Exhibit 99.2
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (the "Agreement") is made and
entered into 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").
RECITALS
A. Pursuant to the terms of the Indenture (as defined below), NELF
conducts a program of financing and holding loans made to borrowers under the
Federal Family Education Loan Program, the proceeds of which are used to defray
the costs of attendance at eligible post secondary educational institutions (the
"Loans").
B. NELF intends to issue its Student Loan Asset-Backed Notes from time
to time (the "Notes") pursuant to the terms of that certain Indenture of Trust
dated as of June 1, 2003, as amended (the "Indenture"), among NELF and Wells
Fargo Bank Minnesota, National Association, as indenture trustee and eligible
lender trustee (the "Trustee"), to provide funds for NELF's program of financing
and holding Loans.
C. NELF has entered into a Master Servicing Agreement dated as of June
1, 2003, with Nelnet, under which a subservicing agreement on behalf of Nelnet
will provide data processing and other necessary assistance in connection with
the servicing and NELF may enter into agreements with other providers of such
services for the Loans (Nelnet and other providers of such services are referred
to herein as the "Servicer").
D. Nelnet employs highly qualified personnel capable of providing
professional administrative services for portfolios of Loans.
E. NELF now desires to engage Nelnet to provide certain services to NELF
in connection with the administration of NELF's portfolio of Loans financed
pursuant to the terms of the Indenture and subject to the terms and conditions
specified herein.
COVENANTS, REPRESENTATIONS AND WARRANTIES
The parties therefore agree as follows:
1. Services to be Provided. Nelnet agrees to provide, through its
officers and employees, the following administrative services to NELF:
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(a) Respond to inquiries and requests made by borrowers,
educational institutions, Guarantee Agencies, the Trustee, and other
parties with respect to the Loans and respond to requests by NELF's
independent auditors for information concerning NELF's financial
affairs;
(b) Maintain financial records concerning the Trust Estate (as
defined in the Indenture) and, if furnished adequate information with
respect to financial affairs not related to the Loans, prepare and
maintain a general ledger and financial statements for NELF;
(c) Provide instructions required by the Indenture or otherwise
to the Trustee with respect to the administration of the Trust Estate;
(d) Furnish to NELF or the Trustee copies of reports received
with respect to the Loans, and prepare such additional reports with
respect to the Trust Estate, as required by the Indenture, NELF or the
Trustee may reasonably request from time to time;
(e) Prepare, or cause to be prepared, and furnish to NELF annual
operating budgets, quarterly statistical reports and cash flow
projections as required under the Indenture; and
(f) Such other services with respect to administration of the
Loans as NELF may reasonably request.
It is expressly agreed that Nelnet will not engage legal or accounting firms on
behalf of NELF, and NELF will not be responsible for compensating any such
expenditures made by Nelnet.
2. Term. This Agreement shall expire on the maturity of the Notes (as
defined in the Indenture).
3. Fees and Expenses.
(a) Fee Schedule. NELF shall pay to Nelnet on the first day of
each calendar month following the execution of this Agreement an amount
equal to 18 basis points .018% of the average outstanding principal
balance of the Loans during the preceding month for services provided by
Nelnet pursuant to Section 1 of this Agreement.
(b) Limited Obligation. The obligation of NELF to pay fees under
this Agreement is a limited obligation to be satisfied solely from
payments made by the Trustee to NELF under the terms of the Indenture.
Although NELF shall be obligated to pay to Nelnet the full amount of all
accrued fees, such payments shall be made exclusively from amounts
deposited from time to time in the Operating Fund. If NELF does not have
funds on hand to cover the full amount of the fees due under this
Agreement, then payment of the unpaid balance shall be deferred until
there are sufficient funds available from such sources to satisfy part,
or all, of the outstanding debt.
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(c) Revision of Fees. The fee payable to Nelnet under this
Agreement may be revised on each June 1 during its term, subject to any
Rating Agency approval required under the Indenture. To alter the fee,
Nelnet must provide written notice of the proposed new fee to NELF
ninety (90) days prior to June 1. If Nelnet and NELF cannot reach an
agreement within sixty (60) days of the receipt of the notice, either
party may terminate this Agreement upon thirty (30) days' written notice
to the other party.
4. Appointment as Agent. NELF hereby appoints and designates Nelnet as
its agent for the purpose of managing and administering the Trust Estate. In
discharging its duties as agent of NELF hereunder, Nelnet shall have authority
to act at its own discretion, and shall not be required to obtain specific
instructions or direction with respect to a particular matter from NELF;
provided, however, that in no event shall Nelnet be permitted to create or incur
obligations on behalf of NELF except as and to the extent specifically
authorized by NELF in writing. Any person dealing with Nelnet may conclusively
presume and rely upon the fact that actions taken by Nelnet on behalf of NELF
with respect to the Trust Estate are duly authorized, regular and binding upon
NELF, without further inquiry.
5. Representations and Warranties of Nelnet. Nelnet hereby represents
and warrants to NELF as follows:
(a) Due Authorization. This Agreement has been duly authorized by
all necessary corporate action on the part of Nelnet and has been duly
executed by a duly authorized officer of Nelnet, and constitutes a valid
and binding agreement of Nelnet enforceable in accordance with its
terms, except as its enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and other laws affecting
creditors' rights generally.
(b) Due Organization. Nelnet is a corporation duly organized,
validly existing in good standing under the laws of Nevada and has the
requisite corporate power to enter into and perform this Agreement.
(c) Conflicting Instruments. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated
hereby will violate or result in any violation of or be in conflict with
or constitute a default under any term of the Articles of Incorporation
or Bylaws of Nelnet, or of any judgment, decree or order of any court or
administrative body applicable to Nelnet, or any term of any agreement
or other instrument applicable to Nelnet.
6. Representations and Warranties of NELF. NELF hereby represents and
warrants to Nelnet as follows:
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(a) Due Authorization. This Agreement has been duly authorized by
all necessary corporate action on the part of NELF and has been duly
executed by a duly authorized officer of NELF, and constitutes a valid
and binding agreement of NELF enforceable in accordance with its terms,
except as its enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization and other laws affecting creditors' rights
generally.
(b) Due Organization. NELF is a bankruptcy remote, limited
purpose corporation duly organized, validly existing in good standing
under the laws of the State of Nebraska and has the requisite corporate
power to enter into and perform this Agreement.
(c) Conflicting Instruments. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated
hereby will violate or result in any violation of or be in conflict with
or constitute a default under any term of the Articles of Incorporation
or Bylaws of NELF, or of any judgment, decree or order of any court or
administrative body applicable to NELF, or any term of any agreement or
other instrument applicable to NELF.
7. Indemnification. In addition to the fees payable by NELF to Nelnet
under paragraph 3 of this Agreement, NELF shall indemnify and hold Nelnet
harmless from and against any and all claims, costs, expenses, losses, damages,
charges, counsel fees, payments or liability which may be asserted against or
incurred by Nelnet, or for which it may be held to be liable, arising out of or
attributable to:
(a) any action taken by Nelnet in good faith in compliance with
the terms of this Agreement; or
(b) reliance upon or use by Nelnet of any information or
materials provided by or at the direction of NELF and compliance with
instructions or directions given to Nelnet by NELF.
8. Termination. Either of the parties to this Agreement may terminate
this Agreement, with or without cause, by giving written notice of termination
to the other party. Such termination shall be effective thirty (30) days after
delivery of such written notice.
9. Assignment. Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior written consent of
the other.
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10. Miscellaneous.
(a) This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written
agreement executed by both of the parties hereto.
(b) All notices, requests, claims, demands and other
communications hereunder required to be in writing shall either be
personally delivered or mailed by First Class Mail to the respective
parties as follows:
If to Nelnet:
Nelnet, Inc.
121 South 13th Street, Suite 201
Lincoln, Nebraska 68508
Attention: James D. Kruger
and if to NELF:
Nelnet Education Loan Funding, Inc.
121 South 13th Street, Suite 201
Lincoln, Nebraska 68508
Attention: Terry J. Heimes
or to such other address as either party may have furnished to the other
in writing in accordance herewith. Any notice under this Agreement will
be deemed to have been given when so delivered or mailed, except that
notices of change of address shall only be effective upon receipt.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nebraska.
(d) Capitalized Terms. Capitalized terms used in this Agreement
that are not otherwise defined shall have the same meaning as those
terms used in the Indenture.
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IN WITNESS WHEREOF, the parties have caused this Administrative Services
Agreement to be executed on the day and year first above written.
Nelnet, Inc.
By: /s/ Michael Dunlap
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Title: Chief Executive Officer
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Nelnet Education Loan Funding, Inc.
By: /s/ Terry J. Heimes
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President
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