakes by the Lender and accepted by Great Lakes for
servicing.
2. GREAT LAKES' DUTIES AS SERVICER.
(a) Great Lakes as servicer of the Loans shall perform all of the Lender's
obligations as holder of Loans as required by the Act and all regulations issued
by the U.S. Department of Education or by GLHEGC to implement the Act. Great
Lakes shall have full power to sign and act on the Lender's behalf as the
Lender's agent in all transactions with borrowers serviced hereunder. Lender
does hereby authorize, constitute and appoint Great Lakes on its behalf and as
its attorney in fact, to endorse those promissory notes for which a claim has
been filed with the Guarantor. Great Lakes will carry out its responsibilities
hereunder in a diligent and lawful manner.
(b) Great Lakes shall complete all forms and reports required by the U.S.
Department of Education and by GLHEGC as guarantor of the Loans.
(c) Great Lakes shall prepare a "Lender's Request for Payment of Interest
and Special Allowance" to be used in billing the U.S. Department of Education
(the "Department") for interest and the special allowance for all eligible
loans on a quarterly basis. If requested by Lender, Great Lakes agrees to
submit the billing to the Department within 30 days following the last day of
each quarter (March 31, June 30, September 30, December 31).
Great Lakes shall accrue and capitalize interest on those Loans not
eligible for interest subsidy.
(d) Great Lakes shall verify the current status of all borrowers not
less often than annually through direct contact with each borrower to ensure
correct amount information. Great Lakes shall also seek to verify the
borrower's status by direct or indirect contact with educational institutions.
(e) Great Lakes shall respond to all borrower inquiries in a prompt,
courteous and thorough manner.
(f) When a Loan becomes due for repayment, Great Lakes shall prepare a
payment schedule and disclosures statement and mail it to the borrower for
signature(s). Prior to the first payment due date, repayment coupons will be
prepared and sent to the borrowers.
(g) Great Lakes shall post to the borrower's account all payments of
principal, interest and other charges. The day after receipt, Great Lakes will
initiate an ACH transfer of all collections to an account established by the
Lender.
(h) Great Lakes shall provide reports to the Lender of all monetary
transactions as well as periodic summary and account information as required in
the "Lender Service Manual" including such items as:
(1) A "monetary transactions journal" including a detailed report
to support all cash transactions processed;
(2) A monthly "portfolio status report" including a listing of each
account with key activity and performance data;
(3) A monthly listing of delinquent accounts; and
(4) A quarterly report of ▇▇▇▇▇▇▇▇ to the U.S. Department of
Education for interest and special allowances.
(i) Great Lakes shall automatically credit the Lender's account whenever a
borrower overpays an account by less than $5.00, and the Lender, at its
discretion, can reimburse the borrower. When the overpayment is more than $5.00,
Great Lakes shall remit the overpayment directly to the borrower. When a
borrower's balance owing is less than $10.00, Great Lakes may, at its
discretion, write-off the balance.
(j) Great Lakes shall handle all required borrower contact functions and
shall meet all servicing "due diligence" requirements, as that term is used
under the Act. Such functions include, for example, skip tracing, contacting
delinquent borrowers, handling borrower's requests for extensions or deferments
and preparing and processing default claims, including death, disability and
bankruptcy.
(k) Great Lakes agrees to prepare and submit all papers and documents
necessary to strictly follow reimbursement procedures specified in the
guarantor's Common Manual upon default of borrower and further agrees to
promptly remit proceeds to Lender upon receipt from the guarantor.
(l) Great Lakes shall capture and retain a copy of all purchased
promissory notes and supporting documentation on its image system and shall
store a backup image copy in a facility remote from Great Lakes' premises. Great
Lakes shall hold the original loan documents for safekeeping in accordance with
the terms of the Custodian Agreement dated as of September 30, 1998 between
Great Lakes and the Lender.
3. LENDER'S RESPONSIBILITIES. Lender further agrees to promptly notify Great
Lakes in such form as may from time to time be specified by Great Lakes in the
Lender Service Manual, of any transaction involving the Lender and the borrower
and/or changes in status or demographic data on any of its accounts if received
from sources other than Great Lakes. Lender specifically agrees to promptly
notify Great Lakes of any bankruptcy action taken with respect to any Loan.
4. FEES. The Lender agrees to pay Great Lakes the fees established by Great
Lakes from time to time for services rendered pursuant to this Agreement. The
current fee schedule is attached to this Agreement as Schedule A. Increases or
decreases in such schedule may be made from time to time; provided however, that
the Lender shall be given 60 days written notice prior to the effective date of
any change in the fee schedule. Such effective date shall be the beginning of a
calendar quarter (April 1, July 1, October 1, January 1). The current fee
schedule cannot be changed for at least twelve months from the date of this
contract. Statements for services rendered will be provided on a
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monthly basis and are payable upon receipt. If servicing fees are not paid
within 60 days of the Lender's receipt of a statement, Great Lakes shall have
the option to offset servicing fees against borrower payment collections or
submit a 30-day termination notice to the Lender.
5. LIABILITY. Great Lakes shall exercise care and due diligence in performing
the services required by this Agreement. To the extent that Great Lakes is
required to appear in, or is made a defendant in any legal action or other
proceeding commenced by a party other than Lender with respect to any matter
arising hereunder, Lender shall indemnify and hold Great Lakes harmless from all
loss, liability and expense (including reasonable attorney's fees) except for
any loss, liability or expense arising out of or relating to Great Lakes' acts
or omissions with regard to the performance of services hereunder. Subject to
Section 13 below, if by reason of any (direct or indirect) negligent act or
omission of Great Lakes in the servicing of any Loan, the guarantor shall deny
or reject any claim made to the guarantor with respect to such Loan or such Loan
shall be ineligible for interest benefits or for special allowance payments,
then, upon demand by Lender, and after attempted mitigation by Great Lakes (to
the extent mitigation by Great Lakes is possible), but in no event later than
one year after such demand by Lender, Great Lakes shall purchase such Loan at a
price equal to the unpaid principal amount thereof plus accrued and unpaid
interest thereon; provided, however, that if such Loan has been removed from
Great Lakes' system, Great Lakes' liability with respect to such Loan shall be
limited to a return of the actual amount of the servicing fees paid by Lender to
Great Lakes with respect to such Loan, unless Great Lakes is provided with the
loan documentation and all servicing history entries with respect to such Loan
within one year of the first denial or rejection or the first determination of
ineligibility of such Loan and is afforded the opportunity to exercise its right
of mitigation with respect to such Loan; and provided further, however, that in
no event shall Great Lakes be responsible or liable for any consequential
damages with respect to any matter whatsoever arising out of this Agreement,
(other than the payment as aforesaid of the principal, and interest on Loans).
Either party shall have the right, at its own cost and expense, to mitigate
its liability under this Agreement by taking such actions as may be appropriate,
including but not limited to reperformance; provided, however, that such right
on the part of Great Lakes shall not extend the time for purchase of Loans by
Great Lakes under the preceding paragraph of this Section 5.
Great Lakes does not assume, and acceptance for servicing shall not result
in, any responsibility for the correctness or completeness of Loan-related
papers transmitted to Great Lakes as a part of or in conjunction with the
commitment of any Loans to Great Lakes for servicing, and Great Lakes shall not
be responsible for any procedural errors or omissions (including due diligence
violations) which may have occurred prior to initiation of servicing of a Loan
hereunder by Great Lakes.
6. CONFIDENTIALITY. Information about each borrower furnished to Great Lakes
hereunder is furnished upon the express condition that the information will be
kept confidential by Great Lakes. All such information, except as may be
otherwise required by statute, by court order or as may be necessary in Great
Lakes' reasonable judgment to the performance of the services required under
this Agreement, shall be held in confidence by Great Lakes.
7. EXAMINATION OF RECORDS. The Lender or its designated representative may at
any time during Great Lakes' regular business hours examine, at the sole
expense of the Lender, the records which Great Lakes maintains on the Lender's
loans.
8. TERMINATION.
(a) This Agreement shall remain in full force and effect until terminated
or modified as provided herein. This Agreement may be terminated only at the
end of a calendar quarter (March 31, June 30, September 30, December 31), and
only if written notice is given: (i) by the Lender to Great Lakes at least 60
days prior to the end of a calendar quarter; provided, however, that no
termination shall become effective until a new servicer, satisfactory to the
Lender and Concord, shall be appointed, or (ii) by Great Lakes to the Lender at
least 180 days prior to the end of a calendar quarter.
(b) In the event that this Agreement is terminated as provided in subsection
(a) above, Great Lakes shall continue its full servicing until the date of
termination and shall provide to the Lender a full set of periodic reports,
adjusted through the date of termination. Great Lakes shall retain all notes,
records and papers, as well as a copy of all computer stored data relating to
the Lender's accounts as required by the Act. Great Lakes shall make available
to the Lender on demand copies of all records relating to the Lender's accounts.
Such copies of the records will be
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provided and updated at the times and in the format desired by Lender in order
to facilitate a transfer to another servicing agent. The Lender agrees to pay
Great Lakes the servicing removal fee identified on Schedule A. Upon the
Lender's request, Great Lakes may agree to provide servicing removal services
beyond those identified in this section. Such agreement between Great Lakes and
the Lender shall include sufficient additional charges to cover Great Lakes'
costs. Great Lakes agrees that Lender shall be entitled to injunctive relief to
enforce the provisions of this subsection.
(c) The Lender shall be liable for all charges incurred for services
performed pursuant to this Agreement up to the termination date.
(d) Great Lakes shall continue to be liable for all acts or failures to
act prior to termination but not after except that Great Lakes shall be
obligated to remit to the Lender any collections received by Great Lakes
subsequent to termination and to provide the reports and records herein
required.
(e) Great Lakes' servicing obligations hereunder and, except as
specifically provided in Section 5, Great Lakes' liabilities hereunder, in each
case, on individual loans shall terminate if the loan is sold or transferred to
another Lender or guarantor, is returned to the Lender with the Lender's
consent, is purchased by the guarantor or is paid in full.
9. AMENDMENTS. Except as provided in section 4, this Agreement may be amended
by Great Lakes at anytime upon 30 days written notice to the Lender, provided
that the provisions of this Agreement shall at all times be consistent with the
Act and applicable regulations. In the event of any such modification by Great
Lakes the Lender has 30 days in which to accept or reject the modification by
notice in writing. In the event of rejection of proposed modification, either
party may exercise its right to terminate as provided in section 8. In the event
of termination for this reason, such modification shall not apply to the Lender.
10. GOVERNING LAW. This Agreement shall be interpreted under the laws of the
State of Wisconsin.
11. NO IMPLIED WAIVER. Any waiver or modification, expressed or implied, by
Great Lakes or by the Lender of any breach of this Agreement shall not be
construed to be a waiver of any such breach or any acquiescence thereto; nor
shall any delay or omission by Great Lakes or by the Lender to exercise any
right arising from any such breach affect or impair the respective party's right
to such breach or any future breach.
12. ARBITRATION. In the event that the parties hereto shall fail to agree
regarding any provision of this Agreement, such disputes shall be resolved by
arbitration procedures established by the American Arbitration Association. The
decision of any arbitrator under this paragraph shall be fined and binding upon
the parties.
13. LIMITATION OF LIABILITY. Great Lakes and the Lender recognize that Great
Lakes' Lender servicing program is separate and distinct from GLHEGC's guarantee
program. The Lender specifically agrees to look only to Great Lakes in its
capacity as a servicing agent for any claims under this Agreement relating to
its functions as servicing agent. Lender specifically waives any claim against
GLHEGC's Guarantee Fund as defined in 34 CFR 682.410(a)(1) for claims under this
Agreement.
14. OTHER AGREEMENTS. The parties acknowledge that this agreement is an
integral element of and shall be construed in conjunction with the following
related agreements: (1) Custodian Agreement and (2) Agreement and
Acknowledgement Relating to Student Loan Servicing Agreement. The parties
acknowledge that the above-identified agreements are interrelated and shall be
construed and interpreted as part of the contractual servicing relationship.
15. NOTICES. All notices, requests, demands or other instruments which may or
are required to be given by any party to any other party shall be in writing and
such shall be deemed to have been properly given when served personally on an
officer of the entity to which such notice is to be given, or upon expiration of
a period of 48 hours from and after the postmark thereof when mailed postage
prepaid by registered or certified mail, requesting return receipt, addressed as
follows:
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If intended for Great Lakes Higher Education Servicing Corporation:
Executive Vice President
Great Lakes Higher Education Servicing Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If intended for Lender:
NHELP-I, Inc.
c/o National Higher Education Loan Program
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
NHELP-I, INC. GREAT LAKES HIGHER
EDUCATION SERVICING CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------- ---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President & Treasurer Executive Vice President
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GREAT LAKES HIGHER EDUCATION SERVICING CORPORATION
STUDENT LOAN SERVICING AGREEMENT
NHELP-I, INC.
SCHEDULE A -- FEES
The lender agrees to pay the following fees to Great Lakes upon receipt of a
monthly statement for services rendered pursuant to this agreement:
MONTHLY SERVICE FEES:
$1.45 per borrower per month during interim (in-school) period
$3.05 per borrower per month during grace period
$3.23 per borrower per month during first 12 months of repayment
servicing
$2.86 per borrower per month during the remainder of the repayment
period
SERVICING REMOVAL FEE:
$14.00 per account or actual cost, if higher, to remove an active
account from the servicing system
Both PLUS and SLS loans made for attendance at non-proprietary schools will be
considered in-school loans for fee purposes as long as they are initially
deferred and interest is to be capitalized and not collected on an on-going
basis. All other PLUS and SLS loans will be charged the standard repayment
servicing fees.
The total monthly amount due will be the actual fees calculated as described
above or $75, whichever is greater.
Great Lakes may agree to provide the lender with services beyond those normally
included in the servicing program. Such agreement between Great Lakes and the
lender shall include sufficient additional charges to cover Great Lakes' costs.
Increases or decreases to this fee schedule may be made from time to time as
provided in Section 4 of this agreement.
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AGREEMENT AND ACKNOWLEDGEMENT RELATING TO
STUDENT LOAN SERVICING AGREEMENT
THIS AGREEMENT AND ACKNOWLEDGEMENT RELATING TO STUDENT LOAN SERVICING
AGREEMENT, dated as of September 30, 1998 (this "Agreement"), is by and among
GREAT LAKES HIGHER EDUCATION SERVICING CORPORATION ("Great Lakes"), NHELP-I,
INC. ("NHELP"), MELLON BANK, N.A. ("Mellon") and CONCORD MINUTEMEN CAPITAL
COMPANY LLC ("Concord", and together with Mellon, the "Credit Providers"),
relates to and supplements the Student Loan Servicing Agreement dated as of
September 30, 1998 (the "Servicing Agreement"), between Great Lakes and NHELP.
WHEREAS, pursuant to the Servicing Agreement, and as more fully described
therein, NHELP has retained Great Lakes to process and service certain student
loans which are made and guaranteed in accordance with the provisions of the Act
and which are acquired by NHELP;
WHEREAS, pursuant to a Warehouse Loan and Security Agreement dated as of
September 30, 1998 (as amended and supplemented from time to time in accordance
with its terms, the "Loan Agreement"), among NHELP, Concord and Norwest Bank
Minnesota, National Association, as trustee (together with its successors as
trustee under the Loan Agreement, the "Trustee"), NHELP intends to acquire
Financed Loans (as defined in the Loan Agreement) from time to time (all such
Financed Loans so acquired from time to time, and constituting part of the Trust
Estate under and as defined in the Loan Agreement, being referred to herein as
the "Loans");
WHEREAS, in order to provide liquidity under the Loan Agreement, Mellon and
Concord will enter into a Liquidity Agreement dated as of September 30, 1998
(the "Liquidity Agreement");
WHEREAS, the Loans are security for the obligations of NHELP under the Loan
Agreement, upon the terms and conditions provided in the Loan Agreement;
WHEREAS, it is a condition to the servicing of the Loans by Great Lakes
that the Credit Providers consent to the Servicing Agreement and such servicing;
and
WHEREAS, it is a condition to the consent of the Credit Providers that the
parties hereto enter into this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS. Except as otherwise defined herein, all capitalized
terms used herein shall have the respective meanings stated or ascribed in the
Servicing Agreement.
SECTION 2. AGREEMENTS RELATING TO THE LOANS. The parties hereto hereby
agree that notwithstanding anything to the contrary in the Servicing Agreement,
and to the extent the Servicing Agreement relates to the Loans;
(a) In addition to all other requirements of the Servicing Agreement,
Great Lakes shall, at the cost and expense of NHELP and without cost to the
Credit Providers or the Trustee:
(i) provide to NHELP and the Credit Providers a copy of any
report or audit required by the Secretary of Education or by Great
Lakes Higher Education Guaranty Corporation to be prepared in
connection with Great Lake's servicing activities relating to student
loans;
(ii) furnish to NHELP and the Credit Providers, (A) as soon as
available and in any event within 180 days following the end of its
annual fiscal year, its audited financial statements, certified by a
firm of independent certified public accountants, together with any
management letter received noting any material failure of Great Lakes
to perform any of its duties required by this Agreement, the Servicing
Agreement or under the Act; (B) on an annual basis within 10 days
after receipt thereof, copies of SAS 70 reports of Great Lakes and the
annual compliance audit for Great Lakes required by Section
428(b)(1)(4) of The Higher Education Act; and (C) to the extent not
included in the financial information provided pursuant to clauses (A)
and (B) hereof, Great Lakes net dollar loss for the year due to
servicing errors;
(iii) permit NHELP, the Credit Providers or any person
designated by NHELP, the Credit Providers or the Trustee to visit any
of the offices of Great Lakes to examine any documentation relating to
Loans subject to the Servicing Agreement and this Agreement, and, to
the extent permitted by law, to make copies thereof or of extracts
therefrom, and to discuss the affairs and accounts of Great Lakes with
its principal officers, all at such reasonable times and as often as
NHELP, the Credit Providers or the Trustee may reasonably request; and
(iv) permit NHELP, the Credit Providers or the Trustee to
conduct, or have auditors suitable to NHELP, the Credit Providers or
the Trustee conduct, a procedural audit with respect to Great Lakes's
compliance with the servicing rules of the Act and the Guarantor (if
NHELP, the Credit Providers or the Trustee shall have reasonable cause
to believe that such servicing rules are not being observed) and
provide NHELP or the Credit Providers with copies of any similar
procedural audits performed by any other third party, so long as such
audit does not contain confidential or proprietary information
relating to a client of Great Lakes (other than NHELP). Such audits
will be at the expense of NHELP.
(b) Subject to the provisions of Sections 2(f), 2(g) and 2(h) of this
Agreement, the term of the Servicing Agreement shall continue until the later
of: (i) such time as the obligations of NHELP under the Loan Agreement have been
paid in full, and (ii) such time as no Loans are held by the Trustee or the
Credit Providers (or a nominee of the Credit Providers), whether directly or as
security for obligations of NHELP.
2
(c) All reports provided by Great Lakes pursuant to the Servicing
Agreement shall be prepared on a basis which accounts for the Loans separately
from all other loans serviced by Great Lakes under the Servicing Agreement.
(d) NHELP and the Credit Providers shall have the right, at any time and
from time to time, during normal business hours and upon five days' notice to
Great Lakes, to examine, copy and audit any and all of Great Lakes's records or
accounts pertaining to any Loans, to interview personnel involved in the
servicing of such loans and to require Great Lakes to furnish such documents as
in the sole discretion of the Credit Providers from time to time either or both
of them deem necessary in order to determine that Great Lakes has complied with
the Servicing Agreement and this Agreement.
(e) All payments in connection with Loans received by Great Lakes (i)
shall be made directly to a third-party lock-box established by Great Lakes at a
commercial bank having net assets of no less than $100,000,000 selected by Great
Lakes in accordance with applicable legal and regulatory requirements, (ii)
shall be held in trust for the benefit of Credit Providers and not subject to
any setoff by Great Lakes, and (iii) shall be directed by Great Lakes to be paid
to the Trustee.
(f) Notwithstanding Sections 4 and 8 of the Servicing Agreement, Great
Lakes shall have the right to terminate the Servicing Agreement with respect to
the Loans only if (i) NHELP refuses or fails to pay servicing fees provided in
Section 4 of the Servicing Agreement with respect to the Loans and refuses or
fails to resume such payments within 30 days, (ii) Great Lakes furnishes 60
days' prior written notice to NHELP and the Credit Providers of such
termination, and (iii) Great Lakes complies with the provisions of Sections 3(c)
and 3(e) of this Agreement (it being expressly understood and agreed that (A)
refusal or failure by NHELP to pay servicing fees provided in Section 4 of the
Servicing Agreement with respect to loans that are not Loans shall not
constitute grounds for termination of the Servicing Agreement with respect to
the Loans, and (B) all moneys received by Great Lakes from the Trustee or the
Credit Providers shall be deemed to be in respect of servicing fees with respect
to Loans if and to the extent such fees are due and payable in accordance with
the Servicing Agreement).
(g) Unless given by the Trustee or NHELP with the prior written consent of
the Credit Providers or at the written direction of the Credit Providers, no
notice or other action by the Trustee or NHELP to terminate the Servicing
Agreement shall be effective to terminate the same with respect to the Loans.
(h) In addition to any right which NHELP may have to terminate the
Servicing Agreement pursuant to Sections 4 and 8 thereof, NHELP may terminate
the Servicing Agreement with respect to the Loans if (i) on the basis of a
request or directive of the Credit Providers' pursuant to the Loan Agreement
predicated on the Credit Providers' judgment that Great Lakes is not servicing a
material number of Loans in accordance with the requirements of the Act and the
Guarantor, NHELP requests Great Lakes to take remedial action to bring its
system into conformity with the requirements of the Act and the Guarantor and
Great Lakes fails to complete such remedial action with 60 days of such request,
or (ii) on the basis of a request or directive of the Credit Providers
3
pursuant to Loan Agreement predicated on the Credit Providers' judgment
that the financial condition of Great Lakes is not sufficient to justify
Great Lakes as a servicer of the Loans, NHELP requests such termination.
Any such termination of the Servicing Agreement with respect to the Loans
shall be effected as promptly as may be practicable.
(i) No amendment or waiver of the Servicing Agreement (other than an
amendment in respect to fees under Section 4 thereof) which is made without
the prior written consent of the Credit Providers shall be effective with
respect to the Loans or the rights, remedies, duties and obligations of
Great Lakes, NHELP, the Trustee or the Credit Providers with respect to the
Loans.
SECTION 3. ADDITIONAL CONSENTS AND AGREEMENTS RELATING TO THE CREDIT
PROVIDERS AND THE TRUSTEE. Great lakes hereby confirms to the Credit Providers
that, notwithstanding anything to the contrary in the Servicing Agreement:
(a) Great Lakes acknowledges the assignment of the Servicing
Agreement to the extent that it relates to the Loans pursuant to the Loan
Agreement (i) to the Trustee, as collateral security for the obligations of
NHELP under the Loan Agreement and for the benefit of the Credit Providers
as collateral security for the obligations of NHELP to the Credit Providers
under the Loan Agreement, (ii) to the Credit Providers as provided in the
Loan Agreement (after and by reason of the occurrence of an Event of
Default under and as defined in the Loan Agreement), and (iii) to any
nominee of or successor to any of the foregoing. Great Lakes agrees and
confirms to any assignee permitted under this paragraph (a) that (A) each
assignment referred to in this paragraph (a) shall be fully effective
against Great Lakes under the terms of the Servicing Agreement, (B) no such
assignment shall constitute a breach of or default under the Servicing
Agreement, and (C) notwithstanding any such assignment, each provision of
the Servicing Agreement shall remain in full force and effect.
(b) Neither the Trustee nor the Credit Providers shall be liable for
the performance or observance of any of the obligations or duties of NHELP
under the Servicing Agreement, nor shall the assignment referred to in the
preceding paragraph (a) give rise to any duties or obligations whatsoever
on the part of the Trustee or the Credit Providers owing to Great Lakes
except that, insofar as the Trustee or the Credit Providers exercises any
of its rights under the Servicing Agreement or makes any claims with
respect to any payments, deliveries or other obligations under the
Servicing Agreement, in each case, upon the terms described in the
following paragraph (d), the terms and conditions of the Servicing
Agreement applicable to such exercise of rights or such claims (including,
without limitation, the payment of servicing fees with respect to the
Loans) shall apply to, and be binding upon, the Trustee or the Credit
Providers, as applicable, for the same extent as NHELP.
(c) Great Lakes agrees to provide to the Credit Providers and the
Trustee copies of any notice of default or termination sent by Great Lakes
to NHELP pursuant to Section 4 or 8 of the Servicing Agreement
contemporaneously with sending such notice to NHELP.
4
(d) After the delivery by the Trustee or the Credit Providers to Great
Lakes of notice stating that an Event of Default under the Loan Agreement has
occurred and is continuing, the Trustee or the Credit Providers, or any nominee
acting on behalf of the Credit Providers, shall be entitled (i) notwithstanding
the terms and provisions of the Servicing Agreement, to terminate the Servicing
Agreement with respect to the Loans at any time (but subject to servicing fees
and removal fees otherwise due), and (ii) in the place and stead of NHELP, to
exercise any and all rights of NHELP under the Servicing Agreement with respect
to the Loans in accordance with the terms thereof. Following the exercise of any
or all rights of NHELP under the Servicing Agreement with respect to the Loans
as provided in this paragraph (d) and at the request of the Trustee or the
Credit Providers (or any nominee of the Credit Providers), Great Lakes shall
enter into a separate servicing agreement between Great Lakes and the Trustee or
the Credit Providers (or any nominee of the Credit Providers) pertaining to the
Loans on the same terms and provisions as are contained in the Servicing
Agreement with respect to the Loans. Upon any termination of the Servicing
Agreement, neither the Trustee nor the Credit Providers shall have any further
liabilities, duties or obligations to the Great Lakes under the Servicing
Agreement.
(e) Great Lakes agrees that, notwithstanding any right it may have under
the Servicing Agreement, at law, in equity or otherwise, it shall not terminate
the Servicing Agreement with respect to the Loans pursuant to Section 4 or 8 of
the Servicing Agreement and Section 2(f) of this Agreement unless it shall have
given the Trustee and Credit Providers at least 30 days' prior written notice of
its intent to terminate the Servicing Agreement with respect to the Loans and
neither the Trustee nor the Credit Providers (or any nominee) shall cure or
cause to be cured the failure or refusal of NHELP to pay servicing fees with
respect to the Loans giving rise to Great Lakes' right of termination of the
Servicing Agreement with respect to the Loans within such time period.
SECTION 4. MISCELLANEOUS.
(a) Except as otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be given and effective in the manner
provided in the Servicing Agreement: if to Great Lakes or NHELP, at its address
specified in or pursuant to the Servicing Agreement; or if to the Trustee, at
its address at 6th and Marquette, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Corporate Trust Department; or if to Concord, % Liberty Hampshire Company, LLC
at its address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ ▇▇▇▇▇▇▇▇, or if to Mellon, at its address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or, as to each of the
foregoing, at such other address as shall be designated by such entity in a
written notice to others.
(b) If any provision of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
5
(c) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF WISCONSIN.
(d) The headings hereof are for convenience only and are not intended
to affect the meaning or interpretation of this Agreement.
(e) This Agreement may be executed in any number of counterparts and
by different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.
SECTION 5. NO PETITION. Each of NHELP, Great Lakes and Mellon hereby
covenants and agrees that prior to the date which is one year and one day after
the payment in full of all outstanding commercial paper of Concord, it will not
institute against or join any other person or entity in instituting against
Concord, 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. Nothing contained in the Section 5 shall be
construed in any manner that would preclude, hinder, delay or limit the ability
of NHELP, Great Lakes or Mellon to respond to or participate in, any such
proceeding instituted by any other Person(s) not affiliated with any such
entity, but in no event shall NHELP, Great Lakes or Mellon oppose (or join with
any other person or entity in opposing) any motion or other actions by Concord
seeking to dismiss or stay any such proceedings.
SECTION 6. LIMITED RECOURSE OF NATURE OF TRANSACTIONS. Each of NHELP,
Great Lakes and Mellon hereby acknowledges and agrees that all transactions with
Concord hereunder and under the Servicing Agreement shall be without recourse of
any kind to Concord. Concord shall have no obligation to pay any amounts owing
hereunder or under the Servicing Agreement unless and until Concord has received
such amounts pursuant to the Financed Loans (as defined in the Loan Agreement).
In addition, each of NHELP, Great Lakes and Mellon agrees that Concord shall
have no obligation to pay any amounts constituting fees, a reimbursement for
expenses or indemnities (collectively, "Expense Claims") and such Expense Claims
shall not constitute a claim against Concord (as defined in Section 101 of Title
11 of the United States Bankruptcy Code), unless or until Concord has received
amounts sufficient to pay such Expense Claims pursuant to the Financed Loans and
such amounts are not required to pay the commercial paper of Concord.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the day and year first above written.
GREAT LAKES HIGHER EDUCATION
SERVICING CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President
NHELP-I INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
CONCORD MINUTEMEN CAPITAL
COMPANY, LLC
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Manager
MELLON BANK, N.A.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
7
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated as of September 30, 1998 is by and among
NHELP-I, INC. (the "Borrower"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee (the "Trustee") under the Agreement referred to below, and UNIPAC
SERVICE CORPORATION ("UNIPAC" or "Servicer"), as custodian (the "Custodian").
WHEREAS, the Trustee, Concord Minutemen Capital Company, LLC ("Concord")
and the Borrower have entered into a Warehouse Loan and Security Agreement
dated as of September 30, 1998 (as amended and supplemented from time to time,
the "Agreement") pursuant to which Concord and Mellon Bank, N.A. (together with
its successors and assigns, "Mellon," and together with Concord, the "Lenders")
will make loans to the Borrower ("Advances") to purchase Eligible Loans; and
WHEREAS, pursuant to the Agreement, the Borrower has granted to the
Trustee, and its successors and assigns, for the benefit of the Secured
Creditors (as defined in the Agreement), as further described in the Agreement,
a security interest in, among other things, the promissory notes and certain
other instruments, documents and Records (as defined in the Agreement) relating
to or evidencing certain Financed Loans as security and protection for the
payment when due of the Obligations (as defined in the Agreement) and the
performance and observance by the Borrower of all of the covenants, terms and
conditions expressed or implied in the Agreement; and
WHEREAS, the Trustee has requested, and the Borrower agrees, that all
Financed Loans shall be placed in the possession of the Trustee's custodian for
the purpose of perfecting the Trustee's security interest in such collateral
under the Uniform Commercial Code; and
WHEREAS, the Borrower has entered into a Servicing Agreement dated as of
September 30, 1998 with UNIPAC SERVICE CORPORATION (the "Servicer")(the
"Servicing Agreement");
NOW, THEREFORE, the Trustee and the Borrower hereby authorize the
Custodian to hold all Deposited Loans (as defined below) as custodian and
agent of the Trustee and authorize the Custodian to perform the following
functions and duties in connection therewith, and the Custodian agrees to
perform such functions and duties as custodian and agent of the Trustee,
including perfecting and continuing the perfection of the Trustee's security
interest in the Deposited Loans:
DEFINITIONS. Unless otherwise defined herein, all capitalized terms used
herein, including the premises hereof, shall have the meanings ascribed to such
terms in the Agreement.
"Deposited Loans" means all Financed Loans which now or at any time
hereafter are serviced by or in the possession and control of the Servicer
pursuant to the Servicing Agreement as well as all Records and other
instruments and documents relating thereto.
SAFEKEEPING OF THE DEPOSITED LOANS. The Custodian hereby agrees to act as
custodian and agent of the Trustee and to perform the following services for the
Trustee with respect to the Deposited Loans:
(a) To hold in its fireproof storage vault and under its exclusive
possession, dominion and control (subject only to the direction of the
Trustee) the following documents with respect to each of the Deposited
Loans and to use due care to preserve and protect the same:
(i) A copy of the original student application (with all
required supplements);
(ii) The original promissory note;
(iii) The Notification of Loan Approval by the Guarantor;
(iv) Any further documentation required by the Secretary or
the Guarantor; and
(v) all Records relating to the Deposited Loans;
provided, however, that to the extent (A) permitted in accordance with the
rules and regulations of the Secretary of Education and/or the applicable
Guarantor, and (B) not otherwise affecting the ability of the Trustee or
the Lenders to enforce against the student obligors under applicable law
the Deposited Loans, the Custodian may retain any of such documentation
(other than original promissory notes) on microfilm or other similar film
storage system;
(b) Upon the written demand of the Trustee or the Lenders and in
circumstances authorized in the Agreement, to deliver and immediately
release to the Trustee or the Lenders, or the agent or representative of
the Trustee, any and all of the Deposited Loans held by Custodian at the
time of such demand, as well as all related information and documents
required to be held under the Servicing Agreement;
(c) To furnish the Trustee monthly and the Lenders at such time or
times the Lenders may reasonably request, a list containing the names and
social security numbers of the obligors of the Deposited Loans, the unpaid
principal balance of all Deposited Loans of each of said obligors, and such
other information with respect to the Deposited Loans which is reasonably
requested by the Trustee or the Lenders;
(d) To permit inspection at all reasonable times and upon reasonable
advance notice by the Trustee, the Lenders or their respective agents
(including auditors and representatives) of the Deposited Loans and the
Records, such inspection to include the right to examine and make copies of
any documents or other instruments relating to the Deposited Loans and to
interview personnel involved in the servicing of the Deposited Loans;
2
(e) To furnish the Trustee and the Lenders from time to time upon
written request of the Trustee or the Lenders a list of all Deposited Loans
submitted for claim and the date of submission and the amount claimed;
(f) To furnish to the Trustee and the Lenders the reports required by
the Servicing Agreement upon written request to the Custodian;
(g) To furnish to the Trustee or the Lenders, at the request of the
Trustee, the Lenders or the Borrower, prior to any withdrawal of moneys
from the Collection Account under the Agreement for the acquisition of
Eligible Loans, a confirmation that all Records, documents and other
instruments described in clause (a) above with respect to such Eligible
Loans have been received by the Custodian; and
(h) To take any and all such other action with respect to the
Deposited Loans as the Trustee may, consistent with its rights and
obligations under the Agreement, reasonably request.
PAYMENTS IN RESPECT OF DEPOSITED LOANS. The Borrower and the Custodian
agree that all amounts received in respect of the Deposited Loans (including
claim payments from any Guarantor and Interest Subsidy Payments and Special
Allowance Payments) shall be promptly paid over to and deposited with the
Trustee pursuant to the Agreement.
RELEASE OF COLLATERAL. The Custodian may release Deposited Loans and all
related information and documentation held by the Custodian only as follows:
(a) The Custodian may release to any Person at any time any Deposited
Loan that has been paid in full;
(b) The Custodian may release to an applicable Guarantor any Deposited
Loan which is eligible for claim payment and with respect to which a claim
is (or is to be) filed; and
(c) The Custodian may, in accordance with the provisions of this
Agreement ("Safekeeping of Deposited Loans"--clause(b)), release to the
Trustee the Deposited Loans and any Records, documents and instruments
relating thereto, subject to the provisions of the Servicing Agreement.
Except as described in this paragraph and except upon termination of this
Agreement, the Custodian will not release any Deposited Loans unless the
Custodian is in receipt of written authorization from the Trustee.
NO LIABILITY. Neither the Trustee nor the Lenders shall have any
responsibility for loss or damage suffered by the Borrower with respect to any
Deposited Loan delivered or released pursuant to this Agreement.
TERMINATION OF AGREEMENT. This Agreement may be terminated by the Trustee
for cause and may be terminated at any time (with the consent of the Lenders)
by the mutual agreement of the Trustee and the Custodian, but no such
termination shall be effective until alternative
3
safekeeping arrangements satisfactory to the Trustee have been effected. This
Agreement shall terminate forthwith upon the discharge of the Agreement in
accordance with the terms of the Agreement. Upon termination of this Agreement
for any reason other than the discharge of the Agreement in accordance with the
terms of the Agreement, the Deposited Loans then held by the Custodian shall be
forthwith delivered to the Trustee but the Trustee shall not be the Servicer of
such Deposited Loans. Upon termination of this Agreement following discharge of
the Agreement as described above, all Deposited Loans and materials relating
thereto in the possession of the Custodian shall be delivered to the Borrower.
Any actual costs incurred by the Custodian at the direction of the Borrower in
addition to the normal cost of servicing shall be borne by the Borrower.
INSPECTION RIGHTS. To the extent permitted by applicable law, all Records
with respect to the Deposited Loans shall be available for inspection or audit
from time to time by Trustee, the Borrower and the Lenders (or their respective
designees) upon the request of the Trustee, the Borrower or the Lenders made
with reasonable advance notice to the Custodian, such availability to include
the right to examine and make copies of any Records, documents or instruments
relating to the Deposited Loans.
AUTHORIZATIONS. The persons whose signatures appear immediately below are
the persons presently authorized to act for the Trustee, the Borrower or the
Lenders, as the case may be, whenever written directions or requests are
required under this Agreement (it being understood and agreed that different or
additional persons may be authorized to act for such Persons without further
notice to the Custodian or any other Persons and that the Custodian may rely on
directions or requests by such different or additional persons so long as they
purport to be authorized officers of the Trustee, the Borrower or the Lenders,
as the case may be).
TRUSTEE BORROWER
Norwest Bank Minnesota, National Association NEHELP-I Inc.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------- --------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
and Treasurer
CONCORD MELLON
Concord Minutemen Capital Company, LLC Mellon Bank, N.A.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CUSTODIAN.
(a) The Custodian agrees to accept delivery of the promissory notes and
other Records, documents and instruments pertaining to the Deposited Loans and
to have and maintain continuous and exclusive possession, dominion and control
over all documents evidencing the Deposited Loans.
(b) The Custodian shall exercise reasonable care and diligence in the
possession, retention and protection of the Deposited Loans delivered to it
hereunder. The Custodian accepts the custodial duties and responsibilities
imposed upon it hereunder and agrees to perform such custodial duties and
responsibilities in a sound and prudent manner consistent in all respects with
sound custodial practices and principles.
(c) The Custodian shall at all times during the term of this Agreement
maintain insurance which shall include, but not be limited to, dishonesty of
employees or other crimes resulting in the loss of the Deposited Loans and
comprehensive general liability, including personal injury and loss or damage
to Records, documents and instruments. The Custodian shall name the Trustee as
a loss payee with respect to any such insurance relating to loss of the
Deposited Loans and shall name the Trustee as an additional insured with
respect to all other insurance. No such policy of insurance may be cancelled or
altered in any material respect without giving the Trustee at least thirty (30)
days' prior written notice of any such cancellation or alternation.
(d) The Custodian shall at all times maintain Records indicating the obligor
name and Social Security Number of all Deposited Loans which are delivered to
it to hold as Custodian pursuant to this Agreement and indicating that such
Deposited Loans have been pledged to the Trustee.
MISCELLANEOUS.
(a) No amendment, modification, termination or waiver of any provision of
this Agreement shall be effective unless the same shall be in writing and
signed by the parties and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. No
amendment of any other agreement or instrument shall affect the Custodian or
its duties hereunder.
(b) This Agreement shall be binding upon the parties hereto and their
successors, transferees and assigns, and shall inure to the benefit of and be
enforceable by all parties hereto and their respective successors, transferees
and assigns, provided that the Custodian may not transfer, assign or terminate
all or any part of this Agreement without the prior written consent of the
Lenders.
(c) The Custodian acknowledges and agrees that its services under this
Agreement are in addition to, and not in lieu of, its services as Servicer of
the Deposited Loans under and pursuant to the Servicing Agreement. The
Custodian shall not be entitled to, and hereby waives, any lien or charge on,
or right of set-off against, any Deposited Loans or proceeds thereof coming into
its possession or otherwise.
5
(d) The parties hereto acknowledge and agree that the Lenders shall be
third-party beneficiaries of this Agreement with the power and right to enforce
the provisions of this Agreement against the parties hereto. In the event that
the Lenders become the assignees or successors of the Trustee (under the
circumstances contemplated in the Agreement) and, as such assignees or
successors of the Trustee, enforce this Agreement against the Custodian, the
Lenders shall succeed to be duties and obligations of the Trustee under this
Agreement.
(e) This Agreement may be executed and delivered in any number of
counterparts, each of which, when so executed and delivered, shall be an
original; provided, however, that such counterparts shall together constitute
but one and the same instrument.
(f) Any provision of this Agreement which is prohibited, unenforceable or
not authorized in any jurisdiction shall, as to such jurisdiction, be effective
to the extent of such prohibition, unenforceability or nonauthorization
without invalidating the remaining provisions hereof or affecting the validity
or enforceability or legality of such provision in any other jurisdiction.
(g) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEBRASKA, WITHOUT REFERENCE TO ITS
CONFLICTS-OF-LAWS PRINCIPLES.
(h) All notices, requests, demands and other communications under or in
respect of this Agreement shall be in writing or shall be delivered or mailed,
first class, postage prepaid, or sent by facsimile machine, to the parties at
the following addresses (or at such other address for a party as shall be
specified by the party to whom addressed):
If to the Borrower: NHELP-I, INC.
c/o National Higher Education Loan Program
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
6th and Marquette
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Custodian: UNIPAC SERVICE CORPORATION
Suite 400
6
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Administration/
Legal Department
If to the Lenders: CONCORD MINUTEMEN CAPITAL
COMPANY, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
MELLON BANK, ▇.▇.
▇▇▇▇▇▇ Bank Center
One Mellon Bank, Rm 410
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
7
IN WITNESS WHEREOF, the parties have signed this Agreement as of September
30, 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Trustee under the Agreement
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
NHELP-I, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President and Treasurer
UNIPAC SERVICE CORPORATION
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
8
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated as of September 30, 1998 is by and among
NHELP-I, INC. (the "Borrower"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee (the "Trustee") under the Agreement referred to below, and GREAT
LAKES HIGHER EDUCATION SERVICING CORPORATION, as custodian (the "Custodian").
WHEREAS, the Trustee, the Borrower and Concord Minutemen Capital Company,
LLC ("Concord") have entered into a Warehouse Loan and Security Agreement dated
as of September 30, 1998 (as amended and supplemented from time to time, the
"Agreement") pursuant to which Concord and Mellon Bank, N.A. (together with its
successors and assigns "Mellon," and together with Concord, the "Lenders") will
make loans to the Borrower ("Advances") to purchase Eligible Loans; and
WHEREAS, pursuant to the Agreement, the Borrower has granted to the
Trustee, and its successors and assigns, for the benefit of the Secured
Creditors (as defined in the Agreement), a security interest in, among other
things, the promissory notes and certain other instruments, documents and
Records (as defined in the Agreement) relating to or evidencing certain
Financed Loans as security and protection for the payment when due of the
Obligations (as defined in the Agreement) and the performance and observance by
the Borrower of all of the covenants, terms and conditions expressed or implied
in the Agreement; and
WHEREAS, the Trustee has requested, and the Borrower agrees, that all
Financed Loans shall be placed in the possession of the Trustee's custodian for
the purpose of perfecting the Trustee's security interest in such collateral
under the Uniform Commercial Code; and
WHEREAS, the Borrower has entered into a Servicing Agreement dated as
September 30, 1998, with Great Lakes Higher Education Servicing Corporation
(the "Servicer") (the "Servicing Agreement");
NOW, THEREFORE, the Trustee and the Borrower hereby authorize the
Custodian to hold all Deposited Loans (as defined below) as custodian and agent
of the Trustee and authorize the Custodian to perform the following functions
and duties in connection therewith, and the Custodian agrees to perform such
functions and duties as custodian and agent of the Trustee.
DEFINITIONS. Unless otherwise defined herein, all capitalized terms used
herein, including the premises hereof, shall have the meanings ascribed to such
terms in the Agreement.
"Deposited Loans" means all Financed Loans which now or at any time
hereafter are serviced by or in the possession and control of the Servicer
pursuant to the Servicing Agreement as well as all Records and other
instruments and documents relating thereto.
SAFEKEEPING OF THE DEPOSITED LOANS. The Custodian hereby agrees to act as
custodian and agent of the Trustee and to perform the following services for the
Trustee with respect to the Deposited Loans:
(a) To hold in its fireproof storage vault and under its exclusive
possession, dominion and control (subject to the direction of the Trustee)
the following documents with respect to each of the Deposited Loans and to
use due care to preserve and protect the same:
(i) a copy of the original combination student
application/promissory note (with all required supplements) or the
combination of separate documents representing the same but in all
cases, documents shall include the original promissory note;
(ii) the Notification of Loan Approval by the Guarantor or
system documentation sufficient to indicate the electronic
notification of loan approval by the Guarantor;
(iii) any further documentation required by the Secretary or the
Guarantor; and
(iv) all Records (excluding computer programs, tapes, disks,
punch cards, data processing software and other computer related
records) relating to the Deposited Loans;
provided, however, that to the extent (A) permitted in accordance with the
rules and regulations of the Secretary of Education and/or the applicable
Guarantor, and (B) not otherwise affecting the ability of the Trustee or
the Lenders to enforce against the student obligors under applicable law
the Deposited Loans, the Custodian may retain any of such documentation
(other than original promissory notes) on microfilm, imaging or other
similar storage system;
(b) Upon the written demand of the Trustee or Lenders and in
circumstances authorized in the Agreement, to deliver and immediately
release to the Trustee, or the agent or representative of the Trustee, any
and all of the Deposited Loans held by Custodian at the time of such
demand, as well as all related information and documents required to be
held under the Servicing Agreement;
(c) To furnish the Trustee monthly and the Lenders at such time or
times the Lenders may reasonably request, a list containing the names and
Social Security numbers of the obligors of the Deposited Loans, the unpaid
principal balance of all Deposited Loans of each of said obligors, and such
other information with respect to the Deposited Loans which is reasonably
requested by the Trustee or the Lenders;
(d) To permit inspection at all reasonable times and upon reasonable
advance notice by the Trustee, the Lenders or their respective agents
(including auditors and representatives) of the Deposited Loans and the
Records, such inspection to include the right to examine and make copies of
any Record, documents or other instruments relating
2
to the Deposited Loans and to interview personnel involved in the servicing
of the Deposited Loans;
(e) To furnish the Trustee and the Lenders from time to time upon
written request of the Trustee or the Lenders a list of all Deposited Loans
submitted for claim and the date of submission and the amount claimed;
(f) To furnish to the Trustee and the Lenders the reports required by
the Servicing Agreement upon written request to the Custodian;
(g) To furnish to the Trustee or the Lenders, at the request of the
Trustee, the Lenders or the Borrower, prior to any withdrawal of moneys
from the Collection Account under the Agreement for the acquisition of
Eligible Loans, a confirmation that all Records, documents and other
instruments described in clause (a) above with respect to such Eligible
Loans have been received by the Custodian; and
(h) To take any and all such other action with respect to the
Deposited Loans as the Trustee may, consistent with its rights and
obligations under the Agreement, reasonably request, after compensation to
the Custodian from the Borrower of any costs and expenses associated
therewith.
PAYMENTS IN RESPECT OF DEPOSITED LOANS. The Borrower and the Custodian
agree that all amounts received in respect of the Deposited Loans (including
claim payments from any Guarantor and Interest Subsidy Payments and Special
Allowance Payments) shall be promptly paid over to and deposited with the
Trustee pursuant to the Agreement.
RELEASE OF COLLATERAL. The Custodian may release Deposited Loans and all
related information and documentation held by the Custodian only as follows:
(a) the Custodian may release to any Person at any time any Deposited
Loan that has been paid in full;
(b) the Custodian may release to an applicable Guarantor any
Deposited Loan which is eligible for claim payment and with respect to
which a claim is (or is to be) filed; and
(c) The Custodian may, in accordance with the provisions of this
Agreement ("Safekeeping of Deposited Loans" --clause(b)), release to the
Trustee the Deposited Loans and any Records, documents and instruments
relating thereto, subject to the provisions of the Servicing Agreement.
Except as described in this paragraph E and except upon termination of this
Agreement, the Custodian will not release any Deposited Loans unless the
Custodian is in receipt of written authorization from the Trustee (but only
under the circumstances set forth in the Agreement for the exercise of remedies
by the Lenders).
3
NO LIABILITY. Neither the Trustee nor the Lenders shall have any
responsibility for loss or damage suffered by the Borrower with respect to any
Deposited Loan delivered or released pursuant to this Agreement.
TERMINATION OF AGREEMENT. This Agreement may be terminated by the Trustee
for cause and may be terminated at any time (with the consent of the Lenders) by
the mutual agreement of the Trustee and the Custodian, but no such termination
shall be effective until alternative safekeeping arrangements satisfactory to
the Trustee have been effected. This Agreement shall terminate forthwith upon
the discharge of the Agreement in accordance with the terms of the Agreement.
Upon termination of this Agreement for any reason other than the discharge of
the Agreement in accordance with the terms of the Agreement, the Deposited Loans
then held by the Custodian shall be forthwith delivered to the Trustee or other
party designated by the Trustee, but the Trustee shall not be the Servicer of
such Deposited Loans. Upon termination of this Agreement following discharge of
the Agreement as described above, all Deposited Loans and materials relating
thereto in the possession of the Custodian shall be delivered to the Borrower.
Any actual costs incurred by the Custodian at the direction of the Borrower in
addition to the normal cost of servicing shall be borne by the Borrower.
INSPECTION RIGHTS. To the extent permitted by applicable law, all Records
with respect to the Deposited Loans shall be available for inspection or audit
from time to time by Trustee, the Borrower and the Lenders (or their respective
designees) upon the request of the Trustee, the Borrower or the Lenders made
with reasonable advance notice to the Custodian, such availability to include
the right to examine and make copies of any Records, documents or instruments
relating to the Deposited Loans.
AUTHORIZATIONS. The persons whose signatures appear immediately below are
the persons presently authorized to act for the Trustee, the Borrower or the
Lenders, as the case may be, whenever written directions or requests are
required under this Agreement (it being understood and agreed that different or
additional persons may be authorized to act for such Persons without further
notice to the Custodian or any other Persons and that the Custodian may rely on
directions or requests by such different or additional persons so long as they
purport to be authorized officers of the Trustee, the Borrower or the Lenders,
as the case may be).
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TRUSTEE BORROWER
Norwest Bank Minnesota, National Association NEHELP-I, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------- ------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
and Treasurer
CONCORD MELLON
Concord Minutemen Capital Company, LLC Mellon Bank, N.A.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------- ------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CUSTODIAN.
(a) The Custodian agrees to accept delivery of the promissory notes
and other Records, documents and instruments pertaining to the Deposited
Loans and to have and maintain continuous and exclusive possession,
dominion and control over all documents evidencing the Deposited Loans.
(b) The Custodian shall exercise reasonable care and diligence in the
possession, retention and protection of the Deposited Loans delivered to it
hereunder. The Custodian accepts the custodial duties and responsibilities
imposed upon it hereunder and agrees to perform such custodial duties and
responsibilities in a sound and prudent manner consistent in all respects
with sound custodial practices and principles.
(c) The Custodian shall at all times during the term of this
Agreement maintain insurance which shall include, but not be limited to,
dishonesty of employees or other crimes resulting in the loss of the
Deposited Loans and comprehensive general liability, including personal
injury and loss or damage to Records, documents and instruments.
(d) The Custodian shall at all times maintain Records indicating the
obligor name and Social Security Number of all Deposited Loans which are
delivered to it to hold as Custodian pursuant to this Agreement and
maintain sufficient records to indicate that the Deposited Loans have been
pledged to the Trustee.
(e) The Custodian makes no representation, express or implied, as to
the effectiveness of the bailment hereunder for purposes of perfection
under the UCC in effect in Wisconsin or Nebraska.
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MISCELLANEOUS.
(a) No amendment, modification, termination or waiver of any provision of
this Agreement shall be effective unless the same shall be in writing and
signed by the parties and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. No
amendment of any other agreement or instrument shall affect the Custodian or
its duties hereunder.
(b) This Agreement shall be binding upon the parties hereto and their
successors, transferees and assigns, and shall inure to the benefit of and be
enforceable by all parties hereto and their respective successors, transferees
and assigns, provided that the Custodian may not transfer, assign or terminate
all or any part of this Agreement without the prior written consent of the
Borrower.
(c) The parties hereto acknowledge and agree that the Lenders shall be
third-party beneficiaries of this Agreement with the power and right to enforce
the provisions of this Agreement against the parties hereto. In the event that
the Lenders become the assignees or successors of the Trustee (under the
circumstances contemplated in the Agreement) and, as such assignees or
successors of the Trustee, enforce this Agreement against the Custodian, the
Lenders shall succeed to the duties and obligations of the Trustee under this
Agreement.
(d) The Custodian acknowledges and agrees that its services under this
Agreement are in addition to, and not in lieu of, its services as Servicer of
the Deposited Loans under and pursuant to the Servicing Agreement. The
Custodian shall not be entitled to, and hereby waives, any lien or charge on,
or right of set-off against, any Deposited Loans or proceeds thereof coming
into its possession or otherwise.
(e) This Agreement may be executed and delivered in any number of
counterparts, each of which, when so executed and delivered, shall be an
original; provided, however, that such counterparts shall together constitute
but one and the same instrument.
(f) Any provision of this Agreement which is prohibited, unenforceable or
not authorized in any jurisdiction shall, as to such jurisdiction, be effective
to the extent of such prohibition, unenforceability or nonauthorization without
invalidating the remaining provisions hereof or affecting the validity or
enforceability or legality of such provision in any other jurisdiction.
(g) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF WISCONSIN, WITHOUT REFERENCE TO ITS
CONFLICTS-OF-LAWS PRINCIPLES.
(h) All notices, requests, demands and other communications under or in
respect of this Agreement shall be in writing or shall be delivered or mailed,
first class, postage prepaid, or sent by facsimile machine, to the parties at
the following addresses
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(or at such other address for a party as shall be specified by the party to
whom addressed):
If to the Borrower: NHELP-I, INC.
c/o National Higher Education Loan Program
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
6th and Marquette
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
If to the Custodian: GREAT LAKES HIGHER EDUCATION
SERVICING CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
If to the Lenders: CONCORD MINUTEMEN CAPITAL
COMPANY, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
MELLON BANK, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
7
IN WITNESS WHEREOF, the parties have signed this Agreement as of September 30,
1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
under the Agreement
By
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
NHELP-I, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
and Treasurer
GREAT LAKES HIGHER EDUCATION
SERVICING CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice
President
8
IN WITNESS WHEREOF, the parties have signed this Agreement as of September
30, 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
under the Agreement
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
NHELP-I, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President and
Treasurer
GREAT LAKES HIGHER EDUCATION
SERVICING CORPORATION
By
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice
President
8