Exhibit 99.1
MASTER SERVICING AGREEMENT
This Master Servicing Agreement (the "Agreement") entered into and
effective as of the 1st day of June, 2003, by and between Nelnet, Inc., a Nevada
corporation ("Nelnet") and Nelnet Education Loan Funding, Inc., a Nebraska
corporation ("NELF").
WHEREAS, Servicer has developed and/or has available to it the systems
and services to enable it to process and service Education Loans in accordance
with 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), and those guarantee
agencies as are satisfactory to Servicer ("Guarantor(s)"); and
WHEREAS, pursuant to the Indenture (as defined below) NELF finances
student loans made and guaranteed under the Education Act ("Education Loans") by
and through its eligible lender trustee; and
WHEREAS, Servicer has developed and/or has available to it the systems
and services to enable it to process and service Education Loans in accordance
with the Rules and Regulations (the "Regulations") promulgated by Guarantor
(references hereinafter to the "Regulations" include Rules and Regulations
promulgated thereunder as in effect from time to time); and
WHEREAS, Nelnet Loan Services, Inc. ("Servicer"), as subservicing agent,
is in the business of servicing loans which are made and guaranteed in
accordance with the provisions of the Education Act; and
WHEREAS, NELF desires to retain Nelnet to cause Servicer to process and
service NELF's Education Loans financed pursuant to the Indenture, and for
Servicer to act as subservicer under the terms of that certain Nelnet Loan
Services, Inc. Subservicing Agreement between Nelnet and Servicer dated as of
June 1, 2003, (the "Subservicing Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. Definitions. Capitalized terms which are not otherwise defined in
this Agreement shall have the meanings ascribed thereto in that certain
Indenture of Trust dated as of June 1, 2003 (as amended, the "Indenture"), among
Wells Fargo Bank Minnesota, National Association as Indenture Trustee and
Eligible Lender Trustee (the "Trustee"), and NELF.
2. Term.
2.1 The term of this Agreement shall continue until the earlier of (i)
termination of the Indenture, (ii) early termination after material default by
Servicer as provided for in Section 16 of this Agreement, and (iii) the
Education Loans serviced under this Agreement are paid in full.
2.2 Upon the termination of this Agreement, Nelnet shall turn over to
NELF all Education Loan files complete with all information contained therein
and all current computer information on the Education Loans under service
pursuant to this Agreement in such form or fashion as NELF shall reasonably
specify. Nelnet and NELF specifically agree that the format used to transfer
NELF's data contains confidential and proprietary trade secret information which
is the exclusive property of Nelnet and/or Servicer. Nelnet makes no claim to
the specific data contained in any printout given to NELF and recognizes that
said data is the exclusive property of NELF. Nelnet and NELF 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 Nelnet's and/or Servicer's
computer program are trade secrets of, proprietary to, and owned exclusively by
Nelnet and/or Servicer. At such deconversion, a minimum 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 NELF; provided
however, that in the event deconversion results from early termination of this
Agreement under Section 16 hereof due to the breach by Nelnet, NELF shall pay
only the actual expenses incurred in connection with the transfer of such files
and other information. The confidentiality provisions of this paragraph shall
survive any termination or expiration of this Agreement.
3. Delivery of Completed Education Loans for Servicing and Collection.
Subject to Servicer's scheduling requirements, NELF may from time to time
deliver or cause to be delivered Education Loans with respect to which loan
processing has been completed and loan proceeds have been fully disbursed to the
student/parent borrowers prior to the date of delivery ("Completed Education
Loans") to Servicer to be serviced pursuant to the terms of this Agreement. NELF
shall transmit to Servicer all such loan documentation as required by Servicer
to enable it to service the Completed Education Loans as provided herein.
4. Servicing of Completed Education Loans. Upon acceptance of any
Completed Education Loan into Servicer's computer system and after the sale date
(if applicable) of the Completed Education Loan to NELF, Nelnet shall cause
Servicer to service such Education Loan in accordance with the Education Act,
the Regulations, and in accordance with the provisions of this Agreement,
including the following:
(a) Servicer shall take all steps necessary to maintain the Insurance on
Education Loans in full force at all times.
(b) Servicer shall prepare and mail directly to the student/parent
borrower all required statements, notices, disclosures and demands.
(c) Servicer shall retain records of contacts, follow-ups, collection
efforts and correspondence regarding each Education Loan.
(d) Servicer shall provide accounting for all transactions related to
individual Education Loans, including, but not limited to, accounting for all
payments of principal and interest upon such Education Loans.
(e) Servicer shall process all deferments and forbearances.
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(f) Servicer shall process all address changes and update address
changes accordingly.
(g) Servicer shall retain all documents received by Nelnet pertaining to
each Education Loan, including the original promissory note with respect to each
Education Loan.
(h) When necessary and allowable by the Education Act, Servicer 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) Servicer shall provide a Lender's Manifest of Education Loans on all
new accounts, accounts paid in full or converted to repayment, and provide any
other information required by Guarantor.
(j) Servicer shall provide such other services as Servicer customarily
provides and deems appropriate.
(k) Nelnet and NELF agree that upon delivery of the original promissory
notes relating to the Education Loans to the Servicer as Custodian pursuant to
the Custodian Agreement dated as of June 1, 2003 (the "Custodian Agreement"),
among NELF, the Servicer and the Trustee, that each shall and does relinquish
all power and control over such promissory notes, subject to responsibilities of
Nelnet under this Agreement.
5. Additional Servicing Activities. At NELF's request, Nelnet agrees to
cause Servicer to perform additional servicing activities not required under the
terms of the Subservicing Agreement for those Education Loans transferred to
Servicer as Completed Education Loans 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"). Nelnet shall cause
Servicer, utilizing Cure Procedures approved by the Guarantor, to use Servicer's
best efforts to cure all defects caused by NELF. Nelnet makes no representation
or warranty that the guarantee on each Education Loan will be reinstated
regardless of Servicer following the Cure Procedures as approved by the
Guarantor. NELF agrees to pay Nelnet those fees for Cure Services described in
Schedule A under the topic entitled "Additional Servicing Activity".
6. Portfolios Subject to Rejection by Nelnet. NELF acknowledges that
certain loan portfolio types pose a risk of financial hardship for Servicer to
service under this Agreement. Nelnet may in its discretion, prior to placing
such loans in the Servicer's system, reject certain loans or loan portfolios
("Rejected Loans"). Nelnet shall provide NELF with reasonable advance notice as
to any Rejected Loans which Nelnet declines to place on Servicer's system.
Nelnet shall have no right to reject or decline loans after the loans are
transferred to the Servicer's system.
7. Reports to NELF. On or before the 15th day of each month, unless some
other time is provided herein, Nelnet shall cause Servicer to prepare and
deliver to NELF and the Trustee (upon Trustee's request), or to such other
person as NELF may designate, the following reports with respect to activity
during the preceding month:
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(a) As of the last day of each month, an unaudited statement, in
reasonable detail, of all transactions during that month on Completed Education
Loans serviced by Servicer for NELF;
(b) Processing Status Report (daily);
(c) Check Register (daily);
(d) Posting Ledger (daily/monthly);
(e) Statistical Report (monthly);
(f) Loan Ledger/Alpha Report (monthly);
(g) Guarantor Manifest (monthly);
(h) Delinquency Report (daily/monthly);
(i) Claims Activity Report (monthly).
NELF shall receive at no cost one copy of each of the aforementioned
reports. Nelnet will cause Servicer to provide extra copies at the request of
NELF. NELF shall reimburse Nelnet for the cost in producing such extra copies.
8. Interest Computation. Nelnet shall cause Servicer to provide on a
quarterly basis statistical data for the computation of interest and special
allowance billable to the U.S. Department of Education for NELF's Education
Loans. Data will be computed commencing with the date Education Loans appear on
the records of Servicer.
9. Service Fee to Nelnet. NELF shall pay to Nelnet, on or before the
15th day of each month, or within fifteen (15) days of billing statement (which
may be sent either by Nelnet or Servicer), for and in consideration of the
services performed by Nelnet and Servicer hereunder for the preceding month, the
fee provided for in Schedule A of this Agreement ("Servicing Fee"). The
Servicing Fee shall be subject to change every twelve (12) months. Such change
shall not result in an increase that will exceed three and one-fifth percent
(3.2%) cumulatively for any twelve (12) month period. In addition, these fees
are subject to renegotiation every three years, subject to the renegotiated fees
meeting approval of the Rating Agencies. In the event the parties cannot agree
to new fees for each three year period, then either party may terminate this
Agreement upon 90 days' written notice. In the event Servicing Fees are not paid
within thirty (30) days of the billing statement, NELF agrees Nelnet will have
the following rights to (a) impose a late charge of one and one-half percent (1
1/2%) per month against the entire outstanding balance of the past due Servicing
Fee including any prior late charge; and (b) terminate services without notice
if nonpayment persists for sixty (60) or more days from billing. The Servicing
Fee and related charges shall be paid only from the Trust Estate and only to the
extent moneys are available in the Collection Fund as provided for under the
terms of the Indenture.
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The parties agree that should Servicer be required to make material
changes to its current servicing practices or servicing system due to changes to
the Education Act, Regulations, and/or business environment, or to other costs
beyond Nelnet's control, including but not limited to postal fees, Nelnet may
renegotiate the Servicing Fees with NELF to reasonably reflect those increased
costs at any time during the term of this Agreement.
10. Loan Payments. Student/parent borrowers will make all loan payments
to a third party lockbox established by Servicer. All cash receipts will be
remitted once a week to the Trustee for deposit into the Collection Fund.
11. Disclosure of Information. All data, information, records,
correspondence, reports or other documentation received by Nelnet or Servicer
pursuant to this Agreement from NELF or the school which the student attended or
from the student/parent borrower, or prepared and maintained by Nelnet or
Servicer in the course of its activities under this Agreement shall be released
or divulged only to NELF and the Trustee, 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 Nelnet or Servicer may be
directed in writing by NELF or such student/parent borrower.
12. 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 Nelnet's
and/or Servicer'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 Nelnet's and/or Servicer's programs conveyed in confidence by Nelnet
or Servicer to NELF pursuant to this Agreement which is not generally known to
the public and which give Nelnet or Servicer 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 Nelnet and/or
Servicer.
13. Inquiries. Nelnet shall answer or shall cause Servicer to answer all
inquiries received by it pertaining to Education Loans, school status or
refunds, and NELF 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.
Neither Nelnet nor Servicer shall have any responsibility for any disputes
between student/parent borrowers and schools regarding tuition, registration,
attendance, or quality of education/training.
14. Agent Authorization. NELF hereby authorizes Nelnet and Servicer to
act on behalf of and as NELF's agent in the servicing of NELF's Education Loans.
Such authorization will include but not be limited to all correspondence and
liaison necessary with Guarantor regarding NELF's Education Loans, assignment of
claims to Guarantor and any/or all other communications, correspondence,
signatures or other acts appropriate to service NELF's Education Loans in
accordance with the Education Act and/or Regulations.
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15. Liability of Nelnet and Servicer. Nelnet and Servicer assume no
responsibility or liability for failure of NELF to exercise reasonable care or
due diligence and the results thereof, in making or servicing an Education Loan
prior to placing of the Education Loan on Servicer's system and prior to the
date NELF holds ownership of the Education Loan. Nelnet and Servicer also assume
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 NELF's Education Loans.
Nelnet and Servicer shall not be responsible for consequences of unreasonable
acts of any Guarantor. In the event Servicer shall take any action or fail to
take any action which causes any Education Loan in NELF's portfolio to be denied
the benefit of any applicable guarantee, Nelnet and Servicer 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,
Nelnet shall cause Servicer to pay NELF 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, less any amount which is not eligible for
guarantee under the Education Act and Regulations, and thereupon, Servicer shall
be subrogated to all rights of NELF with respect to the applicable Education
Loan, including without limitation the right to collect on the Education Loan,
the right to federal subsidies, and agency authorization to litigate in
accordance with the Subrogation Agreement with Servicer. In such event, NELF
agrees to perform such further acts as shall be necessary or appropriate to
subrogate the Education Loan to Servicer. For any subrogated Education Loan for
which the guarantee is fully reinstated by Guarantor, NELF shall pay Servicer an
amount equal to the then outstanding principle balance plus all accrued interest
due thereon, less any amount which is not eligible to guarantee under the
Education Act and Regulations, whereupon the subrogation rights of Servicer
shall terminate. In such event, Nelnet agrees to cause Servicer to perform such
further acts as shall be necessary or appropriate to reconvey the Education Loan
to NELF. It is hereby acknowledged that Nelnet shall not be performing any of
the servicing activities described in this Agreement, and that Servicer shall be
responsible for performance of all such servicing duties. As such, Nelnet shall
have no liability of any nature whatsoever arising out of or in connection with
this Agreement for any negligent or wrongful act or omission on the part of
Servicer; provided, however, that Nelnet hereby assigns, transfers and sets over
unto NELF all of Nelnet's rights and remedies against Servicer as they pertain
to NELF's Education Loans.
16. 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 thirty (30) days written notice, terminate this Agreement. Without limiting
the generality of the foregoing sentence, the following shall be deemed as
failure or refusal to perform in a material fashion: (i) failure by Servicer to
make deposits to the Trustee of payments received with respect to the Education
Loans; (ii) failure or refusal to perform or observe in any material respect any
portion of this Agreement, including any failure to perform or observe in any
material respect any covenants or agreements contained herein; (iii) upon an
event of bankruptcy. An event of bankruptcy means: (a) the commencement of a
voluntary case or other proceeding seeking liquidation, reorganization or other
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relief under any bankruptcy, insolvency or other similar law, or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official, making a general assignment for the benefit of creditors, declaring a
moratorium with respect to one's debts or failure to generally pay one's debts
as they become due; or (b) the commencement of an involuntary case or other
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law, or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official, provided
such action is not dismissed within 60 days. A failure or refusal to service an
Education Loan in accordance with the Education Act shall not constitute a
failure or refusal to perform or observe a covenant or agreement contained
herein so long as the Trustee receives payment of the principal balance and
accrued interest due on the affected Education Loan in accordance with this
Agreement.
17. Indemnification. NELF shall indemnify and hold Nelnet and/or
Servicer harmless from and against all claims, liabilities, losses, damages,
costs and expenses (including reasonable attorney's fees) asserted against or
incurred by Nelnet and/or Servicer as a result of Nelnet and/or Servicer
complying with any instruction or directive by NELF and Nelnet and/or Servicer
shall in like manner indemnify NELF for any noncompliance with any such
instruction or directive by Nelnet. NELF shall further indemnify and hold Nelnet
and/or Servicer harmless from and against all claims, liabilities, losses,
damages, costs and expenses (including reasonable attorney's fees) asserted
against or incurred by Nelnet and/or Servicer as a result of actions not the
fault of or not caused by a negligent act of Nelnet and/or Servicer, and their
respective agents or employees, including all claims, liabilities, losses,
damages and costs caused by or the fault of NELF, a prior holder, owner or
lender, a prior servicer or any other party connected in any manner to the loan
or loans resulting in the claim, liability, loss, damage or cost.
18. Statute of Limitations. Any action for the breach of any provisions
of this Agreement shall be commenced within one (1) year after the Education
Loan leaves the Servicer's servicing system.
19. Governing Law. This Agreement is executed and delivered within the
State of Colorado, and the parties hereto agree that it shall be construed,
interpreted and applied in accordance with the laws of that State, and that the
courts and authorities within the State of Colorado shall have sole jurisdiction
and venue over all controversies which may arise with respect to the execution,
interpretation and compliance with this Agreement.
20. 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.
21. 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.
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22. Persons Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their legal representatives, heirs, successors
and assigns.
23. Assignment. 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; provided, however, that NELF may assign this Agreement to
the Trustee subject to the terms of Section 32 hereof, and Nelnet may assign
this Agreement to Servicer.
24. Mutual Release. Each of the parties to this Agreement releases the
other party from any and all claims, or causes of the other arising from any
event or transaction occurring prior to the execution of this Agreement. This
release is an independent covenant between the parties, and will survive any
termination of this Agreement.
25. Titles. The titles used in this Agreement are intended for
convenience and reference only. They are not intended and shall not be construed
to be a substantive part of this Agreement or in any other way to affect the
validity, construction or effect of any of the provisions of this Agreement.
26. Waiver. The waiver or failure of either party to exercise in any
respect any right provided for herein shall not be deemed a waiver of any
further right hereunder.
27. Continuity of Loan Servicing.
27.1 NELF hereby agrees that it will ensure that all Education Loans
acquired, held, or sold by NELF under the Act and subject to this Agreement will
remain with the Servicer for the full term of this Agreement.
27.2 In the event NELF desires to sell any of its Education Loans, NELF
will first attempt to sell the Education Loans to an eligible lender maintaining
an agreement with Servicer, in order for the sale to cause no disruption in
service, or change in Servicer for the Borrower. Should NELF decide to sell its
Education Loans to an eligible lender or holder which does not maintain an
agreement with Servicer and does not plan to have the Education Loans serviced
by Servicer, Nelnet is hereby granted the right to arrange for the purchase of
such Education Loans by an eligible lender or holder maintaining an agreement
with Servicer. Such purchase must be arranged within thirty (30) days following
the notice by NELF of its intent to sell such Education Loans, which notice must
include sufficient information with respect to the Education Loans to be sold.
Nelnet has the right to arrange for the sale of such Education Loans, provided
Nelnet is able to arrange for the sale of the Education Loans offering the same
terms secured by NELF in its efforts to sell such Education Loans, subject to
the continuing servicing rights granted to Servicer.
27.3 Sections 27.1 and 27.2 do not apply in the event of Nelnet's breach
or default hereunder, or with respect to a sale of the Education Loan to a
holder of other loans for the same borrower.
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27.4 The intent of this Section 27 is to assure that every Education
Loan will remain with Servicer for servicing for the life of the loan.
28. Removal Fee. Should NELF remove any of its Education Loans from the
Servicer system prior to a scheduled termination or breach of this Agreement,
NELF agrees to pay to Nelnet a removal fee of Fifteen Dollars ($15.00) per loan
transferred off the Servicer computer system, this removal fee shall be in
addition to those charges described in Section 2.2 of this Agreement, and in
addition to damages arising from a breach of Section 27 hereof.
29. Force Majeure. The foregoing provisions of this Agreement are
subject to the following limitation: If by reason of a force majeure Nelnet
and/or Servicer is unable in whole or in part to carry out any agreement on its
part herein contained, Nelnet and Servicer 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, strikes, lockouts, or
other industrial disturbances; acts of public enemies; order or restraint of any
kind of the government of the United States of America or of the State of
Colorado or City of Aurora or any of their departments, agencies or officials,
or any civil or military authority; insurrections; riots; landslides;
earthquakes; fires; storms; droughts; floods; explosions; breakage or accident
to machinery, equipment, transmission pipes or canals; or any other cause or
event not reasonably within the control of Nelnet and/or Servicer.
30. Hiring. NELF agrees that during the term of this Agreement and any
extensions or renewals thereof, and for one year thereafter, NELF shall not
solicit for hire, or knowingly allow its employees to solicit for hire, any
employees of Nelnet and Servicer without the prior written consent of Nelnet or
Servicer, respectively.
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. Trustee as Third Party Beneficiary. This Agreement has been made and
entered into not only for the benefit of Nelnet and NELF but also for the
benefit of the Trustee in connection with the financing of Eligible Loans, and
upon assignment by NELF to the Trustee, or an Event of Default by NELF (as
defined in the Indenture), its provisions may be enforced not only by the
parties to this Agreement but by the Trustee. The foregoing creates a permissive
right on behalf of the Trustee and the Trustee shall be under no duties or
obligations hereunder.
This Agreement shall inure to the benefit of the Trustee and its
successors and assigns. Without limiting the generality of the foregoing, all
representations, covenants and agreements in this Agreement which expressly
confer rights upon the Trustee shall be for the benefit of and run directly to,
the Trustee, and the Trustee shall be entitled to rely on and enforce such
representations, covenants and agreements to the same extent as if it were a
party hereto. The foregoing creates a permissive right on behalf of the Trustee,
and the Trustee shall be under no duties or obligations hereunder.
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If there is an Event of Default under the Indenture and the Trustee
forecloses on its security interest on the Education Loans, and the Trustee
seeks to become a party to this Agreement under this Section 32, then the
Trustee (not in its individual capacity but solely as eligible lender trustee
and Indenture trustee under the Indenture) shall assume all duties and
obligations of NELF hereunder. In no event shall the Trustee be obligated to
perform any of the servicing activities contemplated in this Agreement.
33. Annual Certification. Nelnet shall cause Servicer to deliver to
NELF, the Trustee and to Moody's, on or before each annual anniversary date of
this Agreement, a certificate stating that (i) a review of the activities of
Servicer during the preceding calendar year and its performance under the
Subservicing Agreement has been made under the supervision of the officer
signing such certificate, and (ii) to the best of such officer's knowledge,
based on such review, Servicer has fulfilled all its obligations under the
Subservicing Agreement throughout such year, or, there has been a default in the
fulfillment of any such obligation, specifying the nature of such default. In
addition, Nelnet shall require the Servicer to promptly furnish to Nelnet and
NELF from time to time upon request, such information, reports and financial
statements within its control related to the Servicer or the servicing of the
Education Loans as Nelnet or NELF reasonably deems appropriate to be prepared
and Nelnet shall file all necessary reports or certifications with the
Securities and Exchange Commission or as required by the Sarbanes-Oxley Act of
2002, or the Indenture.
34. No Petition. Nelnet hereby covenants and agrees that prior to the
date which is one year and one day after the payment in full of all outstanding
Obligations (as defined in the Indenture), it will not institute against or join
any other person or entity in instituting against NELF 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 WHEREFORE, the parties hereto have executed this Agreement as
of the date first written above.
Nelnet, Inc., a Nevada corporation Nelnet Education Loan Funding, Inc., a
Nebraska corporation
By: /s/ Michael Dunlap By: /s/ Terry J. Heimes
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Name: Michael Dunlap Name: Terry J. Heimes
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(Please print) (Please print)
Title: Chief Executive Officer Title: President
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SCHEDULE "A"
A. Loan Origination Fee (Where Applicable).
Six Dollars ($6.00) per loan for Stafford, SLS and PLUS loan. Fifty-five
Dollars ($55.00) per loan for Consolidated loans (if applicable). In
addition, reimbursement for costs in the event a credit evaluation of
the borrower is to be performed by Nelnet.
B. Conversion Fee.
Five Dollars ($5.00) per account acquired by NELF and added to the
Nelnet 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. There shall be no
charge for loans already on the Nelnet full servicing system.
Notwithstanding the foregoing, should any portfolio present an
"Extraordinary Conversion", requiring additional conversion services
materially beyond that customarily provided for a normal acquisition of
Education Loans, then NELF agrees to pay a conversion fee mutually
agreed to between NELF and Nelnet.
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 by Nelnet. 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 such as whether the files are
complete or whether the data matches the file content.
4. NELF adherence to its obligations and delivery schedules.
5. Presence of backlogged processing in the portfolio.
6. Whether prior servicing had substantial noncompliance with the
Education Act and Regulations.
7. Condition of the hard copy file documentation.
After consideration of the foregoing factors, NELF and Nelnet shall
mutually agree at the beginning and once again at the end of the
conversion of any particular portfolio as to whether an Extraordinary
Conversion has taken place.
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C. Monthly Servicing Fee - GSL (Stafford) Loans in School Status.
.90% annualized
D. Monthly Servicing Fee - GSL (Stafford, PLUS, SLS) Loans in Other Than
School Status.
1.25% annualized
E. Consolidation Loans.
0.60% annualized
F. 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 Nelnet
system.
G. Additional Servicing Activity.
Thirty-five Dollars ($35.00) per Education Loan referred for 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 Nelnet.)
H. Delinquency Fee.
A surcharge of $2.25 for each account more than 30 days past due through
date of claim payment by Guarantor, or until account becomes current.
I. Appeal Fee.
A fee of $10.00 per month per account will be assessed for Nelnet 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 Nelnet.
J. Minimum Monthly Fee.
There will be a minimum monthly fee of Seven Hundred and Fifty Dollars
($750.00) per month.
K. Removal Fee. Loans transferred off the Nelnet 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 Nelnet Servicing System on
or after termination of this Agreement will be assessed a fee of Twelve
Dollars ($12.00) per account.
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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.
N. Other Services
For services requested by NELF that are beyond the scope of those
described in this Agreement, the fees shall be assessed as follow:
(1) Supplies Cost Plus 15%
(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 NELF and after time and total cost estimate has been provided by
Nelnet.
O. Legal Opinions
Cost plus five percent (5%).
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