EXHIBIT 10.66
- --------------------------------------------------------------------------------
AMENDED AND RESTATED WAREHOUSE NOTE PURCHASE
AND SECURITY AGREEMENT
among
NHELP-III, INC.,
as the Issuer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as the Trustee
and
DELAWARE FUNDING COMPANY LLC,
as a Note Purchaser
and
PARK AVENUE RECEIVABLES COMPANY LLC,
as a Note Purchaser
and
THREE RIVERS FUNDING CORPORATION,
as a Note Purchaser
and
JPMORGAN CHASE BANK,
as DFC Agent, PARCO Agent and Administrative Agent
and
MELLON BANK, N.A.,
as TRFC Agent
Dated as of March 1, 2004
U.S. $450,000,000
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms........................................2
Section 1.02. Other Terms.................................................23
Section 1.03. Computation of Time Periods.................................23
ARTICLE II
THE FACILITY
Section 2.01. Note Issuances and Purchases................................23
Section 2.02. The Initial Note Issuance and Subsequent Note Issuances.....24
Section 2.03. Termination or Reduction of the Facility Limit..............25
Section 2.04. Collection Account..........................................25
Section 2.05. Transfers from Collection Account...........................26
Section 2.06. Cash Reserve Account........................................27
Section 2.07. Transfers from the Cash Reserve Account.....................28
Section 2.08. Management of Collection Account and Cash Reserve Account...28
Section 2.09. Pledged Collateral Assignment of the Transaction Documents..29
Section 2.10. Grant of a Security Interest................................29
Section 2.11. Evidence of Debt............................................30
Section 2.12. Special Provisions Governing Note Purchases.................30
Section 2.13. Payments by the Issuer......................................30
Section 2.14. Payment of Stamp Taxes, Etc.................................31
Section 2.15. Sharing of Payments, Etc....................................31
Section 2.16. Yield Protection............................................31
ARTICLE III
THE NOTES
Section 3.01. Form of Notes Generally.....................................33
Section 3.02. Securities Legend...........................................34
Section 3.03. Priority....................................................34
Section 3.04. Execution, Delivery and Dating..............................35
Section 3.05. Registration, Registration of Transfer and Exchange,
Transfer Restrictions.......................................35
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.................36
Section 3.07. Persons Deemed Owners.......................................37
Section 3.08. Cancellation................................................37
ARTICLE IV
CONDITIONS TO NOTE PURCHASES
Section 4.01. Conditions Precedent to Initial Issuance....................37
Section 4.02. Conditions Precedent to All Note Purchases..................37
ARTICLE V
REPRESENTATIONS AND WARRANTIES................................................38
ARTICLE VI
GENERAL COVENANTS OF THE ISSUER
Section 6.01. General Covenants...........................................40
Section 6.02. Acquisition, Collection and Assignment of Student Loans.....45
Section 6.03. Enforcement of Financed Loans...............................45
Section 6.04. Enforcement of Servicing Agreements.........................46
Section 6.05. Administration and Collection of Financed Loans.............46
Section 6.06. Amendment of Form of Sale and Purchase Agreement............46
Section 6.07. Custodian...................................................46
Section 6.08. Prepayments and Refinancing.................................46
Section 6.09. Periodic Reporting..........................................47
Section 6.10. UCC Matters; Protection and Perfection of Pledged
Collateral; Delivery of Documents...........................47
Section 6.11. Obligations of the Issuer With Respect to
Pledged Collateral..........................................48
Section 6.12. Collateral Call.............................................48
Section 6.13. Guarantor Limitations.......................................49
ARTICLE VII
EVENTS OF DEFAULT.............................................................49
ARTICLE VIII
TRUSTEE
Section 8.01. Acceptance of Trust.........................................51
Section 8.02. Trustee's Right to Reliance.................................52
Section 8.03. Compensation of Trustee.....................................53
Section 8.04. Resignation of Trustee......................................53
Section 8.05. Removal of Trustee..........................................53
Section 8.06. Successor Trustee...........................................53
Section 8.07. Manner of Vesting Title in Trustee..........................54
Section 8.08. Servicing Agreement.........................................54
Section 8.09. Trustee Covenants with Respect to "Eligible Lender" Status..54
Section 8.10. Trustee's Status as an "Eligible Lender."...................55
ARTICLE IX
INDEMNIFICATION...............................................................55
ii
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments and Waivers......................................57
Section 10.02. Notices, Etc................................................57
Section 10.03. No Waiver; Remedies.........................................57
Section 10.04. Binding Effect; Assignability...............................57
Section 10.05. Survival....................................................58
Section 10.06. Governing Law; Severability.................................58
Section 10.07. Governing Law; Jury Waiver..................................58
Section 10.08. Costs, Expenses and Taxes...................................59
Section 10.09. Recourse Against Certain Parties............................59
Section 10.10. Execution in Counterparts; Severability; Integration........59
Section 10.11. Confidentiality.............................................60
Section 10.12. No Proceedings..............................................60
Section 10.13. Section Titles..............................................61
Section 10.14. Entire Agreement............................................61
ARTICLE XI
THE AGENTS
Section 11.01. Authorization and Action of Administrative Agent............61
Section 11.02. Authorization and Action of Agents..........................61
Section 11.03. Agency Termination..........................................62
Section 11.04. Agents' Reliance, Etc.......................................62
Section 11.05. Administrative Agent, Agents, and Affiliates................62
Section 11.06. [Reserved]..................................................62
Section 11.07. Purchase Decision...........................................63
Section 11.08. Successor Agents............................................63
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-1 FORM OF ASSET COVERAGE RATIO CERTIFICATE
EXHIBIT E-2 FORM OF CASH RELEASE CERTIFICATE
EXHIBIT F TRUSTEE'S FEE LETTER AGREEMENT
EXHIBIT G COPIES OF SERVICING AND CUSTODIAN AGREEMENTS
EXHIBIT H FORM OF NOTE
EXHIBIT I FORM OF SUMMARY OF SERVICER REPORT
EXHIBIT J FORM OF ACCOUNT BALANCE REPORT
EXHIBIT K ADDITIONAL CLOSING ITEMS
EXHIBIT L FORM OF PARTICIPATION AGREEMENT
EXHIBIT M PREMIUM SCHEDULE
SCHEDULE I COMMITMENT AMOUNT SCHEDULE
SCHEDULE II TRUSTEE GUARANTEE AGREEMENTS
iii
THIS AMENDED AND RESTATED WAREHOUSE NOTE PURCHASE AND SECURITY AGREEMENT
(this "Agreement") is made as of March 1, 2004, among: NHELP-III, INC., a
corporation duly organized under the laws of the state of Nevada (the "Issuer");
DELAWARE FUNDING COMPANY LLC, a Delaware limited liability company ("DFC")
successor to Delaware Funding Corporation; PARK AVENUE RECEIVABLES COMPANY LLC,
a Delaware limited liability company ("PARCO"), successor to Park Avenue
Receivables Corporation; THREE RIVERS FUNDING CORPORATION, a Delaware
corporation ("TRFC"); JPMORGAN CHASE BANK, successor to Morgan Guaranty Trust
Company of New York, a New York banking corporation, as DFC Agent (in such
capacity, the "DFC Agent") and Administrative Agent (in such capacity, the
"Administrative Agent"); MELLON BANK, N.A., a national banking association, as
TRFC Agent (the "TRFC Agent") and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
successor to Wells Fargo Bank Minnesota, National Association and Norwest Bank
Minnesota, National Association, a national banking association, as eligible
lender and trustee (the "Trustee").
PRELIMINARY STATEMENTS
1. The Issuer, DFC, TRFC, the DFC Agent, the TRFC Agent, and the
Trustee have previously entered into that certain Warehouse Note Purchase and
Security Agreement dated as of September 1, 1999, (the "Original Agreement").
2. Each of the parties to the Original Agreement wish to amend and
restate the Original Agreement to set forth in one document the amendments and
assignments previously contained in the First Amendment to the Warehouse Note
Purchase and Security Agreement dated as of September 1, 2000 (the "First
Amendment"), the Second Amendment to the Warehouse Note Purchase and Security
Agreement dated as of September 12, 2002 (the "Second Amendment") and the
Assignment and Assumption Agreement dated as of September 11, 2003 (the
"Assignment Agreement") to make certain additional amendments as set forth
herein.
3. Pursuant to Section 10.01 of the Original Agreement, the Issuer,
DFC, PARCO, TRFC, the DFC Agent, the PARCO Agent, the TRFC Agent and the Trustee
may amend and restate the Original Agreement in its entirety with the prior
written consent of the Issuer, the Required Note Purchasers, the Trustee and the
Agents. By their execution and delivery of this Agreement, TRFC, PARCO and DFC,
who collectively constitute the Required Note Purchasers under the terms of the
Original Agreement, and the Agents have given their written consent to the
execution of this Amendment.
4. DFC, PARCO and TRFC (each, a "Conduit Note Purchaser") are
special purpose corporations 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 among each seller
of financial assets and the Conduit Note Purchaser, or to purchase notes of
certain entities for the purpose of financing financial assets of such entities.
5. The Issuer 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").
6. The Issuer desires to fund the Transactions through the issuance
of Notes and sale of the same to the Note Purchasers (and other Note Purchasers)
up to the Facility Limit on the terms and conditions set forth herein.
7. To provide liquidity support to the Conduit Note Purchasers in
connection with the Notes purchased by them hereunder, the Conduit Note
Purchasers may, from time to time, assign all or a part of such Notes or assign
interests therein or the commitments to purchase such Notes to certain financial
institutions pursuant to the terms of the Liquidity Agreements referred to
below, and as a result of such assignment, such financial institutions would
become Note Purchasers hereunder.
8. Each of the DFC Agent, the PARCO Agent and the TRFC Agent is
willing to act as agent on behalf of its related Conduit Note Purchaser and
Liquidity Provider(s) pursuant to this Agreement and the applicable Liquidity
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. Certain capitalized terms used
throughout this Agreement are defined above or in this Section 1.01. 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).
"Accounting Based Consolidation Event" means, with respect to any
Conduit Note Purchaser, the occurrence of (a) any change in accounting standards
or the issuance of any pronouncement or release by any accounting body or any
other body charged with the promulgation or administration of accounting
standards (including, without limitation, the Financial Accounting Standards
Board, the American Institute of Certified Public Accountants or the Securities
and Exchange Commission); or (b) any change in the interpretation or application
of any accounting standard, the effect of which (in any such event described in
clause (a) or (b)) is to cause or require the consolidation of all or any
portion of the assets and liabilities of the Conduit Note Purchaser or the
consolidation of the assets related to the transaction contemplated by this
Agreement with the assets and liabilities of such Agent or any of its Affiliates
or the effect of which is to deem all or any portion of the assets and
liabilities of the Conduit Note Purchaser or the assets related to the
transaction contemplated by this Agreement to be consolidated with the assets
and liabilities of such Agent or any of its Affiliates and, in connection
therewith, such Agent or any of its Affiliates are required by any regulatory
body to maintain 8% capital against the assets of the Conduit Note Purchaser (or
with respect to the transaction contemplated by this Agreement) consolidated
with such Agent or any of its Affiliates. If capital is required to be held by
an Agent or any Affiliate other than as described in the foregoing sentence
(whether higher or lower than 8%), then recovery for any increased costs will be
made pursuant to Section 2.16 of this Agreement.
2
"Administrative Agent" means JPMorgan Chase Bank, formerly known as
Morgan Guaranty Trust Company of New York, and its successors and assigns in its
capacity as administrative agent for the Note Purchasers.
"Administrative Agent Fee" means, for each Interest Period, the per
annum fee paid to the Administrative Agent and agreed to from time to time and
as set forth in a letter between the Issuer and the Administrative Agent,
payable monthly in arrears on each Settlement Date.
"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 the DFC Agent, the PARCO Agent, the TRFC Agent or the
Administrative Agent, as applicable, or the successor or assign of any of them.
"Aggregate 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.
"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 Issuer
and not yet transferred to the Trustee on such date.
"Aggregate Note Balance" means the aggregate principal amount of all
Notes Outstanding at the date of determination after giving effect to all
distributions of principal and Note Purchases on such date of determination.
"Agreement" means this Amended and Restated Warehouse Note Purchase and
Security Agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time hereafter.
3
"Agreement and Acknowledgement" means the Agreement and Acknowledgement
Relating to Student Loan Servicing Agreement dated as of September 1, 1999, by
and among the Issuer, the Note Purchasers, each Agent and Great Lakes Higher
Education Servicing Corporation.
"Alternate Rate" means the higher of (a) the rate of interest most
recently announced by the Administrative Agent in New York, New York, as its
"prime rate" or (b) rate of interest most recently announced by the Federal
Reserve Bank in New York, New York, as the "federal funds rate" + .50%. The
Alternate Rate is not necessarily intended to be the lowest per annum rate of
interest determined by the Administrative Agent in connection with extensions of
credit. The Alternate 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
Administrative Agent's prime rate changes.
"Asset Coverage Ratio" means, as of the date of any Valuation Report,
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 Issuer" means the Issuer's president, chief
financial officer or any vice president.
"Available Commitment Amount" means, for any Note Purchaser on any date
of determination, the difference between such Note Purchaser's Commitment Amount
and the Aggregate Note Balance attributable to such Note Purchaser.
"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 Issuer or any ERISA Affiliate of the
Issuer is, or at any time during the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA.
"Business Day" means a day of the year other than a Saturday or a Sunday
on which (a) banks are not authorized or required to close in New York City, (b)
the DFC Agent at the DFC Agent Payment Office is open for business, (c) the
PARCO Agent at the PARCO Agent Payment Office is open for business and (d) the
TRFC Agent at the TRFC Agent Payment Office is open for business; provided,
however, if the term "Business Day" is used in connection with the LIBOR, means
any day of the year on which dealings in dollar deposits are carried on in the
London interbank market.
"Calculation Date" means the third 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 2.06 hereof.
4
"Cash Reserve Requirement" means, on any Issuance Date, one-half of one
percent (0.50%) of the aggregate principal amount of Notes issued on such date
other than in connection with a Rollover Note Purchase; provided, however, that
in the event that the aggregate outstanding principal amount of Financed Loans
that are unsubsidized Stafford Loans in forbearance, grace or deferment exceeds
50% of the aggregate outstanding principal amount of all Financed Loans
immediately following any Note Purchase, the "Cash Reserve Requirement" shall be
an amount determined by the Administrative Agent after consultation with the
Issuer.
"Closing Date" means September 16, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute and the regulations promulgated and rulings issued thereunder.
"Collection Account" means the special account created pursuant to
Section 2.04 hereof.
"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) received or deemed to have been received pursuant
to Section 2.04 and (b) all other cash collections, tax refunds and other cash
proceeds of the Pledged Collateral.
"Commitment" means the obligation of the Note Purchasers to fund Note
Purchases.
"Commitment Amount" means, with respect to any Note Purchaser, the
amount set forth opposite its name on Schedule I hereto, as amended from time to
time.
"Commitment Fee" means, for each Interest Period and each Agent, the per
annum fee agreed to from time to time and as set forth in the Fee Letter between
the Issuer and the applicable Agent, payable monthly in arrears on each
Settlement Date to such Agent.
"Conduit Note Purchaser" means each of DFC, PARCO, TRFC and any
successors or assigns (subject to Section 10.04 hereof) that are special purpose
corporations or other entities that become parties to this Agreement which
obtain funds to purchase financial assets from the issuance of CP.
"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 Stafford Loans in accordance with the
Higher Education Act.
"CP" means the commercial paper notes issued by DFC, PARCO or TRFC or
any assignee (subject to Section 10.04 hereof) of either of them which is a
Conduit Note Purchaser from time to time in the United States commercial paper
market.
5
"Custodian" means, individually or collectively, Nelnet, Inc., formerly
known as UNIPAC Service Corporation, Great Lakes Higher Education Servicing
Corporation, Nelnet, Inc., formerly known as InTuition, Inc., Sallie Mae
Servicing, L.P., f/k/a United Student Aid Funds, Inc., ACS Education Services,
Inc. and each additional Servicer or bailee with which the Issuer has entered
into a Custodian Agreement.
"Custodian Agreement" means, individually or collectively, (a) the
Custodian Agreement dated as of September 16, 1999, among the Issuer, the
Trustee and Nelnet, Inc., formerly known as UNIPAC Service Corporation, (b) the
Custodian Agreement dated as of September 16, 1999, among the Issuer, the
Trustee and Great Lakes Higher Education Servicing Corporation, (c) the
Custodian Agreement dated as of September 16, 1999, among the Issuer, the
Trustee and Nelnet, Inc., formerly known as InTuition, Inc., (d) the Custodian
Agreement dated as of September 16, 1999, among the Issuer, the Trustee and
Sallie Mae Servicing, L.P., and (e) each additional or successor custodian
agreement entered into among the Issuer, the Trustee and a Custodian and
approved by the Required Note Purchasers.
"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 leases
which shall have been or should be, in accordance with GAAP, recorded as capital
leases, (e) obligations secured by an Adverse Claim upon property or assets
owned by such Person, even though such Person has not assumed or become liable
for the payment of such obligations and (f) obligations of such Person under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of other Persons of the
kinds referred to in clauses (a) through (e) above.
"Defaulted Student Loan" means any Student Loan (a) as to which any
payment, or portion thereof, is more than the number of days past due from the
original due date thereof as allowed by the terms of the Higher Education Act
(which number of days, as of the Closing Date, is 270), unless such Student Loan
is 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 the number of days past due
from the original due date thereof as allowed by the terms of the Higher
Education Act).
"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.
6
"DFC" means Delaware Funding Company LLC, successor to Delaware Funding
Corporation, and its successors and assigns.
"DFC Agent" means JPMorgan Chase Bank, and its successors and assigns,
in its capacity as agent of DFC and the DFC Liquidity Providers pursuant to the
DFC Asset Purchase Agreement or any other Liquidity Agreement to which DFC and
the DFC Agent are parties.
"DFC Agent Payment Office" means 4 New York Plaza, 6th Floor, New York,
New York 10004.
"DFC Asset Purchase Agreement" means the Asset Purchase Agreement dated
as of September 16, 1999, among DFC, each of the Liquidity Providers named
therein and the DFC Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time hereafter.
"DFC Liquidity Providers" means the Liquidity Providers under the DFC
Asset Purchase Agreement or other Liquidity Agreement as to which DFC and the
DFC Agent are parties.
"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. ss. 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 Issuer (either
directly or through a Participation Agreement in the form attached
hereto as Exhibit L) in the ordinary course of its business and was
originated in the United States, its territories or possessions;
(b) the payments under which constitute 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 Issuer therein and the
perfection of the Trustee's interest therein under this Agreement and
which has only one set of original documentation;
7
(c) of which the borrower is an Eligible Borrower attending an
Eligible Institution;
(d) if such Student Loan is a subsidized Stafford Loan, of which
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, of which 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 Stafford Loan,
of which 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 a Note Purchase,
which 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
Issuer, 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 Issuer 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 Issuer has executed and
delivered a Custodian Agreement, (ii) with respect to which the Issuer
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;
8
(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 a rehabilitated Consolidation Loan,
the outstanding Principal Balance of which when added to the outstanding
Principal Balance of all other Financed Loans that are rehabilitated
Consolidation Loans does not exceed 3% 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 Issuer; (b) a trade or business (whether or not incorporated)
under common control (within the meaning of Section 414(c) of the Code) with the
Issuer; or (c) a member of the same affiliated service group (within the meaning
of Section 414(m) of the Code) as the Issuer, 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 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
7.01.
9
"Facility Amount" means at any time the aggregate principal amount of
outstanding Notes purchased by the Note Purchasers under this Agreement, which
amount shall not exceed the Facility Limit.
"Facility Limit" means, at any time, $450,000,000 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.
"Fee Letter" means that certain fee letter agreement, dated as of
September 11, 2003, by and among the Issuer, the DFC Agent, the PARCO Agent and
the TRFC Agent, as the same may be amended from time to time.
"FFEL Program" means the Federal Family Education Loan Program
authorized under the Higher Education Act, including Federal Stafford 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 Stafford Loans authorized under Section 428H
thereof.
"Financed Loans" means any Eligible Loans purchased by the Issuer from a
Seller pursuant to a Sale and Purchase Agreement and financed with the proceeds
of Note Purchases under this Agreement.
"Fitch" means Fitch, Inc. (or its predecessor or successors in interest)
if and so long as it has rated and is continuing to rate the CP of any Conduit
Note Purchaser.
"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
perfected 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.
10
"Guarantee" or "Guaranteed" means, with respect to a Student Loan, the
insurance or guarantee by the Guarantor, in accordance with the terms and
conditions of the Guarantee Agreement, of at least the minimum required by law
of the principal of the Student Loan and the coverage of the Student Loan by the
Federal Reimbursement Contracts providing, among other things, for reimbursement
to the Guarantor for losses incurred by it on defaulted Student Loans insured or
guaranteed by the Guarantor up to the minimum required by law of such losses.
"Guarantee Agreements" means the Federal Reimbursement Contracts, the
Trustee Guarantee Agreement and any other similar guarantee or agreement issued
by a Guarantor to the Trustee, which pertain to Student Loans.
"Guarantee Program" means the Guarantor's student Loan guarantee program
pursuant to which the Guarantor guarantees or insures Student Loans.
"Guaranteed Loan" means an Eligible Loan which is Guaranteed.
"Guarantor" means any entity authorized to guarantee Student Loans under
the Higher Education Act and with which the Trustee maintains in effect a
Guarantee Agreement.
"Higher Education Act" means Title IV, Parts B, F and G of the Higher
Education Act of 1965, as amended or supplemented from time to time, and all
regulations and guidelines promulgated thereunder.
"Holder" means the Person in whose name a Note is registered in the Note
Register. The DFC Agent, the PARCO Agent and TRFC shall be the initial Holders.
"Indemnified Amounts" has the meaning assigned to that term in Article
IX.
"Independent Director" means a Person who (a) is not a stockholder or
other securityholder (whether direct, indirect or beneficial), customer or
supplier of the Issuer or any of its Affiliates; (b) is not a director, officer,
employee, former employee, Affiliate, member, manager or associate of the Issuer
or any of its Affiliates (other than in its capacity as the Independent Director
for the Issuer 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 Issuer or any of its Affiliates (other than in its capacity as
Independent Director for the Issuer or any of its Affiliates).
"Interest Period" means for each Note, the period commencing on the Note
Purchase date of such Note and ending on (but excluding) the Maturity Date of
such Note.
"Interest Rate" means, (a) with respect to a Regular Note Purchase, the
Regular Interest Rate and (b) with respect to a Liquidity Note Purchase, the
applicable Liquidity Interest Rate; provided, however, that while any Event of
Default shall have occurred and be continuing, the Issuer 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 Note Purchases and other
Obligations, at a rate per annum which is equal to the Alternate Rate 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.
11
"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.
"Issuance" means an issuance of Notes by the Issuer to a Holder under
this Agreement.
"Issuance Date" means, with respect to any Issuance, the date on which
such Issuance is funded.
"Liabilities" means the sum of (a) the Facility Amount and (b) all
accrued Yield and Commitment Fees applicable thereto plus (c) any accrued and
unpaid fees, including Custodian Fees, Servicing Fees, Portfolio Administration
Fees, Trustee Fees and any other fees payable pursuant to the Transaction
Documents or the Liquidity Agreements by the Issuer.
"LIBOR" means for any Interest Period, the rate determined as of the
second Business Day before the first day of such Interest Period for Eurodollar
deposits 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 the Administrative Agent using an
interpolated rate for LIBOR.
"Liquidity Agreement" means, individually or collectively, (a) the DFC
Asset Purchase Agreement, (b) the TRFC Funding Agreement, (c) the PARCO Asset
Funding Agreement and (d) any other such agreement entered into among DFC,
PARCO, TRFC or other Conduit Purchaser, the DFC Agent, PARCO Agent or TRFC
Agent, and any Person providing liquidity or credit support for the CP issued to
finance the Financed Loans.
"Liquidity Interest Rate" means the rate of interest to be paid on
Liquidity Note Purchase, which shall be equal to either (a) LIBOR + 1.00% if the
related Conduit Note Purchaser is unable to fund the Notes through the issuance
of CP, (b) the sum of LIBOR plus 0.625% if the related Conduit Note Purchaser is
able but unwilling to fund the Notes through the issuance of CP or (c) the
Alternate Rate, as selected in accordance with Section 2.02; provided, however,
that if (i) LIBOR cannot be determined, or (ii) it shall become unlawful for the
applicable Liquidity Note Purchaser to obtain funds in the London interbank
market to fund or maintain its interest in a Note, or (iii) an Agent advises the
Issuer that a Note Interest Rate based on LIBOR will not adequately and fairly
reflect the cost to the related Liquidity Note Purchaser of funding a Note based
on LIBOR, then the Liquidity Interest Rate shall be the Alternate Rate.
"Liquidity Note Purchases" means Note Purchases made by or on behalf of
the Liquidity Providers, or by TRFC in the event TRFC does not obtain funds to
purchase financial assets from the issuance of CP but instead obtains such funds
from a Liquidity Provider.
"Liquidity Note Purchasers" means Note Purchasers who are Liquidity
Providers, or TRFC in the event TRFC does not obtain funds to purchase financial
assets from the issuance of CP but instead obtains such funds from a Liquidity
Provider.
12
"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 a
Liquidity Agreement.
"Liquidity Termination Event" means the occurrence of any of the
following events: (a) any Liquidity Provider then providing liquidity to a
Conduit Note Purchaser 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 Moody's is substituted within 30 days of such
downgrade, (b) any Liquidity Provider shall fail to honor any of its payment
obligations under the related Liquidity Agreement unless such payment
obligations are otherwise satisfied by the related Agent, Conduit Note Purchaser
or another financial institution, (c) any Liquidity Agreement shall cease for
any reason to be in full force and effect or be declared null and void and such
Liquidity Agreement is not replaced or (d) 60 days after written notice has been
received by the Issuer stating that a consolidation of (i) DFC and JPMorgan
Chase Bank, (ii) PARCO and JPMorgan Chase Bank or (iii) TRFC and Mellon Bank
N.A., has occurred.
"Loan Valuation Percentage" as determined pursuant to the Valuation
Agreement by the Valuation Agent means (a) (i) the present value of the Net Cash
Available (using the Portfolio Characteristics and the Valuation Model
Assumptions) divided by (ii) the outstanding Principal Balance of Financed
Loans, plus (b) 100%.
"Majority Note Purchasers" means Note Purchasers whose Commitment
Amounts total more than 50% of the Facility Limit.
"Margin" means, for each Note Purchaser, the per annum rate agreed to
from time to time between the Issuer and each Note Purchaser and set forth in
the Fee Letter.
"Material Adverse Effect" means a material adverse effect on:
(a) the ability of the Issuer 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 Note Purchase,
which, unless otherwise extended by mutual agreement between the Required Note
Purchasers and the Issuer, shall be the first day of the calendar month in which
such Note Purchase expires.
"Maximum Note Purchase Percentage" means (a) with respect to the
acquisition of Eligible Loans on each Note Purchase, the percentage determined
pursuant to Exhibit M hereto based upon the average outstanding principal
balance of the Eligible Loans to be purchased and (b) with respect to
determination of the value of Eligible Loans within the Pledged Collateral, the
percentage determined pursuant to Exhibit M hereto based upon the average
outstanding principal balance of the Eligible Loans within the Pledged
Collateral.
"Minimum Asset Coverage Requirement" means an Asset Coverage Ratio of
100.25%.
13
"Monthly Report" means a report, in substantially the form of Exhibit D,
furnished by the Issuer to each Agent, the Valuation Agent and the Note
Purchasers.
"Moody's" means Moody's Investors Service, Inc. or its successor if and
so long as it has rated and is continuing to rate the CP of any Conduit Note
Purchaser.
"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 Issuer or any ERISA
Affiliate on behalf of its employees.
"NELNET" means National Education Loan Network, Inc., a Nevada
corporation, or its successors and assigns.
"Note" means each Note issued by the Issuer to a Holder.
"Note Account" has the meaning specified in Section 2.11 hereof.
"Note Purchase" means a purchase, including a Rollover Note Purchase, of
the Issuer's Notes by the Note Purchasers pursuant to Article II.
"Note Purchasers" means DFC, PARCO, TRFC, and their respective Liquidity
Providers, and their respective successors and assigns (subject to Section 10.04
hereof). DFC and the DFC Liquidity Providers shall purchase their Notes and
otherwise act through the DFC Agent, PARCO and the PARCO Liquidity Providers
shall purchase their Notes and otherwise act through the PARCO Agent and the
TRFC Liquidity Providers shall purchase their Notes and otherwise act through
TRFC.
"Note Register" has the meaning set forth in Section 3.05(a).
"Note Registrar" has the meaning set forth in Section 3.05(a).
"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
Issuer to the Agents or the Note Purchasers, 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 Note Purchases, any break funding costs attributable to CP Notes of the
Conduit Note Purchasers or funding by the Liquidity Purchaser occurring after a
prepayment made pursuant Section 6.08, closing fees, unused line fees, audit
fees, expense reimbursements, indemnifications, and other amounts due or to
become due under the Transaction Documents, including, without limitation,
interest, fees and other obligations that accrue after the commencement of an
insolvency proceeding (in each case whether or not allowed as a claim in such
insolvency proceeding).
"Obligor" means a Person obligated to make payments with respect to a
Student Loan including the student, Guarantors and the Department.
14
"Outstanding," when used with respect to Notes, means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Agreement except,
(a) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(b) Notes for whose payment or repayment money in the necessary
amount has been theretofore deposited with the Trustee for the Holders
of such Notes; and
(c) Notes which have been exchanged for other Notes, or in lieu
of which other Notes have been delivered, pursuant to this Agreement.
"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.
"PARCO" means Park Avenue Receivables Company LLC, successor to Park
Avenue Receivable Corporation, and its successors and assigns.
"PARCO Agent" means JPMorgan Chase Bank and its successors and assigns,
in its capacity as agent of PARCO and the PARCO Liquidity Providers pursuant to
the PARCO Asset Purchase Agreement or any other Liquidity Agreement to which
PARCO and the PARCO Agent are parties.
"PARCO Agent Payment Office" means 4 New York Plaza, 6th Floor, New
York, New York 10004.
"PARCO Asset Purchase Agreement" means the Asset Purchase Agreement
dated as of September 11, 2003, among PARCO, each of the Liquidity Providers
named therein and the PARCO Agent, as the same may be amended, restated,
supplemented or otherwise modified from time to time hereafter.
"PARCO Liquidity Providers" means the Liquidity Providers under the
PARCO Asset Purchase Agreement or other Liquidity Agreement as to which PARCO
and the PARCO Agent are parties.
"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 not less than "F-1" or the equivalent thereof from Fitch and not less
than "P1" or the equivalent thereof from Moody's; (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 not less than "F-1" or the equivalent thereof
from Fitch and not less than "P1" or the equivalent thereof from Moody's; (e)
freely redeemable shares in money market funds having a rating of "AAA-m" or
"AAAM-G" from S&P and "AAA" from Fitch and "Aaa" from Moody's; and (f) any other
investment approved in writing by the Required Note Purchasers.
15
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, government (or any agency or political subdivision thereof) or other
entity.
"Pledged Collateral" has the meaning specified in Section 2.10 hereof.
"PLUS/SLS" means a Student Loan originated under the authority set forth
in Section 428A or B (or a predecessor section thereto) of the Higher Education
Act and shall include Student Loans designated as "PLUS Loans" or "SLS Loans,"
as defined, under the Higher Education Act.
"Portfolio Administration Fee" means, for each Calculation Period,
one-twelfth of a 0.30% per annum fee payable monthly in arrears 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.
"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 Note Purchaser at any time, a
fraction (expressed as a percentage) the numerator of which is the Aggregate
Note Balance attributable to such Note Purchaser and/or the Liquidity Note
Purchasers (or an Agent or other Note Purchaser on its behalf), and the
denominator of which is the Aggregate Note Balance. As of the date of this
Agreement, the Pro Rata Share of the DFC Agent shall be a fraction (expressed as
a percentage), the numerator of which is 125 and the denominator of which is
450, the Pro Rata Share of PARCO shall be a fraction (expressed as a
percentage), the numerator of which is 125 and the denominator of which is 450,
and the Pro Rata Share of TRFC shall be a fraction (expressed as a percentage),
the numerator of which is 200 and the denominator of which is 450.
"Records" means all documents, books, records, Student Loan Notes and
other information (including without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
maintained with respect to Financed Loans or otherwise in respect of the Pledged
Collateral.
16
"Regular Interest Rate" means, the rate of interest to be paid on
Regular Note Purchases, which shall be (a) with respect to any Note funded by a
Conduit Note Purchaser through the issuance of CP on any date during an Interest
Period, a rate of interest equal to the per annum rate (expressed as a
percentage and an interest yield equivalent and calculated on the basis of a
360-day year) equivalent to the sum of the Margin plus the weighted average of
the per annum rates paid or payable by the applicable Note Purchaser from time
to time as interest on or otherwise in respect of the CP issued by such Note
Purchaser during such Interest Period as determined by the applicable Agent,
which rates shall reflect and give effect to (x) dealer and placement agent fees
and commissions associated with the issuance of such Note Purchaser's CP, and
(y) other borrowings by such Note Purchaser, including borrowings to fund small
or odd dollar amounts that are not easily accommodated in the commercial paper
market to the extent such amounts are allocated, in whole or in part, to such
Note by the applicable Agent; provided, that if any component of such rate is a
discount rate, in calculating the "Regular Interest Rate" for such day the
applicable Agent shall for such component use the rate resulting from converting
such discount rate to an interest bearing equivalent rate per annum; and (b)
with respect to any Note funded by a Conduit Note Purchaser other than through
the issuance of CP, the Liquidity Rate.
"Regular Note Purchases" means Note Purchases made by either DFC, PARCO,
TRFC or other Conduit Note Purchasers.
"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 Note Purchase Percentage" means the rate, stated as a
percentage, of the aggregate Principal Balance of the Eligible Loans to be
financed by a Note Purchase that is requested by the Issuer, not to exceed the
Maximum Note Purchase Percentage.
17
"Required Note Purchasers" means at all times, each Agent.
"Revolving Period" means the period commencing on the Closing Date and
terminating on the Termination Date. 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 Note Purchasers.
"Rollover Note Purchase" means a Note Purchase the funding of which
would not and does not have the effect of increasing the Facility Amount.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc. (or its predecessor or successors in interest) if and so
long as it has rated and is continuing to rate CP of any Note Purchaser.
"Sale and Purchase Agreements" means either (a) a student loan purchase
agreement between the Issuer and a Seller, substantially in the form attached
hereto as Exhibit A, for the purchase of Eligible Loans, as the same may be
amended from time to time or (b) a Participation Agreement between the Issuer
and a Seller, substantially in the form attached hereto as Exhibit L, for the
purchase of a participation interest in Eligible Loans.
"Schedule of Purchased Student Loans" means a listing of certain
Financed Loans of the Issuer delivered to and held by the Trustee pursuant to
Section 6.01(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, the Note Purchasers and the
Agents, solely in their capacity as Agents.
"Sellers" means any entity which sells Eligible Loans or a participation
interest in Eligible Loans to the Issuer pursuant to the terms of a Sale and
Purchase Agreement; including, but not limited to, Nelnet Education Loan
Funding, Inc., formerly known as NEBHELP, INC., NHELP-I, Inc., Union Bank and
Trust Company, NELNET, any Affiliate of NELNET or any other financial
institution with which NELNET or any Affiliate of NELNET has a purchase
agreement.
"Servicer" means, individually or collectively, (a) NELNET, (b) Nelnet,
Inc., formerly known as UNIPAC Service Corporation, (c) Great Lakes Higher
Education Servicing Corporation, (d) Nelnet, Inc., formerly known as InTuition,
Inc., (e) Sallie Mae Servicing, L.P., successor to USA Group Loan Services,
Inc., (f) ACS Education Services, Inc., and (g) any other organization with
which the Issuer has entered into a Servicing Agreement with respect to Eligible
Loans, with the prior written approval of the Required Note Purchasers.
18
"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 below) and such failure continues unremedied for 10 days after:
(i) written notice thereof shall have been given by the
Issuer or the Trustee to the Issuer 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 Servicer to the Issuer, the Agents or
the Note Purchasers prior to the execution and delivery of this
Agreement is pending against a Servicer or any of its Affiliates at the
time of execution hereof, or (ii) any material development has occurred
in any such litigation or proceedings so disclosed, or (iii) any
litigation, governmental proceeding, arbitration proceeding or other
event has occurred since the date of execution hereof which in the case
of clause (i), (ii) or (iii), in the opinion of the Required Note
Purchasers, 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 as of September 16, 1999, between the Issuer and
Nelnet, Inc., formerly known as UNIPAC Service Corporation, (b) the Servicing
Agreement dated as of September 16, 1999, between Great Lakes Higher Education
Servicing Corporation and the Issuer, and (c) with the prior written consent of
the Required Note Purchasers, any other servicing agreement between the Issuer
and any Servicer, as any such agreement may be amended or supplemented from time
to time with the prior written consent of the Required Note Purchasers, under
which the respective Servicer agrees to administer and collect the Financed
Loans.
19
"Servicing Fees" means any fees payable by the Issuer 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 or such
other day as may be agreed to by the Issuer and the Note Purchasers.
"Solvent" means, at any time, a condition under which:
(a) the fair value and present fair saleable value of such
Person's total assets is, on the date of determination, greater than
such Person's total liabilities (including contingent and unliquidated
liabilities) at such time;
(b) the fair value and present fair saleable value of such
Person's assets is greater than the amount that will be required to pay
such Person's probable liability on its existing debts as they become
absolute and matured ("debts," for this purpose, includes all legal
liabilities, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed, or contingent);
(c) such Person is and shall continue to be able to pay all of
its liabilities as such liabilities mature; and
(d) such Person does not have unreasonably small capital with
which to engage in its current and in its anticipated business.
For purposes of this definition:
(i) the amount of a Person's contingent or unliquidated
liabilities at any time shall be that amount which, in light of
all the facts and circumstances 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.
20
"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.
"Stafford Loan" means a Loan made to an Eligible Borrower designated as
such that is made under the Robert T. Stafford 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 Stafford
Loan or a Proprietary Loan.
"Student Loan Notes" means the promissory notes or other writings
evidencing the Student Loans.
"Termination Date" means the earliest to occur of (a) the second
Business Day of September, 2009, (b) such other date as may be agreed in writing
by the Required Note Purchasers and the Issuer, (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 VII, (e) the
date on which all Liquidity Agreements are terminated or expires, or (f) the
occurrence of any Liquidity Termination Event.
"Transaction Documents" means, collectively, this Agreement, each Note,
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.
"TRFC" means Three Rivers Funding Corporation and its successors and
assigns.
"TRFC Account" means Deutsche BankTrust Company Americas, ABA 021001033,
To Credit Corporate Trust and Agency Services, Acct. #01419647, Ref: Three
Rivers Funding, Attn: Luke Evans.
"TRFC Agent" means Mellon Bank, N.A., and its successors and assigns, in
its capacity as agent for TRFC and the TRFC Liquidity Providers pursuant to a
TRFC Funding Agreement or any other Liquidity Agreement to which TRFC and the
TRFC Agent are parties.
"TRFC Funding Agreement" means the Funding Agreement dated as of
September 16, 1999, among TRFC, each of the Liquidity Providers named therein
and the TRFC Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time thereafter.
21
"TRFC Liquidity Providers" means the Liquidity Providers under the TRFC
Funding Agreement or any other Liquidity Agreement as to which TRFC and the TRFC
Agent are parties.
"TRFC Payment Office" means Bankers Trust Company, ABA 021001033, To
Credit Corporate Trust and Agency Group, Acct. #01419647, Ref: Three Rivers
Funding, Attn: Wendy Wong.
"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 Issuer pledged
and assigned to the Trustee for the benefit of the Secured Creditors pursuant to
this Agreement.
"Trustee" means Wells Fargo Bank, National Association, as successor to
Wells Fargo Bank Minnesota, National Association and 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 guarantee
agreements listed in Schedule II hereto, as such Schedule may be amended from
time to time with the consent of the Required Note Purchasers.
"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.
"Unused Commitment" shall have the meaning set forth in Section 2.16.
"Valuation Agent" means J.P. Morgan Securities, Inc., or any other
entity appointed as Valuation Agent by the Issuer and approved by the Required
Note Purchasers, which approval shall not be unreasonably withheld.
"Valuation Agent Agreement" means the Amended and Restated Valuation
Agent Agreement dated as of March 1, 2004, among the Issuer, each Agent, DFC,
PARCO, TRFC and the Valuation Agent and any other valuation agent agreement in
the form attached hereto as Exhibit B among the Issuer, DFC, PARCO, TRFC, each
Agent and the Valuation Agent, as any such agreement may be amended or
supplemented from time to time with the prior written consent of the Required
Note Purchasers.
"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 DFC Agent, the PARCO Agent, the TRFC Agent, DFC, PARCO, TRFC or the
Issuer, or (b) not later than the third Business Day preceding each April 30,
July 31, October 31 or January 31.
22
"Valuation Report" means a report furnished by the Valuation Agent to
each Agent, the Required Note Purchasers, the Trustee and the Issuer pursuant to
Section 6.09(a) hereof, the form of which is attached as Exhibit B to the
Valuation Agreement.
"Yield" means, for each Note and for each Interest Period, the sum of,
for each day in such Interest Period,
IRT x C
-------
AP
where:
C = the principal amount of such Note on such day;
IRT = the Interest Rate in effect with respect to such Note;
AP = 360, or if the Interest Rate is computed based on the
Alternate Rate, 365/366, as applicable.
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 Note Purchasers to the Issuer 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 New York, and not specifically defined herein, are
used herein as defined in such Article 9.
Section 1.03. Computation of Time Periods. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding."
ARTICLE II
THE FACILITY
Section 2.01. Note Issuances and Purchases.
(a) On the terms and conditions hereinafter set forth, the Note
Purchasers, agree to purchase Notes issued by the Issuer pro rata in
proportion to their respective Available Commitment Amounts 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 Note
Purchase; provided that no Note Purchase shall be in an amount less than
$5,000,000. In addition to the other terms and conditions hereinafter
set forth, under no circumstances shall DFC, PARCO or TRFC be obligated
23
or committed to make any Note Purchase funded by the issuance of CP. If
any Note Purchaser is unable or unwilling to fund a Note Purchase by the
issuance of CP, then said Note Purchaser shall fund its Note Purchase or
cause its obligation to be funded pursuant to the terms of its Liquidity
Agreement. Within the limits set forth in this Section 2.01 and the
other terms and conditions of this Agreement, during the Revolving
Period, the Issuer may issue, prepay and reissue Notes under this
Section 2.01. In addition, the aggregate principal amount of any Note
Purchase, which is not a Rollover Note Purchase, during the Revolving
Period shall not exceed the product of (x) the aggregate Principal
Balance of Eligible Loans to be financed by such Note Purchase,
multiplied by (y) the Requested Note Purchase Percentage related
thereto. All Notes issued hereunder shall be denominated in and be
payable in United States dollars. All then outstanding Notes and other
Obligations hereunder shall be due and payable on the Termination Date.
(b) Each Note Purchaser's obligations under this Section 2.01
are several and the failure of any Note Purchaser or any Agent (acting
on behalf of the related Conduit Note Purchaser and/or Liquidity Note
Purchasers, if applicable) to make available its pro rata portion of the
Note Purchase described in (a) above of any requested Note Purchase
shall not relieve any other Note Purchaser of its obligations hereunder
or obligate any other Note Purchaser to honor the obligations of any
defaulting Note Purchaser. Notwithstanding anything contained in this
Agreement to the contrary, no Note Purchaser shall be obligated or
committed to fund any portion of any Note Purchase in excess of its
Available Commitment Amount.
(c) Each Note shall be issued in the name of a Holder.
(d) Each Note Purchase (other than a Rollover Note Purchase)
shall be purchased at 100% of the principal amount thereof.
Section 2.02. The Initial Note Issuance and Subsequent Note Issuances.
(a) At the request of the Issuer, Note Purchases shall be made
by a Note Purchaser during the Revolving Period, not more than eight
times in each calendar month (unless otherwise agreed by the Issuer and
the Required Note Purchasers), subject to and in accordance with the
terms and conditions of Section 2.01 and this Section 2.02. After the
Revolving Period and at the request of the Issuer, the Note Purchasers
shall make Rollover Note Purchases on each Settlement Date (unless
otherwise agreed by the Issuer and the Required Note Purchasers),
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 refinance
any maturing Notes.
(b) Subject to satisfaction of the conditions precedent set
forth in this Agreement and, if the Note Purchase to be made is a
Liquidity Note Purchase, to satisfaction of the conditions precedent in
the applicable Liquidity Agreement, the Issuer may request a Note
Purchase hereunder by giving written notice to each Agent in the form of
Exhibit C hereto not later than 1:00 p.m., New York time, at least three
Business Days prior to the proposed date of such Issuance. Each such
notice shall specify (i) the aggregate amount of such Issuance, (ii) the
date of such Issuance, (iii) if the Note Purchase to be made is a
24
Liquidity Note Purchase, the requested applicable Liquidity Interest
Rate for such Issuance and (iv) the Requested Note Purchase Percentage.
On the date of such Issuance and no later than 1:00 p.m., New York time,
each Conduit Note Purchaser or Liquidity Provider(s), shall, upon
satisfaction of the applicable conditions set forth in this Agreement,
make available to the Issuer in same day funds, its respective share
(pro rata in proportion to its Available Commitment Amount) of the
amount of such Issuance by payment to the account which the Issuer has
designated in writing.
(c) Except as otherwise provided in Article IX of this
Agreement, principal and accrued Yield on the Note Purchases shall be
payable solely from the Pledged Collateral and from payments made or
owing pursuant to the "Collateral Calls" made in accordance with Section
6.12. Any Principal and Yield due or accrued on the Note Purchases on
any Settlement Date will be payable to each Note Purchaser based on its
Pro Rata Share on such Settlement Date at the times specified in Section
2.13 hereof and applied in the order of priority specified in Section
2.05(c) hereof. Principal of the Notes (net of any Rollover Note
Purchases) will be paid 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 Note Purchasers.
(d) If as a result of a funding pursuant to a Liquidity
Agreement a Liquidity Note Purchaser shall become a Note Purchaser on
any day other than the first day of an Interest Period, the Liquidity
Interest Rate applicable to such Liquidity Note Purchaser's Note
Purchases for the remainder of such Interest Period shall be (i) the
Alternate Rate plus 2.0% if such draw is the result of the occurrence of
an Event of Default hereunder, or (ii) at the Issuer's discretion,
either (A) the Alternate Rate, (B) the sum of LIBOR plus 1.0% if the
related Conduit Note Purchaser is unable to fund the Notes through the
issuance of CP or (C) the sum of LIBOR plus 0.625% if the related
Conduit Note Purchaser is able but unwilling to fund the Notes through
the issuance of CP if such draw is not the result of the occurrence of
an Event of Default hereunder and provided that the Agents shall be
given written notice of such draw request not later than 1:00 p.m., New
York time, at least three Business Days prior to the date of such draw,
unless otherwise agreed to by the Note Purchasers.
Section 2.03. TERMINATION OR REDUCTION OF THE FACILITY LIMIT. The Issuer
may, upon at least 30 days' written notice to the Required Note Purchasers
terminate in whole or reduce in part the portion of the Facility Limit that
exceeds the outstanding Note Purchases. Any reduction shall be applied pro rata
among the Note Purchasers; provided, however, that the Issuer may terminate or
reduce in whole or in part any one Note Purchaser's portion of the Facility
Limit if an Accounting Based Consolidation Event has occurred with respect to
such Note Purchaser.
Section 2.04. COLLECTION ACCOUNT. On or prior to the date hereof, the
Issuer 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 Issuer, 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 of receipt. The Issuer shall direct each Servicer,
25
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 2.08. The Trustee shall apply funds on
deposit in the Collection Account as described in Section 2.05.
Section 2.05. TRANSFERS FROM COLLECTION ACCOUNT.
(a) On each date on which any principal or interest is due with
respect to the Notes, the Trustee shall promptly apply moneys held in
the Collection Account to pay to the Holders, the accrued and unpaid
Yield and principal amounts then due and owing. On each date on which
other Obligations are owed to the Note Purchasers or the Agents, the
Trustee shall promptly apply moneys in the Collection Account to pay to
the Holders the obligations then due and owing.
(b) Not later than the Calculation Date each month, the Issuer
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 day occurring two business days prior to the Calculation Date
(the "Collection Date") for the period from and including the Collection
Date occurring in the immediately preceding calendar month, but
excluding the current Collection Date (the "Collection Period"), and
cause the Portfolio Administrator to forward such Monthly Report to the
Trustee, the Valuation Agent and the Required Note Purchasers.
(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 Issuer, an amount equal to
the estimated taxes owed by the Issuer that are payable prior to
the next Settlement Date and not previously paid, which relate
to the net income of the Issuer 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 Holders first an amount equal to the
accrued and unpaid Yield and other Obligations in respect of the
Notes; and second, an amount equal to principal on the Notes,
net of any Rollover Note Purchases, in each case, due and owing
as of such Settlement Date;
(iv) pay to (A) each Agent the Commitment Fee and all
other fees and expenses of the Agents which are accrued and
unpaid as of the close of business on the last day preceding
such Settlement Date and (B) the Administrative Agent the
Administrative Agent Fee which is accrued and unpaid as of the
close of business on the last day preceding such Settlement
Date;
26
(v) pay fees and expenses related to the Financed Loans
under the Higher Education Act 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 Issuer);
(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
Aggregate Cash Reserve Requirement;
(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 each Agent, the Additional Margin, if any;
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 Section 6.12 in this Agreement,
transfer to the Issuer or any other Person as directed by the
Issuer (by wire transfer as directed by the Issuer), any amounts
calculated pursuant to the provisions of Exhibit E -1 hereto and
set forth on a certificate substantially in the form of Exhibit
E-2 hereto executed by an authorized officer the forms of which
shall not be changed or amended without the prior written
consent of the Required Note Purchasers.
(d) Any moneys allocated to the payment of Trustee Fees,
Commitment Fees, Administrative Agent Fees, Portfolio Administration
Fees, Servicing Fees, Custodian Fees, principal or accrued Yield on
Notes and other Obligations pursuant to this Section 2.05 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 2.05.
SECTION 2.06. CASH RESERVE ACCOUNT. On or prior to the date hereof, the
Issuer 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
Issuance and each subsequent Issuance, other than in connection with a Rollover
Note Purchase, and additional amounts shall be deposited to the Cash Reserve
27
Account pursuant to Section 2.05(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 2.08. The Trustee shall apply funds on deposit in the
Cash Reserve Account as described in Section 2.07.
SECTION 2.07. TRANSFERS FROM THE CASH RESERVE ACCOUNT. To the extent
there are insufficient moneys in the Collection Account to pay the following
amounts in accordance with the provisions of Section 2.05, 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 Yield is due and
owing with respect to any Note, the Trustee shall promptly apply moneys
held in the Cash Reserve Account to pay to the Note Purchasers the
accrued and unpaid Yield and principal amounts then due and owing; and
(b) on any Settlement Date, to the Collection Account for the
payment of accrued and unpaid fees and expenses described in Section
2.05(c)(i) through (vi).
SECTION 2.08. MANAGEMENT OF COLLECTION ACCOUNT AND CASH RESERVE ACCOUNT.
(a) All funds held in the Collection Account and the Cash
Reserve Account (or any subaccount thereof), including investment
earnings thereon, shall be invested at the direction of the Issuer or
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 Agents shall have the sole right to restrict the
maturities of any investments held in the Collection Account and/or the
Cash Reserve Account and to direct the withdrawal of any such
investments for the purposes of paying the Obligations, including
principal on the Note Purchases. All investment earnings (net of losses)
on such Permitted Investments shall be credited to and retained in the
Collection Account or the Cash Reserve Account, as the case may be.
(b) The Collection Account and the Cash Reserve Account shall be
established with a securities intermediary (the "Securities
Intermediary") who shall agree with the Trustee (and Wells Fargo Bank,
National Association, as Securities Intermediary, hereby agrees with the
Trustee) that (i) the Collection Account and the Cash Reserve Account
shall be securities accounts of the Trustee, (ii) all property credited
to Collection Account or the Cash Reserve Account shall be treated as a
financial asset, (iii) the Securities Intermediary shall treat the
Trustee as entitled to exercise the rights that comprise each financial
asset credited to the Collection Account or the Cash Reserve Account,
(iv) the Securities Intermediary shall comply with entitlement orders
originated by the Trustee without the further consent of any other
person or entity, (v) except as otherwise provided in Section 2.08(a),
the Securities Intermediary shall not agree to comply with entitlement
orders originated by any person or entity other than the Trustee, (vi)
the Collection Account, the Cash Reserve Account and all property
credited to either such account shall not be subject to any lien,
security interest, right of set-off or encumbrance in favor of the
Securities Intermediary or anyone claiming through the Securities
28
Intermediary (other than the Trustee), and (vii) such agreement between
the Securities Intermediary and the Trustee shall be governed by the
laws of the State of Minnesota. Each term used in this Section 2.08(b)
and defined in the Minnesota Uniform Commercial Code (the "Minnesota
UCC") shall have the meaning set forth in the Minnesota UCC.
SECTION 2.09. PLEDGED COLLATERAL ASSIGNMENT OF THE TRANSACTION
DOCUMENTS. To secure the prompt and complete payment when due of the Obligations
and the performance by the Issuer of all of the covenants and obligations to be
performed by it pursuant to this Agreement and each other Transaction Document,
the Issuer 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 Issuer's right and title to and interest in
(but not the obligations of) the Transaction Documents. The Issuer confirms and
agrees that the Trustee shall have, following an Event of Default, the sole
right to enforce the Issuer'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 Issuer under the Transaction Documents.
SECTION 2.10. GRANT OF A SECURITY INTEREST. To secure the prompt and
complete payment when due of the Obligations and the performance by the Issuer
of all of the covenants and obligations to be performed by it pursuant to this
Agreement and each other Transaction Document, the Issuer hereby Grants to the
Trustee on behalf of the Secured Creditors (and their respective successors and
assigns), a security interest in all of the Issuer's right, title and interest
in and to all accounts, general intangibles, instruments, documents, chattel
paper, goods, money, investment property, advices of credit, letters of credit,
certificates of deposit, deposit accounts and all other property and interests
in property, whether tangible or intangible and whether now owned or existing or
hereafter arising or acquired and wheresoever located, arising from, consisting
of or related to any of the following (collectively, the "Pledged Collateral"):
(a) all Financed Loans;
(b) all revenues and recoveries of principal from Financed
Loans, including all borrower payments and reimbursements of principal
and accrued interest on default claims received from any Guarantor;
(c) any other Collections, Permitted Investments, funds and
accrued earnings thereon held in the various funds and accounts created
under this Agreement, including the Collection Account and the Cash
Reserve Account;
(d) all rights and remedies (but none of the obligations) under
each of the Transaction Documents;
(e) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Financed Loans, whether pursuant to the contract related to such
Financed Loan or otherwise;
(f) all Records relating to such Financed Loans; and
29
(g) all proceeds of any of the foregoing (including, but not by
way of limitation, all cash proceeds, accounts, accounts receivables,
notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and
every kind and all other forms of obligations and receivables and other
liquidated property, which at any time constitutes all or part or are
included in the proceeds of any of the foregoing property).
SECTION 2.11. EVIDENCE OF DEBT. Each Agent shall maintain a Note Account
(the "Note Account") on its books in which shall be recorded (a) all Note
Purchases owed to each related Note Purchaser by the Issuer pursuant to this
Agreement, (b) the outstanding principal amount of Note Purchases then funded by
its related Conduit Note Purchaser and Liquidity Provider(s), (c) all payments
of principal and Yield made by the Issuer on all such Note Purchases, (d) the
respective percentages of such Note Purchaser's Commitment Amount which each
Liquidity Provider is obligated to fund under the applicable Liquidity
Agreement, and (e) all appropriate debits and credits as provided in this
Agreement including, without limitation, all fees, charges, expenses and
interest. All entries in each Agent's Note Account shall be made in accordance
with such Note Purchaser's customary accounting practices as in effect from time
to time. The entries in the Note Account shall be conclusive and binding for all
purposes, absent manifest error. Any failure to so record or any errors in doing
so shall not, however, limit or otherwise affect the obligation of the Issuer to
pay any amount owing with respect to the Notes or any of the other Obligations.
SECTION 2.12. SPECIAL PROVISIONS GOVERNING NOTE PURCHASES. The Issuer
shall indemnify each Note Purchaser, 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 Note
Purchases), that such Person may sustain: (a) if for any reason other than an
act, default or omission by the Note Purchasers or their Agents (or any of them)
an Issuance of Notes does not occur on a date specified therefor; (b) if the
Issuer elects, or is required by reason of a breach by the Issuer of this
Agreement, to fund any Note Purchase through a Liquidity Note Purchase on a date
that is not the last day of the Interest Period applicable to that Note
Purchase; or (c) as a consequence of any other default by the Issuer to repay
its Note Purchases when required by the terms of this Agreement. Unless
otherwise provided herein, the amount specified in the written statement of any
Note Purchaser shall be payable on demand after receipt by the Issuer thereof.
SECTION 2.13. PAYMENTS BY THE ISSUER. All payments to be made by the
Issuer shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Issuer shall be made
(a) if to TRFC, to the TRFC Account, (b) if to a TRFC Liquidity Provider that is
a Liquidity Note Purchaser, to an account designated by such TRFC Liquidity
Provider, (c) if to DFC or a DFC Liquidity Provider, to such Agent for the
account of such Note Purchaser at such Agent's Payment Office by 1:00 p.m., New
York time, and (d) if to PARCO or a PARCO Liquidity Provider, to such Agent for
the account of such Note Purchaser at such Agent's Payment office by 1:00 p.m.,
New York time, in Dollars. Such payments shall be made in immediately available
funds so as to be received by the Note Purchasers no later than 1:00 p.m., New
York time, on the date specified herein. Payments shall be applied first against
30
interest amounts then due and unpaid in respect of any Note Purchase, 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 Note
Purchase. Any payment which is received by any Note Purchaser later than 1:00
p.m., New York time, shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue.
SECTION 2.14. PAYMENT OF STAMP TAXES, ETC. The Issuer 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, each Agent and each
Note Purchaser 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 2.15. SHARING OF PAYMENTS, ETC. If, other than as expressly
provided elsewhere herein, any Note Purchaser shall obtain on account of the
Note Purchases 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 Note Purchaser shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Note Purchasers such participations made by them as shall be
necessary to cause such purchasing Note Purchaser to share the excess payment
pro rata (based on the Pro Rata Share of each Note Purchaser) with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Note Purchaser, such purchase shall to
that extent be rescinded and each other Note Purchaser shall repay to the
purchasing Note Purchaser the purchase price paid therefor, together with an
amount equal to such paying Note Purchaser's ratable share (according to the
proportion of (i) the amount of such paying Note Purchaser's required repayment
to (ii) the total amount so recovered from the purchasing Note Purchaser) of any
interest or other amount paid or payable by the purchasing Note Purchaser in
respect of the total amount so recovered The Issuer agrees that any Note
Purchaser so purchasing a participation from another Note Purchaser may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Note Purchaser was the direct creditor of the Issuer in the amount of such
participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section 2.15 and will in each case notify each Agent
following any such purchases or repayments.
SECTION 2.16. 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
under the applicable Liquidity Agreement (the "Unused
Commitment") (other than taxes, duties or charges based on
income or gross receipts), or shall change the basis of taxation
(other than taxes based on income or gross receipts) of payments
to the Affected Party of any yield on or reductions to the
31
Obligations owed to or with respect to the Obligations funded in
whole or in part by it or any other amounts due under this
Agreement in respect of any portion of the Obligations owned by
or funded by it or its obligations or rights, if any, to fund
Note Purchases or in respect of its Unused Commitment (except
for changes in the rate of tax on the overall net income or
gross receipts of such Affected Party imposed by the United
States of America, by the jurisdiction in which such Affected
Party's principal executive office is located and, if such
Affected Party's principal executive office is not in the United
States of America, by the jurisdiction where such Affected
Party's principal office in the United States is located);
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the
Federal Reserve Board, 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;
(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 applicable 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 applicable 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 applicable Liquidity Agreement or
arising in connection herewith to a level below that
which the Affected Party could otherwise have achieved;
32
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 Issuer shall pay directly to such
Affected Party such additional amount or amounts as will compensate such
Affected Party for such additional or increased cost or such reduction;
provided such additional amount or amounts shall not be payable with
respect to any period in excess of 180 days prior to the date of demand
by the Affected Party unless (1) the effect of the Regulatory Change is
retroactive by its terms to a period prior to the date of the Regulatory
Change, in which case any additional amount or amounts shall be payable
for the retroactive period but only if the Affected Party provides its
written demand not later than 180 days after the Regulatory Change, or
(2) the Affected Party reasonably and in good faith did not believe the
Regulatory Change resulted in such an additional or increased cost or
such a reduction.
(b) Each Affected Party will promptly notify the Issuer and the
Required Note Purchasers of any event of which it has actual knowledge
which will entitle such Affected Party to any compensation pursuant to
this Section 2.16; provided, however, no failure or delay in giving such
notification shall adversely affect the rights of any Affected Party to
such compensation unless such failure or delay results in a Material
Adverse Effect.
(c) In determining any amount provided for or referred to in
this Section 2.16, 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 2.16 shall
submit to the Issuer 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 Issuer.
ARTICLE III
THE NOTES
SECTION 3.01. FORM OF NOTES GENERALLY.
(a) The Notes shall be in substantially the form set forth in
Exhibit H in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes.
(b) The Notes shall be printed.
33
(c) The Notes shall be issuable only in registered form and with
a maximum principal amount that, when aggregated with the maximum
principal amounts of each other Outstanding Note, will equal the
Facility Limit.
(d) All Notes shall be substantially identical except as to
maximum denomination and except as may otherwise be provided in or
pursuant to this Section 3.01.
SECTION 3.02. SECURITIES LEGEND. Each Note issued hereunder will contain
the following legend limiting sales to "Qualified Institutional Buyers" within
the meaning of Rule 144A under the Securities Act:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN
OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF ACKNOWLEDGES THAT THESE
SECURITIES ARE "RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE ISSUER AND
ITS AFFILIATES THAT THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERMITTED ASSIGNEE WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A OR (B) TO A PERMITTED ASSIGNEE PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), OR (C) TO A PERMITTED ASSIGNEE PURSUANT TO ANY OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SECTION 5 OF THE
SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION.
SECTION 3.03. PRIORITY. All Notes issued under this Agreement shall be
in all respects equally and ratably entitled to the benefits hereof and secured
by the Pledged Collateral without preference, priority or distinction on account
of the actual time or times of authentication and delivery, all in accordance
with the terms and provisions of this Agreement. Payments of Yield on the Notes
and all other Obligations shall be made pro rata among all Outstanding Notes
based on the amount of interest owed on such Note, without preference or
priority of any kind. Payments of principal on the Notes shall be made pro rata
among all Outstanding Notes, without preference or priority of any kind.
34
SECTION 3.04. EXECUTION, DELIVERY AND DATING.
(a) The Notes shall be executed on behalf of the Issuer by any
of the Authorized Officers of the Issuer. The signature of any of these
officers on the Notes may be manual or facsimile.
(b) Notes bearing the manual or facsimile signatures of
individuals who were at any time Authorized Officers of the Issuer shall
bind the Issuer, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and
delivery of such Notes or did not hold such offices at the date of such
Notes.
(c) Each Note shall be dated the date of its execution.
SECTION 3.05. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE,
TRANSFER RESTRICTIONS.
(a) The Issuer shall cause to be kept a register (the "Note
Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Notes and of
transfers of the Notes. The Trustee shall serve as "Note Registrar" for
the purpose of registering Notes and transfers of the Notes as herein
provided.
(b) Upon surrender for registration of transfer of any Note at
the office or agency of the Issuer to be maintained as provided in
Article V(j), the Issuer shall execute and deliver in the name of the
designated transferee or transferees, one or more new Notes of any
authorized denominations and of a like tenor and aggregate principal
amount.
(c) At the option of the Holder, Notes may be exchanged for
other Notes of like tenor in a maximum principal amount consistent with
Section 3.01(c), upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange,
the Issuer shall execute and deliver the Notes which the Holder making
the exchange is entitled to receive.
(d) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Agreement, as the Notes surrendered upon such registration of transfer
or exchange.
(e) Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Issuer or the
Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Note Registrar duly
executed, by the Holder thereof or his attorney duly authorized in
writing with such signature guaranteed by a commercial bank or trust
company, or by a member firm of a national securities exchange, and such
other documents as the Trustee may require.
35
(f) No service charge shall be made for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee may require
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of
transfer or exchange of Notes, other than exchanges pursuant to Section
3.05(d) not involving any transfer or in connection with a Rollover Note
Purchase.
(g) No Holder of a Note shall transfer its Note unless such
transfer is made (i) in accordance with (A) Rule 144A under the
Securities Act of 1933, as amended, (B) an exemption from registration
provided by Rule 144 under the Securities Act of 1933, as amended, (if
available) or any other exemption from the registration requirements
under Section 5 of the Securities Act of 1933, as amended, provided the
Issuer is provided an Opinion of Counsel that such transfer is so
exempt, and (C) the registration and qualification requirements (or any
applicable exemptions therefrom) under applicable state securities laws
and (ii) pursuant to Section 10.04.
SECTION 3.06. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If any
mutilated Note is surrendered to the Trustee, the Issuer shall execute and
deliver in exchange therefor a new Note of like tenor and maximum principal
amount and bearing a number not contemporaneously outstanding. If there shall be
delivered to the Issuer (a) evidence to the Issuer's satisfaction of the
destruction, loss or theft of any Note and (b) such security or indemnity as may
be required by them to hold the Issuer and any of its agents harmless, then, in
the absence of notice to the Issuer that such Note has been acquired by a bona
fide purchaser, the Issuer shall execute and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of like tenor and principal amount
and maximum principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or
is about to become due and payable, the Issuer in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 3.06, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Note Registrar) connected
therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
36
SECTION 3.07. PERSONS DEEMED OWNERS. Prior to due presentment of a Note
for registration of transfer, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name such Note is registered
as the owner of such Note for the purpose of receiving payment of principal of
and Yield on such Note and for all other purposes whatsoever, whether or not
such Note be overdue, and the Issuer, the Trustee nor any agent of the Issuer or
the Trustee shall be affected by notice to the contrary.
SECTION 3.08. CANCELLATION. Subject to Section 3.04(b), all Notes
surrendered for payment, prepayment in whole, registration of transfer or
exchange shall, if surrendered to any Person other than the Issuer, be delivered
to the Issuer and shall be promptly cancelled by the Issuer. Subject to Section
3.04(b), the Issuer may at any time cancel any Notes previously delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and may
cancel any Notes previously executed hereunder which the Issuer has not issued
and sold. No Notes shall be executed and delivered in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Agreement. All cancelled Notes held by the Issuer shall be held or
destroyed by the Issuer in accordance with its standard retention or disposal
policy as in effect at the time.
ARTICLE IV
CONDITIONS TO NOTE PURCHASES
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL ISSUANCE. The initial
Issuance hereunder is subject to the condition precedent that DFC, PARCO, TRFC
or the Agents or all, as the case may be, shall have received on or before the
date of such Issuance the items listed in Exhibit K hereto, in form and
substance satisfactory to DFC, PARCO, TRFC or the Agents or all, as the case may
be.
SECTION 4.02. CONDITIONS PRECEDENT TO ALL NOTE PURCHASES. Each Issuance
(including the initial Issuance) hereunder shall be subject to the further
conditions precedent that:
(a) on or prior to the date of such Issuance, the Issuer shall
have delivered to each Agent and the Trustee (i) copies of the relevant
Sale and Purchase Agreement (including copies of all schedules,
opinions, financing statements and other documents required to be
delivered by the applicable Seller as a condition of purchase
thereunder, and, upon request, a Schedule of Financed Loans), (ii) a
request for a Note Purchase in the form and at the time required in
Section 2.02(b) hereof and (iii) an opinion or opinions of counsel to
the Issuer addressed to DFC, PARCO, TRFC, the Agents and the Trustee, in
form and substance acceptable to each Agent and the Trustee, concerning
the perfection of Issuer's security interest in the Eligible Loans or
Participation interest, as applicable, of each Seller; and
(b) on the date of such Issuance, the following statements shall
be true, and the Issuer by accepting the amount of such Issuance shall
be deemed to have certified that:
37
(i) the representations and warranties contained in
Article V are correct on and as of such day as though made on
and as of such date;
(ii) no event has occurred and is continuing, or would
result from such Issuance, which constitutes 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
Issuance, the Facility Amount would not exceed the Facility
Limit;
(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 Note Purchases by the Note Purchasers
in accordance with the provisions hereof; and
(v) the amount of money equal to the Cash Reserve
Requirement on such date is deposited in the Cash Reserve
Account on such date from the proceeds of such Issuance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Issuer represents and warrants as follows:
(a) The Issuer 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 Issuer of
this Agreement and all Transaction Documents to be delivered by it in
connection herewith or therewith, including the Issuer's use of the
proceeds of Note Purchases, are within the Issuer's organizational
powers, have been duly authorized by all necessary organizational
action, do not contravene (i) the Issuer's Articles of Incorporation or
bylaws, (ii) any law, rule or regulation applicable to the Issuer, (iii)
any contractual restriction binding on or affecting the Issuer or its
property or (iv) any order, writ, judgment, award, injunction or decree
binding on or affecting the Issuer or its property, and do not result in
or require the creation of any lien, security interest or other charge
or encumbrance upon or with respect to any of its properties (other than
in favor of the Trustee for the benefit of the Secured Creditors with
respect to the Pledged Collateral); and no transaction contemplated
hereby or by the other Transaction Documents to which it is a party
requires compliance with any bulk sales act or similar law. This
Agreement and the other Transaction Documents to which it is named as a
party have each been duly executed and delivered by the Issuer. The
Notes have been duly and validly authorized and when executed and paid
for in accordance with the terms of this Agreement, will be duly and
validly issued and outstanding, and will be entitled to the benefits of
this Agreement.
38
(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 Issuer 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 Issuer is a party constitute the legal, valid and binding
obligations of the Issuer enforceable against the Issuer in accordance
with their respective terms, subject to (i) applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting the rights of
creditors; and (ii) general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law.
(e) There is no pending or, to the knowledge of the Issuer,
threatened, action or proceeding affecting the Issuer before any court,
governmental agency or arbitrator that may materially adversely affect
the financial condition of the Issuer or the ability of the Issuer to
perform its obligations under each Transaction Document to which it is a
party. The Issuer is not in default with respect to any order of any
court, arbitrator or any other Governmental Authority.
(f) No proceeds of any Notes will be used by the Issuer 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
Issuer 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 Issuer), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished by the Issuer to any Agent or any Required Note Purchaser 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 any Agent or such Required Note Purchaser 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.
39
(j) The principal place of business and chief executive office
of the Issuer and the office where the Issuer keeps all the Records are
located at the address of the Issuer referred to in Section 10.02 or
such other location as the Issuer shall have given notice of to the
Required Note Purchasers pursuant to Section 6.10.
(k) The Issuer has no trade names, fictitious names, assumed
names or "doing business as" names or other names under which it has
done or is doing business.
(l) The Issuer is Solvent at the time of (and immediately after)
each "Note Purchase" and each purchase of Eligible Loans made by the
Issuer.
(m) The Issuer 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 Issuer 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 Issuer set forth
in the Transaction Documents to which it is a party are true and correct
in all material respects.
(p) To the Issuer's best knowledge, each Student Loan to be
financed with the proceeds of any Note Purchase constitutes an Eligible
Loan as of the date of such Note Purchase from a Seller pursuant to a
Sale and Purchase Agreement.
(q) [Reserved.]
(r) The sale of the Notes pursuant to this Agreement will not
require the registration of the Notes under the Securities Act of 1933,
as amended.
(s) The Notes will be characterized as debt for federal income
tax purposes.
ARTICLE VI
GENERAL COVENANTS OF THE ISSUER
SECTION 6.01. GENERAL COVENANTS.
(a) COMPLIANCE WITH LAWS; PRESERVATION OF CORPORATE EXISTENCE.
The Issuer will comply in all material respects with all applicable
laws, rules, regulations and orders and preserve and maintain its legal
existence, and will preserve and maintain its rights, franchises,
qualifications and privileges in all material respects.
(b) SALES, LIENS, ETC. The Issuer will not, (i) except for
purposes of serialization, combination, transfer to a Guarantor as may
be required or permitted under the Higher Education Act or repurchase
pursuant to the terms of a Sale and Purchase Agreement of a Financed
Loan, 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) except as otherwise provided
herein, create or suffer to exist any Adverse Claim upon or with respect
to any of the Issuer's assets.
40
(c) GENERAL REPORTING REQUIREMENTS. The Issuer will provide to
each Agent the following:
(i) as soon as available and in any event within 120
days after the end of each fiscal year of the Issuer, a copy of
the balance sheet of the Issuer 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 Issuer;
(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 Issuer
setting forth details of such Event of Default or event and the
action which the Issuer has taken and proposes to take with
respect thereto;
(iii) promptly following receipt thereof, to the extent
requested by any Agent, copies of all financial statements,
settlement statements, portfolio and other material reports,
notices, disclosures, certificates and other written material
delivered or made available to the Issuer by any Person pursuant
to the terms of any Transaction Document;
(iv) promptly following any Agent's request therefor,
such other information respecting the Financed Loans and the
other Pledged Collateral or the conditions or operations,
financial or otherwise, of the Issuer as any Agent may from time
to time reasonably request;
(v) with respect to each Guarantor, promptly after
receipt thereof as made available to the Issuer 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 Issuer'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 Issuer, (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)(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, such Servicer's net dollar loss for
the year due to servicing errors;
(vii) upon request, a Schedule of Financed Loans;
41
(viii) as soon as available and in any event within 120
days after the end of each fiscal year of Nelnet, Inc., copies
of consolidated financial statements for it and its consolidated
subsidiaries prepared in accordance with generally accepted
accounting principles, duly certified by independent certified
public accountants of recognized standing selected by it,
including consolidating statements;
(ix) promptly after the filing or receiving thereof,
copies of all reports and notices with respect to any Reportable
Event defined in Article IV of ERISA which the Issuer files
under ERISA with the Internal Revenue Service, the Pension
Benefit Guarantee Corporation or the U.S. Department of Labor or
which the Issuer 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 Issuer setting forth details of such event and
the action that the Issuer 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 Issuer'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 Issuer, any
of the same against a Servicer;
(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; and
(xiii) upon request, copies of the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities
Act of 1933, as amended in order to permit compliance with Rule
144A in connection with assignments of Notes.
(d) MERGER, ETC. The Issuer 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.
42
(e) NATURE OF BUSINESS. The Issuer will engage in no business
other than (i) purchases and sales of Eligible Loans and (ii) the other
transactions permitted or contemplated by this Agreement and its
Articles of Incorporation and bylaws as they exist on the Closing Date,
or as amended with the consent of the Required Note Purchasers.
(f) TRANSACTION DOCUMENTS. The Issuer (i) will take all action
necessary to perfect, protect and more fully evidence the ownership
interest of the Issuer 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 Issuer will do all
things necessary to maintain its existence as a Nevada corporation
separate and apart from all Affiliates of the Issuer, 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 Issuer of all
payroll, accounting and other administrative expenses and taxes; (ix)
allocating, on an arm's-length basis, all shared operating services,
leases and expenses, including, without limitation, those associated
with the services of shared consultants and agents and shared computer
equipment and software; (x) refraining from paying dividends or making
distributions, Loans or other advances to any of its Affiliates more
frequently than once during any calendar month and, in each case, as
duly authorized by its Directors and in accordance with applicable law;
(xi) refraining from filing or otherwise initiating or supporting the
filing of a motion in any bankruptcy or other insolvency proceeding
involving the Issuer or any other Affiliate of the Issuer to
substantively consolidate the assets and liabilities of the Issuer with
the assets and liabilities of any such Person or any other Affiliate of
the Issuer; (xii) maintaining adequate capitalization in light of its
business and purpose; and (xiii) conducting all of its business (whether
written or oral) solely in its own name.
43
(h) TRANSACTIONS WITH AFFILIATES. The Issuer 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 and from
Affiliates); and (ii) other transactions (including, without limitation,
the lease of office space or computer equipment or software by the
Issuer to or from an Affiliate) (A) in the ordinary course of business,
(B) pursuant to the reasonable requirements of the Issuer's business,
(C) upon fair and reasonable terms that are no less favorable to the
Issuer than could be obtained in a comparable arm's-length transaction
with a Person not an Affiliate of the Issuer, and (D) not inconsistent
with the factual assumptions set forth in the opinion letter issued as
of the Closing Date by Kutak Rock LLP to the Secured Creditors relating
to the issues of substantive consolidation.
(i) DEBT. Except as provided in the Issuer's Articles of
Incorporation, the Issuer will not incur any Debt other than Debt
arising hereunder. The Issuer 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 Required Note Purchasers, the Issuer 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 Issuer or its assignees to any Pledged
Collateral or modify, in a manner adverse to the Issuer or its
assignees, the right of the Issuer and its assignees to demand
or receive payment under any of the Transaction Documents.
44
(k) ERISA. The Issuer 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 Issuer 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 Issuer 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 Issuer shall have taken (or caused to be taken) all
steps reasonably necessary to ensure that (i) after giving effect to
such purchase, the Issuer 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 6.02. ACQUISITION, COLLECTION AND ASSIGNMENT OF STUDENT LOANS.
The Issuer shall acquire only Eligible Loans (or beneficial interests therein)
with proceeds of the Note Purchases and shall diligently cause to be collected
all principal and interest payments on all the Financed Loans and all sums to
which the Issuer 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 Issuer shall also make, or cause to be made by Sellers or Servicers
or Trustees, every effort to collect the Issuer'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 Issuer
will assign or direct the assignment of such Financed Loans for payment of
guarantee benefits as required by applicable law and regulations. The Issuer
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 6.03. ENFORCEMENT OF FINANCED LOANS. The Issuer 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
Issuer and Trustee, as applicable thereunder. The Issuer 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 Issuer, the
Trustee and the Note Purchasers under or with respect to each Financed Loan and
agreement in connection therewith. The Issuer 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 Note Purchasers (with respect to the
rights of the Note Purchasers, without the approval of the Required Note
Purchasers, which approval shall not be unreasonably withheld). Nothing in this
Agreement shall be construed to prevent the Issuer 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.
45
SECTION 6.04. ENFORCEMENT OF SERVICING AGREEMENTS. The Issuer 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 Issuer 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 Issuer
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 Issuer and of the Trustee under or with respect to each
Servicing Agreement. The Issuer 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 Note
Purchasers, without the written consent of the Required Note Purchasers, 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 Required Note
Purchasers shall not be effective with respect to the servicing of Financed
Loans; provided, however, that the Required Note Purchasers shall respond as
promptly as may be practicable after receipt by the Required Note Purchasers of
a request of the Issuer for the Required Note Purchasers' consent to any
modification, amendment or supplement of, or any waiver with respect to, any
provision of any Servicing Agreement.
SECTION 6.05. ADMINISTRATION AND COLLECTION OF FINANCED LOANS. All
Financed Loans shall be administered and collected either by the Issuer 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 6.06. AMENDMENT OF FORM OF SALE AND PURCHASE AGREEMENT. The
Issuer shall notify the Trustee, the Required Note Purchasers 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 Required Note Purchasers
consent in writing thereto (which consent shall not be unreasonably withheld).
SECTION 6.07. 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 Issuer, if any, for
which the Trustee acts in a fiduciary capacity.
SECTION 6.08. PREPAYMENTS AND REFINANCING. The Issuer or its Affiliates
may in the future, upon 10 days' prior written notice to the Agents, enter into
any agreements pursuant to which the Issuer 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
46
therein (previously pledged hereunder), none of which agreements constitute or
will constitute an Adverse Claim on the Financed Loans continuing to be Pledged
Collateral, as long as at the time of any such pledge or sale, the conditions
set forth in the following sentence shall be satisfied. If and to the extent the
Issuer 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 Note
Purchasers, and in which the Trustee is granted a valid and perfected first
priority security interest for the benefit of the Secured Creditors subject to
no other lien, claim or encumbrance, an amount equal to, all Note Purchases 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 Note Purchases. Notwithstanding anything to the contrary contained herein,
without the prior written consent of the Required Note Purchasers, in no event
shall any such payment to the Note Purchasers occur (i) 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 (ii) on a day other than the first Business Day of a calendar
month.
SECTION 6.09. PERIODIC REPORTING.
(a) The Issuer will cause the Valuation Agent to deliver to each
Agent and the Trustee not later than each Valuation Date, a Valuation
Report setting forth the Aggregate Market Value, the Liabilities and the
Asset Coverage Ratio.
(b) The Issuer will cause to be provided to each Agent and the
Valuation Agent, (i) not later than each Calculation Date, a summary of
each servicer report in the form set forth in Exhibit I setting forth
the Portfolio Characteristics (as defined in the Valuation Agreement) of
the Financed Loans, all as of the last day of the immediately preceding
calendar month; and (ii) not later than 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 in the form set forth in Exhibit J.
SECTION 6.10. UCC MATTERS; PROTECTION AND PERFECTION OF PLEDGED
COLLATERAL; DELIVERY OF DOCUMENTS. The Issuer will keep its principal place of
business and chief executive office, and the office where it keeps the Records,
at the address of the Issuer referred to in Article V(j) or, upon 30 days' prior
written notice to the Trustee and the Agents, at such other locations within the
United States where all actions reasonably requested by any Agent to protect and
perfect the interest of the Issuer and the Secured Creditors in the Pledged
Collateral have been taken and completed. The Issuer 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
47
change or use, the Issuer delivers to each Agent such executed financing
statements as any Agent may request to reflect such name change or use, together
with such other documents and instruments as any Agent may request in connection
therewith. The Issuer 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 any Agent may reasonably request in order to perfect,
protect or more fully evidence the Trustee's interest in the Pledged Collateral
for the benefit of the Secured Creditors, or to enable the Trustee or the
Required Note Purchasers to exercise or enforce any of their respective rights
hereunder. Without limiting the generality of the foregoing, the Issuer will:
(a) execute and file such financing or continuation statements or, upon the
request of any Agent, amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate or as any such Agent
may request, and (b) mark its master data processing records evidencing such
Pledged Collateral with a legend acceptable to each Agent, evidencing that the
Trustee, for the benefit of the Secured Creditors, has acquired an interest
therein as provided in this Agreement. The Issuer hereby authorizes the Trustee,
or any Secured Creditor on behalf of the Issuer, 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 Issuer 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 Issuer or the Trustee fails to perform any of its
agreements or obligations under this Section 6.10, 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 Issuer 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 Issuer 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
Issuer's name and on behalf of the Issuer 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 Issuer's name on checks
and other instruments representing Collections and enforcing such Financed Loans
and other Pledged Collateral.
SECTION 6.11. OBLIGATIONS OF THE ISSUER WITH RESPECT TO PLEDGED
COLLATERAL. The Issuer 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 the Issuer
or any of its Affiliates thereunder. The Issuer will timely and fully comply in
all respects with each Transaction Document.
SECTION 6.12. COLLATERAL CALL. The Issuer shall maintain at all times
the Minimum Asset Coverage Requirement. If the Issuer is notified by the
Valuation Agent that the Asset Coverage Ratio is below the Minimum Asset
48
Coverage Requirement, the Issuer 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 Required Note Purchasers in
writing, of receipt of notice from the Valuation Agent, in the Collection
Account of the Trust Estate the amount specified by the Valuation Agent as
necessary to meet the Minimum Asset Coverage Requirement.
SECTION 6.13. GUARANTOR LIMITATIONS. The Issuer 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 each Agent in advance in writing.
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
(a) the Issuer 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 Issuer (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;
(c) the Issuer 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 6.12 hereof) and any
such failure shall remain unremedied for three Business Days after
written notice thereof shall have been received;
(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 Issuer
shall, for any reason, cease to have a valid and perfected first
priority ownership interest in each Financed Loan and Collections with
respect thereto;
(e) an Event of Bankruptcy shall have occurred with respect to
the Issuer;
(f) entry of a judgment or judgments in the aggregate in excess
of $100,000 against the Issuer which are not (i) stayed, bonded,
vacated, paid or discharged within 30 days after entry or (ii) fully
covered by insurance as to which the insurance carrier has acknowledged
coverage to the Issuer in writing within 30 days after entry;
(g) (i) any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental proceedings
not disclosed in writing by the Issuer to the Agents, DFC and TRFC prior
to the date of execution and delivery of this Agreement is pending
49
against Issuer or Affiliate hereof, (ii) any material development has
occurred in any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings so
disclosed, or (iii) any litigation, governmental proceeding, arbitration
proceeding or other event has occurred since the date of execution
hereof which, in the case of clause (i), (ii) or (iii) in the opinion of
the Required Note Purchasers, has a Material Adverse Effect;
(h) the Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to any
of the assets of the Issuer and such lien shall not have been released
within 60 days, or the Pension Benefit Guarantee Corporation shall, or
shall indicate its intention to, file notice of a lien pursuant to
Section 4068 of the Employee Retirement Income Security Act of 1974 with
regard to any of the assets of the Issuer or any of its Affiliates and
such lien shall not have been released within 60 days;
(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 Required Note
Purchasers 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;
(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;
(k) the Issuer shall fail to perform or observe the covenant set
forth in Section 6.12 hereof;
(l) the occurrence of an event or circumstance that has a
Material Adverse Effect;
(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 Agents is not permitted under their
Servicing Agreements shall exceed 10% of the aggregate outstanding
Principal Balance of all Financed Loans;
(n) at any time the sum of the aggregate outstanding Principal
Balance of Financed Loans that are rehabilitated Consolidation Loans
exceeds 3% of the aggregate outstanding Principal Balance of all
Financed Loans;
(o) after 180 days from any funding under a Liquidity Agreement,
one or more Liquidity Note Purchases remain unpaid to the Liquidity Note
Purchaser; or
(p) 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;
50
then, and in any such event, the Agents may, by notice to the Issuer 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 Issuer. Upon any such declaration or
automatic occurrence, the Trustee and the Majority Note Purchasers 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 Majority Note Purchasers pursuant to this Article VII
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 Majority Note Purchasers may deem commercially reasonable. Any sale or
transfer by the Trustee and/or the Majority Note Purchasers of Financed Loans
shall only be made to an Eligible Lender. The Issuer agrees that, to the extent
notice of sale shall be required by law, 10 Business Days' notice to the Issuer
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 VIII
TRUSTEE
SECTION 8.01. ACCEPTANCE OF TRUST. The Trustee hereby accepts the trusts
imposed upon it by this Agreement, and agrees to perform said trusts, but only
upon and subject to the following terms and conditions:
(a) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
51
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 person 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 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 8.02. TRUSTEE'S RIGHT TO RELIANCE. The Trustee shall be
protected in acting upon any notice, resolution, request, consent, order,
certificate, report, servicer's report appraisal, opinion or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee may consult with experts and with
counsel (who may be counsel for the Issuer 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 Issuer, an Agent or the Required Note
Purchasers; 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 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 Issuer, Agent or Note Purchaser 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.
52
SECTION 8.03. COMPENSATION OF TRUSTEE. The Issuer shall pay to the
Trustee from time to time pursuant to Section 2.05(c)(vi) reasonable
compensation for all services rendered by it hereunder, as set forth in the
letter agreement dated September 10, 1999 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 Issuer at least 90 days'
written notice prior to the beginning of a calendar year and without the written
consent of the Agents, which consent shall not be unreasonably withheld.
SECTION 8.04. RESIGNATION OF TRUSTEE. The Trustee and any successor to
the Trustee may resign and be discharged from the trust created by this
Agreement by giving to the Issuer and the Agents notice in writing which notice
shall specify the date on which such resignation is to take effect; provided,
however, that such resignation shall only take effect on the day specified in
such notice if a successor Trustee shall have been appointed pursuant to Section
8.06 hereof (and is qualified to be the Trustee under the requirements of
Section 8.06 hereof). If no successor Trustee has been appointed by the date
specified or within a period of 90 days from the receipt of the notice by the
Issuer and the Agents, whichever period is the longer, the Trustee may (a)
appoint a temporary successor Trustee having the qualifications provided in
Section 8.06 hereof or (b) request a court of competent jurisdiction to (i)
require the Issuer to appoint a successor, as provided in Section 8.06 hereof,
within three days of the receipt of citation or notice by the court, or (ii)
appoint a Trustee having the qualifications provided in Section 8.06 hereof. In
no event may the resignation of the Trustee be effective until a qualified
successor Trustee shall have been selected and appointed. In the event a
temporary successor Trustee is appointed pursuant to (a) above, the Issuer may
remove such temporary successor Trustee and appoint a successor thereto pursuant
to Section 8.06 hereof.
SECTION 8.05. REMOVAL OF TRUSTEE. The Trustee or any successor Trustee
may be removed (a) by the Issuer for cause or upon the sale or other disposition
of the Trustee or its trust functions, or (b) by the Issuer 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 Issuer and acceptance thereof by said
successor.
In the event a Trustee (or successor Trustee) is removed, by any person
or for any reason permitted hereunder, such removal shall not become effective
until the successor Trustee has accepted appointment as such.
SECTION 8.06. 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 Issuer by an instrument
in writing duly authorized by resolution. In the case of any such appointment by
the Issuer of a successor to the Trustee, the Issuer shall forthwith cause
notice thereof to the Agents.
53
Every successor Trustee appointed by the Issuer 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 8.07. MANNER OF VESTING TITLE IN TRUSTEE. Any successor Trustee
appointed hereunder shall execute, acknowledge, and deliver to its predecessor
Trustee, and also to the Issuer and the Agents, 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 Issuer, 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 Issuer 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 Issuer.
SECTION 8.08. SERVICING AGREEMENT. The Trustee acknowledges the receipt
of copies of the Servicing Agreements and Custodian Agreements attached as
Exhibit G hereto.
SECTION 8.09. TRUSTEE COVENANTS WITH RESPECT TO "ELIGIBLE LENDER"
STATUS. The Trustee covenants as follows:
(a) The Trustee represents and warrants that it satisfies the
requirements to be an "eligible lender" as that term is defined in the
Higher Education Act and covenants that it will remain an "eligible
lender" so long as the Trustee remains Trustee under this Agreement;
provided, however, that the Trustee shall have no responsibility or
liability hereunder if it fails to remain as an "eligible lender" as a
result of the actions or inactions of the Issuer 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 Issuer; 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 Issuer is solely responsible.
54
SECTION 8.10. 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 Issuer 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 Issuer, and the Issuer 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 Issuer or any Servicer.
ARTICLE IX
INDEMNIFICATION
Without limiting any other rights which the Note Purchasers, the Agents,
the Trustee or any of their respective Affiliates may have hereunder or under
applicable law, and notwithstanding any limitation on recourse to the Issuer set
forth in this Agreement or any of the other Transaction Documents or any
Liquidity Agreement, the Issuer hereby agrees to indemnify the Note Purchasers,
the Agents, 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, any 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 Issuer shall
indemnify the Note Purchasers, the Agents, 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 Issuer to
be an Eligible Loan which is not at the applicable time an Eligible
Loan;
(b) any representation or warranty made or deemed made by the
Issuer, a 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 Issuer or a 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;
55
(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 Issuer to perform its duties or
obligations in accordance with the provisions of this Agreement or any
other Transaction Document or any failure by the Issuer to perform its
respective duties in respect of the Financed Loans;
(h) any breach of contract by the Issuer 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 Note Purchasers of any amount
previously distributed in payment of Note Purchases or payment of Yield
or any other amount due hereunder, in each case which amount any such
Note Purchaser believes in good faith is required to be repaid;
(k) the commingling by the Issuer or any of its Affiliates of
Collections at any time with other funds;
(l) any investigation, litigation or proceeding expressly
related to this Agreement, any Liquidity Agreement or any other
Transaction Document or the use of proceeds of Note Purchases or the
Pledged Collateral or in respect of any Financed Loan;
(m) any failure by the Issuer 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 Issuer or any of its agents or
representatives to remit to the Trustee, Collections of Financed Loans
and other Pledged Collateral remitted to the Issuer or any such agent or
representative.
56
Any amounts subject to the indemnification provisions of this Article IX
shall be paid by the Issuer to the Note Purchasers, the Agents, 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 X
MISCELLANEOUS
SECTION 10.01. AMENDMENTS AND WAIVERS. No amendment or modification of
any provision of this Agreement shall be effective without the written agreement
of the Issuer, the Required Note Purchasers 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 Issuer shall be effective without the
written concurrence of the Required Note Purchasers. Any waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
SECTION 10.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including electronic mail or other form of electronic transmission and
communication by facsimile copy) and mailed, delivered by nationally recognized
overnight courier service, 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 (which may be an electronic mail address or other address
for electronic delivery) 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 electronic mail, other electronic transmission or facsimile copy, when
verbal communication of receipt is obtained, except that notices and
communications pursuant to Article II shall not be effective until received.
Section 10.03. No Waiver; Remedies. No failure on the part of the Trustee, the
Agents or the Note Purchasers to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 10.04. BINDING EFFECT; ASSIGNABILITY. This Agreement shall be
binding upon and inure to the benefit of the Issuer, the Note Purchasers, the
Agents, the Trustee and their respective successors and permitted assigns
(subject to this Section 10.04). This Agreement and the Note Purchasers' rights
and obligations hereunder and under the Notes and interest herein and in the
Notes shall be assignable in whole or in part (including by way of the sale of
participation interests therein or by assignment by an Agent of any of its
assigns of the whole or any part of the Commitment) by the Note Purchasers and
its successors and assigns; provided, however, that the Note Purchaser shall not
transfer or assign its interests in the Notes if immediately after such transfer
or assignment, the Notes would be owned by more than 100 persons as described in
Treasury Regulation 1.7704-1(h). The Issuer may not assign any of its rights and
obligations hereunder and under the Notes or any interest herein and in the
57
Notes without the prior written consent of the Agents. The Note Purchasers and
the Agent may not assign any of their rights and obligations hereunder and under
the Notes or any interest herein or in the Notes without the prior written
consent of the Issuer; provided, however, the Note Purchasers and the Agent may
assign their respective rights to any Affiliates, Liquidity Providers,
commercial paper conduits administered by an Agent or for whom an Agent acts as
referral agent and collateral agents without the consent of the Issuer. The
parties to each assignment or participation made pursuant to this Section 10.04
shall execute and deliver to the applicable Agent and the Administrative Agent
for their acceptance and recording in their respective books and records, an
assignment or a participation agreement or other transfer instrument reasonably
satisfactory in form and substance to the Issuer. 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 Note Purchasers shall notify the Issuer
of any assignment or participation thereof made pursuant to this Section 10.04.
Subject to Section 10.11, the Note Purchasers may not, in connection with any
assignment or participation or any proposed assignment or participation pursuant
to this Section 10.04, disclose to the assignee or participant or proposed
assignee or participant any information relating to the Issuer and the Pledged
Collateral furnished to the Note Purchasers by or on behalf of the Issuer,
without either (a) first obtaining the prior written consent of the Issuer,
which consent shall not be unreasonably withheld, or (b) delivering to the
Issuer a written agreement signed by the proposed assignee or participant, for
the Issuer's benefit and otherwise in form and substance reasonably acceptable
to the Issuer pursuant to which the proposed assignee or participant agrees to
maintain the confidentiality of the information concerning the Issuer and the
Financed Loans that may be provided to it by an Agent or any Note Purchaser.
SECTION 10.05. SURVIVAL. The rights and remedies with respect to any
breach of a representation and warranty made by the Issuer pursuant to Article V
and the indemnification and payment provisions of Articles VIII and IX and
Sections 2.16, 10.08, 10.09, 10.11 and 10.12 shall be continuing and shall
survive the termination of this Agreement.
SECTION 10.06. GOVERNING LAW; SEVERABILITY. This Agreement shall be
construed in all respects in accordance with, and governed by the internal laws
(as opposed to conflicts of law provisions) of the State of New York. Whenever
possible, each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Agreement.
SECTION 10.07. GOVERNING LAW; JURY WAIVER. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF
THE TRUSTEE, FOR THE BENEFIT OF THE SECURED CREDITORS, IN THE COLLATERAL, OR
REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREUNDER.
58
SECTION 10.08. COSTS, EXPENSES AND TAXES. In addition to the rights of
indemnification granted to the Note Purchasers, the Agents, the Trustee and
their respective Affiliates under Article IX hereof, and notwithstanding any
limitation on recourse set forth herein, the Issuer agrees to pay on demand all
reasonable costs and expenses of each Note Purchaser, each Agent 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
Agreements or any other Transaction Document, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Trustee and each
of the Note Purchasers and Agents with respect thereto and with respect to
advising the Trustee, the Agents and the Note Purchasers 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, the
Agents or the Note Purchasers in connection with the enforcement of this
Agreement, the Liquidity Agreements and the other Transaction Documents.
SECTION 10.09. RECOURSE AGAINST CERTAIN PARTIES. No recourse under or
with respect to any obligation, covenant or agreement (including, without
limitation, the payment of any fees or any other obligations) of the Note
Purchasers 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 Note Purchasers or any incorporator,
affiliate, stockholder, officer, employee or director of any Note Purchasers 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 Note Purchasers
contained in this Agreement and all of the other agreements, instruments and
documents entered into by each such Note Purchaser pursuant hereto or in
connection herewith are, in each case, solely the corporate obligations of such
Note Purchaser, and that no personal liability whatsoever shall attach to or be
incurred by any administrator of any Note Purchaser or any incorporator,
stockholder, affiliate, officer, employee or director of any Note Purchaser 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 Note Purchaser 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 Note Purchaser and each incorporator, stockholder,
affiliate, officer, employee or director of any such Note Purchaser or of any
such administrator, or any of them, for breaches by any Note Purchaser 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 10.09 shall survive the
termination of this Agreement.
SECTION 10.10. EXECUTION IN COUNTERPARTS; SEVERABILITY; INTEGRATION.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement. In case any provision in or obligation under this
59
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby. This Agreement contains the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings.
SECTION 10.11. CONFIDENTIALITY. The Trustee, each Agent and each of the
Note Purchasers each agree to keep confidential and not disclose any non-public
information or documents related to the Issuer or any Affiliate of the Issuer
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 Issuer or such Affiliate as
being confidential; provided, however, that each of the Trustee and each of the
Agents and Note Purchasers may disclose any such information (a) to the extent
required or deemed necessary and/or advisable by such Person's counsel in any
judicial, regulatory, arbitration or governmental proceeding or under any law,
regulation, order, subpoena or decree, (b) to its officers, directors,
employees, accountants, auditors and outside counsel, in each case, provided
they are informed of the confidentiality thereof and agree to maintain such
confidentiality, (c) to or by any liquidity or credit provider for DFC, PARCO or
TRFC, any potential liquidity or credit provider for DFC, PARCO or TRFC, or any
assignee or participant or potential assignee or participant of any liquidity or
credit provider for DFC, PARCO or TRFC, 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 Note
Purchaser, any Agent 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 Agent, any Note Purchaser, 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 any
Liquidity Agreement, (g) to any rating agency rating the commercial paper notes
of a Note Purchaser, and (h) to such other Persons as may be approved by the
Issuer. 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
Note Purchaser, the applicable Agent or any of their respective employees,
directors, officers, advisors, accountants, auditors, or legal counsel to
preserve the confidentiality thereof.
SECTION 10.12. NO PROCEEDINGS.
(a) Each of the Trustee and the Issuer agrees that it shall not
file, or join in the filing of, cooperate with any Person in the filing
of, or encourage any Person with respect to the filing of a petition
against such Conduit Note Purchaser under the federal bankruptcy laws,
or join in the commencement of any bankruptcy, reorganization,
arrangement, insolvency, liquidation or other similar proceeding against
such Conduit Note Purchaser.
60
(b) Each Note Purchaser and each Agent agrees that it shall not
at any time file, or join in the filing of, cooperate with any Person in
the filing of, or encourage any Person with respect to the filing of a
petition against the Issuer under the federal bankruptcy laws, or join
in the commencement of any bankruptcy, reorganization, arrangement,
insolvency, liquidation or other similar proceeding against the Issuer.
SECTION 10.13. SECTION TITLES. The section titles contained in this
Agreement shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties.
SECTION 10.14. 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.
ARTICLE XI
THE AGENTS
SECTION 11.01. AUTHORIZATION AND ACTION OF ADMINISTRATIVE AGENT. Each
Conduit Note Purchaser and Agent hereby accepts the appointment of and
authorizes the Administrative Agent to take such action as agent on behalf of
such Conduit Note Purchaser and Agent and to exercise such powers as are
delegated to such Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. Except for actions which the
Administrative Agent is expressly required to take pursuant to this Agreement,
the Administrative Agent shall not be required to take any action which exposes
the Administrative Agent to personal liability or which is contrary to
applicable law unless the Administrative Agent shall receive further assurances
to its satisfaction from the applicable Conduit Note Purchaser or Agent, of the
indemnification obligations under Section 11.04 against any and all liability
and expense which may be incurred in taking or continuing to take such action.
Each Agent agrees to give to each of its respective Note Purchasers prompt
notice of each notice and determination and a copy of each certificate and
report (if such notice, report, determination, or certificate is not given by
the applicable Person to the Note Purchasers) given to it by the Issuer, any
Seller, any Servicer, the Valuation Agent, or the Trustee, pursuant to the terms
of this Agreement.
SECTION 11.02. AUTHORIZATION AND ACTION OF AGENTS. Each Conduit Note
Purchaser hereby accepts the appointment of and authorizes its related Agent to
take such action as agent on its behalf and to exercise such powers as are
delegated to such Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. Each Agent reserves the right, in its sole
discretion, to take any actions and exercise any rights or remedies under this
Agreement and any related agreements and documents. Each Agent agrees to give to
each of its respective Note Purchasers prompt notice of each notice and
determination and a copy of each certificate and report (if such notice, report,
determination, or certificate is not given by the applicable Person to the Note
Purchasers) given to it by the Issuer, any Seller, any Servicer, the Valuation
Agent, or the Trustee, pursuant to the terms of this Agreement. Except for
actions which any Agent is expressly required to take pursuant to this
Agreement, as the case may be, such Agent shall not be required to take any
61
action which exposes such Agent to personal liability or which is contrary to
applicable law unless such Agent shall receive further assurances to its
satisfaction from its related Liquidity Provider(s) of the indemnification
obligations under Section 11.06 against any and all liability and expense which
may be incurred in taking or continuing to take such action.
SECTION 11.03. AGENCY TERMINATION. Subject to Sections 11.06 and 11.08,
the appointment and authority of the Administrative Agent and the Agents
hereunder shall terminate upon the payment to (a) each Note Purchaser of all
amounts owing to such Note Purchaser hereunder and under the Notes and (b) the
Agents and the Administrative Agent of all amounts due hereunder and under the
Notes.
SECTION 11.04. AGENTS' RELIANCE, ETC. Neither the Administrative Agent,
the Agents nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it as
Administrative Agent or as Agents under or in connection with this Agreement or
any related agreement or document, except for its or their own gross negligence
or willful misconduct. Without limiting the foregoing, the Administrative Agent
and each Agent: (a) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (b) makes no warranty or
representation to any Note Purchaser and shall not be responsible to any Note
Purchaser for any statements, warranties or representations made by the Issuer,
any Seller, any Servicer, any Guarantor, or the Valuation Agent in connection
with this Agreement or any other Transaction Document; (c) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement or any other Transaction
Document on the part of the Issuer, any Servicer, any Seller, any Guarantor or
the Valuation Agent or to inspect the property (including the books and records)
of the Issuer, any Servicer, any Seller, any Guarantor or the Valuation Agent;
(d) shall not be responsible to any Note Purchaser, as the case may be, for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; and (e) shall incur no liability under or in respect of this Agreement
by acting upon any notice (including notice by telephone), consent, certificate
or other instrument or writing (which may be by electronic mail or other
electronic transmission) believed by it in good faith to be genuine and signed
or sent by the proper party or parties.
SECTION 11.05. ADMINISTRATIVE AGENT, AGENTS, AND AFFILIATES. The
Administrative Agent and each Agent and its Affiliates may generally engage in
any kind of business with the Trustee, any Servicer, the Issuer, any Guarantor
or any Seller, any of their respective Affiliates and any Person who may do
business with or own securities of any Servicer, the Issuer, any Guarantor or
any Seller or any of their respective Affiliates, all as if JPMorgan Chase Bank
were not the Administrative Agent and without any duty to account therefor to
the Agents or the Note Purchasers and as if such parties were not Agents and
without any duty to account therefor to their respective related Note
Purchasers.
SECTION 11.06. [RESERVED].
62
SECTION 11.07. PURCHASE DECISION. Each Note Purchaser acknowledges that
it has, independently and without reliance upon its related Agent or the
Administrative Agent, and based on such documents and information as it has
deemed appropriate, made its own evaluation and decision to enter into this
Agreement and to purchase an interest in the Notes. Each Note Purchaser also
acknowledges that it will, independently and without reliance upon its related
Agent or the Administrative Agent or any of their respective Affiliates, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own decisions in taking or not taking action under
this Agreement or any related agreement, instrument or other document.
SECTION 11.08. SUCCESSOR AGENTS. The Administrative Agent or any Agent
may resign at any time by giving five days' written notice thereof to each Agent
(in the case of the Administrative Agent's resignation) or to the related
Conduit Note Purchaser and Liquidity Provider(s) (in the case of an Agent's
resignation), as applicable, the Issuer and the Trustee. Upon any such
resignation, the Agents or related Note Purchasers, as applicable, shall have
the right to appoint a successor Administrative Agent or Agent approved by the
Issuer (which approval will not be unreasonably withheld or delayed). If no
successor Administrative Agent or Agent shall have been so appointed and shall
have accepted such appointment, within sixty days after the retiring
Administrative Agent's or Agent's giving of notice of resignation, then the
retiring Administrative Agent or Agent may, on behalf of the Agents or the
related Note Purchasers, as applicable, appoint a successor Administrative Agent
or Agent. If such successor Administrative Agent or Agent is not an Affiliate of
the resigning Administrative Agent or Agent, such successor Administrative Agent
or Agent shall be subject to the Issuer's prior written approval (which approval
will not be unreasonably withheld or delayed). Upon the acceptance of any
appointment as Administrative Agent or Agent hereunder by a successor
Administrative Agent or Agent, such successor Administrative Agent or Agent
shall thereupon succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring Administrative Agent or Agent, and the
retiring Administrative Agent or Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent's or
Agent's resignation hereunder as Administrative Agent or Agent, the provisions
of this Article XI shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was an Administrative Agent or Agent under this
Agreement.
63
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 ISSUER:
NHELP-III, INC.
By /s/ Terry J. Heimes
--------------------------------------------
Terry J. Heimes, Vice President
c/o Nelnet, Inc.
121 South 13 Street, Suite 201
Lincoln, NE 68508
Attn: Terry J. Heimes
Telephone: (402) 458-2303
Facsimile: (402) 458-2399
THE NOTE PURCHASERS:
DELAWARE FUNDING COMPANY LLC
By: JPMorgan Chase Bank, as attorney-in-fact
for Delaware Funding Company LLC
By /s/ Bradley S. Schwartz
-----------------------------------------
Name Bradley S. Schwartz
---------------------------------------
Title Managing Director
--------------------------------------
JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, NY 10004
Attn: ITS Conduit Administration
Telephone: (212) 623-5370
Facsimile: (212) 623-5980
cpadmin@jpmchase.com
--------------------
with a copy to:
JPMorgan Services, Inc.
500 Stanton Christiana Road, 2CS
Newark, DE 19713
Attn: Lisa Haines
Telephone: (302) 634,5494
Facsimile: (302) 634-5490
64
PARK AVENUE RECEIVABLES COMPANY LLC
By /s/ Andrew L. Stidd
--------------------------------------------
Name Andrew L. Stidd
-------------------------------------------
Title President
------------------------------------------
JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, NY 10004
Attn: ITS Conduit Administration
Telephone: (212) 623-5370
Facsimile: (212) 623-5980
cpadmin@jpmchase.com
--------------------
with a copy to:
JPMorgan Services, Inc.
500 Stanton Christiana Road, 2CS
Newark, DE 19713
Attn: Lisa Haines
Telephone: (302) 634,5494
Facsimile: (302) 634-5490
THREE RIVERS FUNDING CORPORATION
By /s/ Bernard J. Angelo
-------------------------------------------
Name Bernard J. Angelo
-------------------------------------------
Title Vice President
------------------------------------------
c/o Global Securitization Services, LLC
25 West 43rd Street, Suite 704
New York, NY 10036
Attn: Mr. Bernard J. Angelo
Fax: (212) 302-8767
with a copy to the TRFC Agent.
THE AGENTS:
JPMORGAN CHASE BANK, as DFC Agent and
Administrative Agent
By /s/ David Calabria
------------------------------------------
Name David Calabria
-------------------------------------------
Title Authorized Agent
------------------------------------------
65
JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, NY 10004
Attn: ITS Conduit Administration
Telephone: (212) 623-5370
Facsimile: (212) 623-5980
cpadmin@jpmorgan.com
--------------------
with a copy to:
JPMorgan Services, Inc.
500 Stanton Christiana Road, 2CS
Newark, DE 19713
Attention: Lisa Haines
Telephone: (302) 634,5494
Facsimile: (302) 634-5490
JPMORGAN CHASE BANK, as PARCO Agent and
Administrative Agent
By /s/ David Calabria
------------------------------------------
Name David Calabria
-------------------------------------------
Title Authorized Agent
------------------------------------------
JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, NY 10004
Attn: ITS Conduit Administration
Telephone: (212) 623-5370
Facsimile: (212) 623-5980
cpadmin@jpmorgan.com
--------------------
with a copy to:
JPMorgan Services, Inc.
500 Stanton Christiana Road, 2CS
Newark, DE 19713
Attention: Lisa Haines
Telephone: (302) 634,5494
Facsimile: (302) 634-5490
66
MELLON BANK, N.A., as TRFC Agent
By /s/ Mark R. Mershon
--------------------------------------------
Name Mark R. Mershon
------------------------------------------
Title First Vice President
-----------------------------------------
One Mellon Bank Center
Room 0410
Pittsburgh, PA 15258-0001
Attn: Ms. Jacquelyn Lobl
Facsimile: (412) 234-5434
THE TRUSTEE:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By /s/ Susan E. Jacobsen
-------------------------------------------
Susan E. Jacobsen, Vice President
Wells Fargo Bank, National Association
6th & Marquette Avenue
Minneapolis, MN 55479-0069
Attn: Corporate Trust Services
Telephone: (612) 667-4802
Facsimile: (612) 667-2149
67
EXHIBIT A
FORM OF SALE AND PURCHASE AGREEMENT
EXHIBIT B
FORM OF VALUATION AGENT AGREEMENT
EXHIBIT C
DRAW NOTICE
NHELP-III, Inc. Warehousing Facility
Date: [2 Business Days prior to date Note Purchase is to be made]
In accordance with Section 2.02 of the Amended and Restated Warehouse
Note Purchase and Security Agreement dated as of March 1, 2004 (the
"Agreement"), by and among NHELP-III, Inc. (the "Issuer"), Wells Fargo Bank,
National Association (the "Trustee"), Delaware Funding Company LLC, Park Avenue
Receivables Company LLC, Three Rivers Funding Corporation, JPMorgan Chase Bank,
as DFC Agent, PARCO Agent and Administrative Agent, and Mellon Bank, as TRFC
Agent, the Issuer hereby requests a Note Purchase in the amount and as of the
date provided below.
Date of Issuance ------------
Additional Issuance/Rollover Amount:
Total Required Additional Issuance/Rollover Amount as ------------
required pursuant to Exhibit D of the Agreement
New Issuance for the Funding of Student Loans:
Aggregate Amount of Student Loans to be Financed
Principal ------------
Maximum Note Purchase Percentage ------------%
Requested Note Purchase Percentage, not to exceed the
Maximum Note Purchase Percentage provided above
Amount of Issuance required for principal funding (Student ------------%
Loan Principal multiplied by Requested Note Purchase %)
Amount of Issuance required for interest funding ------------
Total Amount of New Issuance
============
Total Issuance to be Purchased
(Sum of Additional Issuance/Rollover Amount and Amount of
New Issuance, provided above)
============
If a Liquidity Note Purchase, the requested Applicable
(Liquidity Not Applicable) Interest Rate
Test of Facility Amount:
Total available Facility Amount 450,000,000
Less the sum of:
Total outstanding Note Purchases ------------
Total projected Yield due on all outstanding Note Purchases ------------
Total outstanding Note Purchases & 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
above-requested Note Issuance to be purchased in the amount noted above to the
Collection Account held by the Trustee on [DATE OF ISSUANCE]. Pursuant to
Article IV of the Agreement, I hereby certify that NHELP-III, Inc. has met the
Conditions precedent to a Note Issuance 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-III, INC.
By
-------------------------------------------
Terry J. Heimes, Vice President
C-2
EXHIBIT D
MONTHLY REPORT
NHELP-III, Inc. Warehousing Facility
Calculation Date: [3rd Business Day preceding the end of each month]
Calculation Period: [Calendar month immediately preceding
the 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 Total
Collections Collections
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 Issuance ----------
Total Collections and Additional Issuance ----------
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 Note Purchases which are due
as the Settlement Date ---------
Issuer designated Principal Reductions or Additions --------- ----------
Total Net Rollover Amount of Note Purchases
========= ==========
5. Accrued and unpaid Commitment Fees, including the
Commitment Fee, 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. On the Settlement Date immediately following each
Valuation Date, amounts Calculated pursuant to the
provisions of Exhibit E, and as further directed by the
Issuer ----------
Total Required Payments pursuant to Section 2.05(c)
of the Agreement
==========
As an authorized representative of NHELP-III, 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 Amended and Restated Warehouse Note Purchase and
Security Agreement dated as of March 1, 2004 (the "Agreement"), by and among
NHELP-III, Inc., Delaware Funding Company LLC, Park Avenue Receivables Company
LLC, Three Rivers Funding Corporation, JPMorgan Chase Bank, Mellon Bank and
Wells Fargo Bank, National Association, as trustee.
Capitalized terms not defined herein shall have the meanings assigned to
them in the Agreement.
Date
---------------------------------
NHELP-III, INC.
By
--------------------------------------
Terry J. Heimes, Vice President
D-2
EXHIBIT E-1
FORM OF ASSET COVERAGE RATIO CERTIFICATE
NHELP-III, Inc. Warehousing Facility
Aggregate Market Value:*
1. Outstanding principal balance of Financed Loans, multiplied by the
Loan Valuation Percentage
2. Accrued and unpaid borrower interest, federal interest subsidies and
special allowance payments
3. Outstanding principal balance of Permitted Investments, including
accrued and unpaid interest thereon
4. Payments on Financed Loans or other assets received by the Servicer
or the Issuer and not yet transferred to the Trustee
5. The unamortized value of any prepaid expenses
Total Aggregate Market Value
Liabilities:*
1. Facility Amount Note Purchases
2. Accrued and unpaid Yield and Commitment Fees
3. Any other accrued and unpaid fees:
(a) Custodian Fees
(b) Commitment Fees
(c) Servicing Fees
(d) Trustee Fees
(e) Portfolio Administration Fees
(f) Other
Total Fees
- --------------------------------
* Certain summary reports have been attached providing detailed calculations for
the amounts provided above, or are available upon request.
Total Liabilities
Asset Coverage Ratio (Total Aggregate Market Value/Total Liabilities) %
As an authorized representative of NHELP-III, 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 Amended and Restated Warehouse Note
Purchase and Security Agreement dated as of March 1, 2004 (the "Agreement"), by
and among NHELP-III, Inc., Delaware Funding Company LLC, Park Avenue Receivables
Company LLC, Three Rivers Funding Corporation, JPMorgan Chase Bank, Mellon Bank
and Wells Fargo Bank, National Association, as trustee.
All capitalized terms not defined herein shall have the meanings
assigned to them in the Agreement.
Date
---------------------------
NHELP-III, INC.
By
--------------------------------------------
Terry J. Heimes, Vice President
E-1-2
EXHIBIT E-2
FORM OF CASH RELEASE CERTIFICATE
NHELP-III, Inc. Warehousing Facility
Calculation Date (Quarterly): [3rd 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
Wells Fargo Bank,
National Association
6th & Marquette
Minneapolis, MN
Pursuant to Section 2.05(c)(ix) of the Amended and Restated Warehouse
Note Purchase and Security Agreement dated as of March 1, 2004 (the
"Agreement"), by and among NHELP-III, Inc. (the "Issuer"), Delaware Funding
Company LLC, Park Avenue Receivables Company LLC, Three Rivers Funding
Corporation, JPMorgan Chase Bank, Mellon Bank and Wells Fargo Bank, National
Association, as trustee, you are hereby instructed to release funds in the
amount of $____________ (the "Cash Release Amount" ) to be transferred to the
Issuer or any other Person as directed by the Issuer (by wire transfer as
directed by the Issuer) 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-III, 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 -----%
Date
--------------------------------
NHELP-III, INC.
By
------------------------------------
Terry J. Heimes, Vice President
E-2-2
EXHIBIT F
TRUSTEE'S FEE LETTER AGREEMENT
EXHIBIT G
COPIES OF SERVICING AND CUSTODIAN AGREEMENTS
EXHIBIT H
FORM OF NOTE
$___________ September __, 2003
NHELP-III, Inc., a Nevada corporation (the "Issuer"), promises to pay to
the order of [Name of Agent], for the benefit of [Name of Conduit Note
Purchaser] and [Liquidity Note Purchaser] (the "Agent") the lesser of the
principal sum of ____________________ Dollars ($___________) or the aggregate
unpaid principal amount of all Note Purchases made by the Agent, on behalf of
the applicable Note Purchasers, pursuant to the Warehouse Security Agreement (as
hereinafter defined), in immediately available funds at its office at
____________________ in _______________, together with Yield on the unpaid
principal amount hereof at the rates and on the dates set forth in the Warehouse
Security Agreement. The Issuer shall pay the principal of and accrued and unpaid
Yield on this Note in the amounts and at the times required under the terms of
the Warehouse Security Agreement.
The Agent shall, and is hereby authorized to, record in accordance with
its usual practice, the date and amount of each Note Purchase and the date and
amount of each principal payment hereunder on the schedule annexed hereto and
any such recordation shall constitute prima facia evidence of the accuracy of
the amount so recorded; provided, that the failure of the Agent to make such
recordation (or any error in such recordation) shall not affect the obligations
of the Issuer hereunder or under the Warehouse Security Agreement.
This Note is issued pursuant to, and is entitled to the benefits of, the
Amended and Restated Warehouse Note Purchase and Security Agreement dated as of
March 1, 2004 (which, as it may be amended or modified and in effect from time
to time, is herein called the "Warehouse Security Agreement"), among the Issuer,
Wells Fargo Bank, National Association, as trustee, Delaware Funding Company
LLC, Park Avenue Receivables Company LLC, Three Rivers Funding Corporation,
JPMorgan Chase Bank and Mellon Bank, to which Warehouse Security Agreement
reference is hereby made for a statement of the terms and conditions governing
this Note, including the terms and conditions under which this Note may be
prepaid or its maturity date accelerated. This Note is secured by the Pledged
Collateral as more particularly described in the Warehouse Security Agreement.
Capitalized terms used herein and not otherwise defined herein are used with the
meanings attributed to them in the Warehouse Security Agreement.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN
OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF ACKNOWLEDGES THAT THESE
SECURITIES ARE "RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE ISSUER AND
ITS AFFILIATES THAT THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERMITTED ASSIGNEE WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A OR (B) TO A PERMITTED ASSIGNEE PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), OR (C) TO A PERMITTED ASSIGNEE PURSUANT TO ANY OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SECTION 5 OF THE
SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION.
NHELP-III, INC.
By
------------------------------------
Name
----------------------------------
Title
---------------------------------
H-2
ANNEX
Schedule of Note Issuances and Principal Repayments
Date of Issuance or Repayment Amount
$-----------------
$-----------------
$-----------------
$-----------------
$-----------------
$-----------------
$-----------------
EXHIBIT I
FORM OF SUMMARY OF SERVICER REPORT
NHELP-III, Inc.
Amended and Restated Warehouse Note Purchase and Security Agreement
Dated as of as of ____________
Stafford PLUS/SLS Consolidations Total
------------------ ----------------- ------------------ ------------------
# of # of # of # of
Principal Accounts Principal Accounts Principal Accounts Principal Accounts
Status:
School
Grace
Deferred
Repayment
Claim
-------- --------- ------- ---------- ------- ---------- -------- ---------
Total
======== ========= ======= ========== ======= ========== ======== =========
Delinquency:
Delinquent
Principal >30 days
(Repayment Status Loans)
School Type:*
Four Year
Two Year
Proprietary
Consolidations
-------- --------- ------- ---------- ------- ---------- -------- ---------
Total
======== ========= ======= ========== ======= ========== ======== =========
Guarantor:*
- -------------------
*This information is provided based upon availability from the servicer.
EXHIBIT J
FORM OF ACCOUNT BALANCE REPORT
NHELP-III, Inc.
Amended and Restated Warehouse Note Purchase and Security Agreement
Dated as of ____________
Collection Account:
Government &
Special
Servicer Servicer Allowance Total
Principal Interest Interest Miscellaneous Receipts/
Receipts Receipts Payment Receipts Payments
-------- -------- ------- -------- --------
Receipts
Amounts held in Collection
Account from previous
Settlement Date
Interest Received on Investments
------------ ----------- ----------- ------------ ------------
Total Collection Account
============ =========== =========== ============ ============
Receipts
Cash Reserve Account:
Cash Reserve Account Balance
Interest Received on Investments
Cash Reserve Account Balance
EXHIBIT K
ADDITIONAL CLOSING ITEMS
1. Opinions of Counsel to Issuer and each Seller.
2. Opinion of Counsel to Trustee.
3. Evidence of establishment of Collection Account and Cash Reserve
Account.
4. UCC-1 Financing Statements (naming each seller as debtor and Issuer
as secured party, and naming Issuer as debtor and Trustee as secured party).
5. Officers' Certificate of Issuer and each Seller (including, in the
case of the Issuer, articles of incorporation, by-laws, board resolutions and
incumbency).
6. Delivery to each Agent a Note in the name of such Agent setting forth
(i) the maximum principal amount equal to such Agent's Commitment Amount and
(ii) the actual amount of the Note Purchase of such Agent on the Closing Date.
7. Schedule of all Financed Loans as of the Closing Date.
8. All fees due and payable to the Agents on the Closing Date.
9. Such other information, certificates, documents and actions as either
Agent may reasonably request.
EXHIBIT L
FORM OF PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT is made and entered into as of the ___ day
of __________, 20__, by and between [NAME OF LENDER], a ____________________
(the "Lender"), in its individual capacity and as trustee, and NHELP-III, a
Nevada corporation (the "Participant").
WHEREAS, the Lender is or will be the owner and holder of FFELP Loans
(as defined herein), or beneficial interests therein, originated by or on behalf
of Lender or acquired by the Lender; and
WHEREAS, the Lender desires to sell, and the Participant desires to
purchase, an undivided 100% participation interest in certain FFELP Loans on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Participation Agreement, the terms set forth above and
in this Article shall have the meanings ascribed thereto (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
Terms not defined herein shall have the meanings ascribed to such terms in the
Warehouse Note Purchase and Security Agreement.
"Administrative Agent" means JPMorgan Chase Bank, as the Administrative
Agent under the Warehouse Note Purchase and Security Agreement, and any
successor or assign in such capacity.
"Agreement" means this Participation Agreement and any amendment or
supplement hereto.
"Borrower" means the student or parent obligor under an Eligible Loan.
"Commitment Amount" means the aggregate outstanding principal balance of
FFELP Loans up to an amount determined by Participant, participation interests
in which are committed to be sold by Lender and purchased by the Participant
pursuant to this Agreement.
"Commitment Period" means the period of time commencing on the date
first set forth above and terminating 364 days thereafter, and renewing
thereafter for successive 364-day periods, unless either party gives written
notice of intent to terminate to the other party and to the Administrative Agent
and the Trustee at least 30 days prior to the termination of the initial
Commitment Period or any renewal/extension Commitment Period. The Commitment
Period shall terminate immediately upon a default by the Lender of any of its
obligations hereunder.
"Eligible Lender Trustee" means _____________________________, acting in
its capacity as eligible lender trustee for the Lender, and not in its
individual capacity.
"Eligible Loan" means a FFELP Loan in which a participation interest is
to be acquired by the Participant which (a) is either Insured or Guaranteed; (b)
if such FFELP Loan is a subsidized Stafford loan, qualifies the holder thereof
to receive Interest Subsidy Payments and Special Allowance Payments; if such
FFELP Loan is a consolidation loan authorized under Section 428C of the Higher
Education Act, qualifies the holder thereof to receive Interest Subsidy Payments
and Special Allowance Payments to the extent applicable; and if such FFELP Loan
is a PLUS loan authorized under Section 428B of the Higher Education Act, a SLS
loan authorized under Section 428A of the Higher Education Act, or an
unsubsidized Stafford loan authorized under Section 428H of the Higher Education
Act, such FFELP Loan qualifies the holder thereof to receive Special Allowance
Payments; (c) complies with each representation and warranty with respect
thereto contained herein (including Section 3.01 hereof); and (d) meets the
other applicable criteria set forth in the Loan Purchase Regulations and is an
"Eligible Loan" as defined under the terms of the Warehouse Note Purchase and
Security Agreement.
"Federal Contracts" means all agreements between a Guarantee Agency and
the Secretary of Education providing for the payment by the Secretary of
Education of amounts authorized to be paid pursuant to the Higher Education Act,
including, but not limited to, reimbursement of amounts paid or payable upon
defaulted Eligible Loans and other student loans guaranteed by any Guarantee
Agency and Interest Subsidy Payments and Special Allowance Payments, if
applicable, to holders of qualifying student loans guaranteed by any Guarantee
Agency.
"FFELP Loans" means loans, inclusive of the promissory notes evidencing
such loans and the related documentation in connection with each thereof, which
were originated pursuant to the Federal Family Education Loan Program and the
Higher Education Act.
"Guarantee" or "Guaranteed" means, with respect to a FFELP Loan, the
guarantee by the Guarantee Agency, in accordance with the terms and conditions
of the Guarantee Agreement, of the principal of and accrued interest on the
FFELP Loan to the maximum extent permitted under the Higher Education Act on
FFELP Loans which have been originated, held and serviced in full compliance
with the Higher Education Act, and the coverage of the FFELP Loan by the Federal
Contracts providing, among other things, for reimbursement to the Guarantee
Agency for losses incurred by it on defaulted Eligible Loans guaranteed by it to
the extent of the maximum reimbursement allowed by the Federal Contracts.
"Guarantee Agency" means a state agency or a private nonprofit
institution or organization which administers a Guarantee Program within a State
or any successors and assignees thereof administering the Guarantee Program
which has entered into a Guarantee Agreement with the Lender or the Eligible
Lender Trustee on behalf of the Lender.
"Guarantee Agreement" means the Federal Contracts, an agreement between
a Guarantee Agency and either the Lender or the Eligible Lender Trustee on
behalf of the Lender providing for the Guarantee by such Guarantee Agency of the
principal of and accrued interest on Eligible Loans, made or acquired by the
Lender or the Eligible Lender Trustee on behalf of the Lender from time to time,
and any other similar guarantee or agreement issued by a Guarantee Agency to the
Lender or the Eligible Lender Trustee on behalf of the Lender pertaining to
Eligible Loans.
L-2
"Guaranteed Loans" means FFELP Loans that are Guaranteed.
"Guarantee Program" means a Guarantee Agency's student loan guaranty
program pursuant to which such Guarantee Agency guarantees or insures student
loans.
"Higher Education Act" means Title IV, Parts B, F and G, of the Higher
Education Act of 1965, as amended or supplemented and in effect from time to
time, or any successor enactment thereto, and all regulations promulgated
thereunder and any directives issued by the Secretary of Education.
"Interest Subsidy Payments" means interest subsidy payments authorized
to be made by the Secretary of Education pursuant to Section 428 of the Higher
Education Act or similar payments authorized by federal law or regulation.
"Lender" means [Name of Lender], a ____________________, an "eligible
lender" under criteria established by the Higher Education Act that has received
an eligible lender designation by the Secretary of Education, which is selling
participation interests in FFELP Loans to the Participant hereunder or, if the
Lender is not designated as an eligible lender under the Higher Education Act,
the Lender holds beneficial ownership of Eligible Loans through the Eligible
Lender Trustee, which is an eligible lender under the Higher Education Act.
"Lender's Retained Interest" means that portion of the income earned
with respect to Eligible Loans covered by the Participation Certificate which is
equal to zero basis points (0.0%), on an annualized basis, of the average
quarterly aggregate principal balance of Eligible Loans covered by the
Participation Certificate; provided, however, that if changes in the Higher
Education Act subsequently reduce the interest rates, Special Allowance Payments
or Interest Subsidy Payments, then the Lender's Retained Interest shall be
reduced on a pro tanto basis.
"Loan Purchase Agreement" means the Loan Purchase Agreement including
all exhibits and schedules attached thereto, substantially in the form of
Schedule A hereto.
"Loan Purchase Regulations" means the rules and regulations of the
Participant, as may be adopted by the Participant from time to time, which
pertain to acquisition of participation interests hereunder, which shall
incorporate all requirements specified in any indentures or other financing
arrangements to which the Participant is subject.
"Master Note" means a Master Promissory Note in the form mandated by
Section 432(m)(1)(D) of the Higher Education Act, as added by Pub. L. 105-244,
ss. 427,112 Stat. 1702 (1998), as amended by Public Law No: 106-554 (enacted
December 21, 2000) and as codified at 20 U.S.C. ss. 1082 (m)(1).
"MPN Loan" means a FFELP Loan evidenced by a Master Note.
"Participant" means NHELP-III, Inc., a Nevada corporation, and its
successors and assigns.
L-3
"Participation Certificate" means the master participation certificate
in the form attached hereto as Schedule B.
"Purchase Price" means ____% of the outstanding principal balance plus
100% of the accrued and unpaid interest thereon with respect to Eligible Loans
covered by the Participation Certificate, each as of the date of purchase.
"Secretary of Education" means the Commissioner of Education and the
Secretary of the United States Department of Education (who succeeded to the
functions of the Commissioner of Education pursuant to the Department of
Education Organization Act), or any officer, board, body, commission or agency
succeeding to the functions thereof under the Higher Education Act.
"Servicer" means, individually or collectively, (a) National Education
Loan Network, Inc., and (b) any other organization with which the Borrower has
entered into a Servicing Agreement with respect to Eligible Loans, with the
prior written approval of the Administrative Agent.
"Servicing Agreement" means the agreement in which a Servicer is engaged
by the Participant to administer and service Eligible Loans covered in the
Participation Certificate.
"Special Allowance Payments" means special allowance payments authorized
to be made by the Secretary of Education pursuant to Section 438 of the Higher
Education Act or similar allowances authorized from time to time by federal law
or regulation.
"Subservicer" means (a) Nelnet, Inc., (b) Sallie Mae Servicing L.P., (c)
ACS Education Services, Inc., (d) Great Lakes Educational Loan Services, Inc.
and (e) any other "Servicer" as defined in the Warehouse Note Purchase and
Security Agreement.
"Subservicing Agreement" shall have the meaning assigned to "Servicing
Agreement" in the Warehouse Note Purchase and Security Agreement.
"Trustee" means Wells Fargo Bank, National Association, acting in its
capacity as trustee under the Warehouse Note Purchase and Security Agreement,
and not in its individual capacity.
"Warehouse Note Purchase and Security Agreement" means the Amended and
Restated Warehouse Note Purchase and Security Agreement, dated as of March 1,
2004, among the Participant, as issuer, the Trustee, as trustee, Delaware
Funding Company LLC, Park Avenue Receivables Company LLC, Three Rivers Funding
Corporation, JPMorgan Chase Bank and Mellon Bank, N.A., and any amendments or
supplements thereto made in accordance with its terms.
ARTICLE II
PURCHASE OF PARTICIPATION INTEREST
SECTION 2.01. PURCHASE OF PARTICIPATION INTEREST. Subject to the terms
and conditions and in reliance upon the representations, warranties and
agreements set forth herein, during the Commitment Period, the Lender agrees to
sell to the Participant, and the Participant agrees to purchase from the Lender,
L-4
in an aggregate amount up to a maximum of the Commitment Amount, an undivided
participation interest in 100% of the outstanding principal balance and accrued
interest thereon of Eligible Loans and a portion of the income generated by the
Eligible Loans as provided herein. The Participant shall pay to the Lender or
its designee the Purchase Price for the participation interest in each Eligible
Loan purchased hereunder, by wire transfer of immediately available funds, on
such dates as the parties may mutually agree upon. The participation interest
acquired by the Participant shall include the promissory note and related
documents in connection with each participated Eligible Loan. The participation
interest purchased by the Participant shall represent a participation interest
in each and every Eligible Loan specifically identified in the Participation
Certificate with respect thereto, and the parties agree that the Participant is
not purchasing an interest in an undivided pool of Eligible Loans. It is the
intention of the Lender that the transfer from the Lender to the Participant
constitutes a true, absolute sale of the participation interest in Eligible
Loans hereunder and that the ownership of such participation interests shall not
become or be deemed to be property of the Lender for any purposes under
applicable law. Except as expressly set forth in this Agreement, the sale of
participation interests in Eligible Loans shall be without recourse to the
Lender in connection with Borrowers' default on such Eligible Loans. If a
Borrower defaults on an Eligible Loan, and the proceeds from the liquidation of
the Eligible Loan are insufficient to pay the interest accrued on the Eligible
Loan, interest shall be distributed on a pro rata basis between the Participant
and the Lender based on the proportion of the basis points comprising the
Lender's Retained Interest and the total basis points comprising the interest
rate on the Eligible Loan.
The Lender hereby authorizes the Participant to file a UCC-1 financing
statement identifying the Lender as debtor/seller and the Participant as secured
party/buyer and describing the participation interest in the Eligible Loans sold
pursuant to this Agreement. The preparation or filing of such UCC-1 financing
statement is solely for additional protection of the Participant's participation
interest in the Eligible Loans and shall not be deemed to contradict the express
intent of the Lender and the Participant that the transfer of participation
interest in the Eligible Loans under this Agreement is an absolute assignment of
such participation interest in the Eligible Loans and is not a transfer of such
participation interest in the Eligible Loans as security for a debt.
SECTION 2.02. PARTICIPATION CERTIFICATE. On the date of the initial sale
of a participation interest with respect to a portfolio of Eligible Loans
hereunder, or thereafter as mutually agreed upon by the parties hereto, the
Lender shall execute and deliver to the Participant the Participation
Certificate evidencing a 100% participation and beneficial ownership interest in
Eligible Loans in that portfolio as identified in Schedule A attached to the
Participation Certificate. The Lender shall attach or cause to be attached to
the executed original Participation Certificate a schedule of the participated
Eligible Loans, legal title to which shall be retained by the Lender (if an
eligible lender under the Higher Education Act) or by the Eligible Lender
Trustee. As the Lender sells additional participation interests in Eligible
Loans to the Participant hereunder, no more frequently than on a monthly basis,
the Lender shall issue (or cause to be issued) supplemental schedules to the
Participant to be substituted and attached to the Participation Certificate. The
participation interest shall be deemed to have been transferred to the
Participant upon payment of the Purchase Price therefor, irrespective of whether
such supplemental schedules are issued by the Lender. The Lender shall also
perform any reasonable or necessary acts to perfect the Participant's ownership
L-5
of the participation interest in Eligible Loans including, without limitation,
providing notice to the Borrowers of the transfer of the participation interest
if the Participant determines such acts are necessary to perfect such sale.
SECTION 2.03. DISTRIBUTION OF PAYMENTS RECEIVED. Upon issuance of the
Participation Certificate with respect to a particular portfolio of Eligible
Loans, the Participant shall be entitled to 100% of payments and income earned
with respect to the Eligible Loans covered by the Participation Certificate,
less the Lender's Retained Interest which shall be deducted therefrom and paid
to the Lender on a quarterly basis. The Lender shall pay for all origination
fees payable to the Secretary of Education pursuant to the Higher Education Act
and any other costs incidental to or associated with origination and Guarantee
with respect to each of the Eligible Loans covered by the Participation
Certificate. The Lender agrees to account and deliver to the Participant, or
cause to be delivered to the Participant, all sums of principal, interest,
Special Allowance Payments, Interest Subsidy Payments or other income received
by the Lender on account of the Participant's participation interest in the
Eligible Loans covered by the Participation Certificate during the term of this
Agreement, less the Lender's Retained Interest.
SECTION 2.04. SERVICING AND CONTROL OF ELIGIBLE LOANS. Subject to
Section 5.11 hereof, the Lender agrees that the Participant shall have the
irrevocable right to service the Eligible Loans covered by the Participation
Certificate under a Servicing Agreement or a Subservicing Agreement. The
Participant shall cause a Servicer or a Subservicer to service and collect each
of the Eligible Loans covered by the Participation Certificate under a Servicing
Agreement or a Subservicing Agreement, in accordance with the terms of the
Higher Education Act, and any rules and any regulations adopted by the
applicable Guarantee Agency or the Secretary of Education. Each Servicer and
Subservicer shall act at the direction of the Participant. The Lender shall
promptly deliver the promissory notes and other documents evidencing or relating
to the Eligible Loans covered in the Participation Certificate to the
appropriate Servicer, Subservicer or its agent. The promissory notes and other
documents evidencing or relating to the Eligible Loans covered in the
Participation Certificate shall be retained by each Servicer, Subservicer or its
agent for safekeeping as custodian in connection with a Servicing Agreement or a
Subservicing Agreement for the benefit of the Lender and the Participant. Each
Servicer or Subservicer shall segregate the Eligible Loans in a separate account
for servicing purposes for the benefit of the Lender and the Participant. During
the term of this Agreement, the Lender shall not (and shall cause the Eligible
Lender Trustee to not) pledge, encumber, sell, transfer or otherwise dispose of
any interest in any Eligible Loan covered by a Participation Certificate.
SECTION 2.05. CONDITIONS OF PURCHASE. The Participant's obligation to
purchase and pay for participation interests in Eligible Loans hereunder shall
be subject to each of the following conditions precedent:
(a) all representations, warranties and statements made by the
Lender contained in this Agreement shall be true on the applicable date
of purchase;
(b) the Participant shall receive an opinion of the Lender's
counsel dated as of the date of the first sale of Participation
Certificates hereunder (covering such first sale and any other sale of
Participation Certificates), in form and substance satisfactory to the
L-6
Participant to the effect that (i) this Agreement has been duly
authorized, executed and delivered by the Lender and constitutes the
legal, valid, binding and enforceable obligation of the Lender; (ii) the
Participation Certificate has been duly authorized, executed and
delivered by the Lender; (iii) with respect to participation interests
in all FFELP Loans in which participation interests are being acquired,
the applicable Guarantee Agreement has been duly authorized, executed
and delivered by the Lender; (iv) assuming the due execution and
delivery thereof, each FFELP Loan in which a participation interest is
acquired hereunder constitutes the legal, valid and binding obligation
of the Borrower (and of each endorser, if any) thereof, enforceable in
accordance with its terms; (v) to the knowledge of the Lender's counsel,
the execution and delivery of this Agreement, the consummation of the
transactions therein contemplated and compliance with the terms,
conditions and provisions of this Agreement do not and will not conflict
with or result in a breach of any of the terms, conditions or provisions
of the charter, articles or bylaws of the Lender or any agreement or
instrument to which the Lender is a party or by which it is bound or
constitute a default thereunder; (vi) to the knowledge of the Lender's
counsel, the Lender is not a party to or bound by any agreement or
instrument or subject to any charter or other corporate restriction or
judgment, order, writ, injunction, decree, law, rule or regulation which
may materially or adversely affect the ability of the Lender to perform
its obligations under this Agreement; (vii) no consent, approval or
authorization of any government or governmental body, including, without
limitation, the Federal Savings and Loan Insurance Corporation, Federal
Deposit Insurance Corporation, the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System or any state banking
regulatory agency, is required in connection with the consummation of
the transactions contemplated in this Agreement; (viii) this Agreement
shall constitute a security agreement under [State of Nebraska] law and
shall be effective to create, in favor of the Participant, a valid,
perfected security interest in the Eligible Loans evidenced by each
Participation Certificate sold hereunder; (ix) the Participant shall
have a perfected security interest in the participation interests in
Eligible Loans evidenced by the Participation Certificate subject to no
prior liens, (x) that (A) if the Lender became a debtor under the United
States Bankruptcy Code, 11 U.S.C.ss.ss.101 et seq., as amended (the
"Bankruptcy Code"), (i) Section 541(a)(1) of the Bankruptcy Code would
not apply to deem the participation interests in Eligible Loans
transferred by the Lender to the Participant and the proceeds therefrom
as property of the bankruptcy estate of the Lender and therefore (ii)
Section 362(a) of the Bankruptcy Code would not apply to stay payment to
the Participant or its assignees and (B) if the Lender became a debtor
under the Bankruptcy Code, a court would not disregard the separate
identity of the Participant so that the assets of the Participant would
be consolidated with and become a part of the Lender's bankruptcy
estate, (xii) if the Lender is a bank or saving association the deposits
of which are insured by FDIC (a "Bank") and the FDIC were appointed as a
receiver or conservator of such Bank, a court would not recharacterize
the transfer and assignment of the participation interests in Eligible
Loans to the Participant as a pledge to secure a borrowing rather than
as a sale of the participation interests in Eligible Loans;
(c) delivery by the Lender to the Participant on or before the
applicable date of purchase of the Participation Certificate, original
or supplemental schedules to the Participation Certificate listing and
L-7
identifying each Eligible Loan in which a participation interest is
being transferred to the Participant; UCC-1 Financing Statements
evidencing the transfer from the Lender to the Participant, UCC Lien
Searches, and UCC Termination Statements or Releases, if any, releasing
any security interest granted by Lender in any Eligible Loan covered by
the Participation Certificate; and
(d) adequate funds are available to the Participant from the
Warehouse Note Purchase and Security Agreement or otherwise which will
finance the purchase of participation interests in Eligible Loans under
this Agreement.
SECTION 2.06. REPURCHASE OBLIGATION. If:
(a) any representation or warranty made or furnished by the
Lender in or pursuant to this Agreement with respect to a FFELP Loan
(including Section 3.01 hereof) shall prove to have been materially
incorrect;
(b) the Secretary of Education or a Guarantee Agency, as the
case may be, refuses to honor all or part of a claim with respect to a
FFELP Loan (including any claim for Interest Subsidy Payments, Special
Allowance Payments or Guarantee Payments) on account of any circumstance
or event that occurred prior to the sale of the participation interest
in such FFELP Loan to the Participant or the sale of such FFELP Loan to
the Participant by and through its eligible lender trustee or after such
sale if such refusal is due to any action of the Lender;
(c) on account of any circumstance or event that occurred prior
to the sale of a participation interest in a FFELP Loan to the
Participant or the sale a FFELP Loan to the Participant by and through
its eligible lender trustee or after such sale if such refusal is due to
any action of the Lender, a defense is asserted by a Borrower (or
endorser, if any) of the FFELP Loan with respect to a Borrower's
obligation to pay all or any part of the FFELP Loan, and the
Participant, in good faith, believes that the facts reported, if true,
raise reasonable doubts as to the legal enforceability of such FFELP
Loan; or
(d) the instrument which the Lender purports to be a FFELP Loan
is not, in fact, a FFELP Loan;
then the Lender shall repurchase the participation interest in such FFELP Loan
or purported FFELP Loan upon the request of the Participant by paying the
Participant the then outstanding principal balance of such FFELP Loan or
purported FFELP Loan (or such greater amount as may be necessary to make the
Participant whole), plus interest and applicable Interest Subsidy Payments and
Special Allowance Payments with respect to such FFELP Loan or purported FFELP
Loan to and including the date of repurchase, plus any amounts owed to the
Secretary of Education with respect to the repurchased FFELP Loan or purported
FFELP Loan, plus any attorney fees, legal expenses, court costs, servicing fees
or other expenses incurred by the Participant in connection with such FFELP Loan
or purported FFELP Loan, less the Lender's Retained Interest with respect to
such FFELP Loan.
L-8
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01. LENDER'S REPRESENTATIONS AND WARRANTIES. The Lender hereby
represents, warrants and covenants to the Participant and the Administrative
Agent as follows as of the date hereof and as of the date of each purchase
hereunder:
(a) All information furnished by the Lender to the Participant,
or the Participant's agents, with respect to a FFELP Loan is true,
complete and correct.
(b) The amount of the unpaid principal balance of each FFELP
Loan is due and owing, and no counterclaim, offset, defense or right to
rescission exists with respect to any FFELP Loan which can be asserted
and maintained or which, with notice, lapse of time or the occurrence or
failure to occur of any act or event could be asserted and maintained by
the Borrower against the Lender, the Eligible Lender Trustee or the
Participant as assignee thereof. The Lender shall have taken all
reasonable actions to assure that no Borrower under a FFELP Loan has or
may acquire a defense to the payment thereof. No payment of principal or
interest with respect to any FFELP Loan is, as of the date hereof, more
than 90 days delinquent and no applicable payment of principal or
interest with respect to any FFELP Loan will, at the date of the
applicable Participation Certificate, be more than 90 days delinquent.
No FFELP Loan carries a rate of interest less than, or in excess of, the
applicable rate of interest required by the Higher Education Act.
Notwithstanding any provisions of the Higher Education Act that permits
the Lender to charge an interest rate less than the applicable rate of
interest, no FFELP Loan purchased hereunder shall bear interest at a
rate lower than the applicable rate of interest; provided, however, that
the Participant may approve, in its sole discretion, in writing,
interest reductions which are part of a borrower repayment incentive
program of the Lender, the terms of which have been fully described in
detail and in writing to the Participant.
(c) Each FFELP Loan has been duly executed and delivered and
constitutes the legal, valid and binding obligations of the maker (and
the endorser, if any) thereof, enforceable in accordance with its terms.
(d) Each FFELP Loan complies in all respects with the
requirements of the Higher Education Act and is an Eligible Loan.
(e) The Lender or the Eligible Lender Trustee has applied for
and received the Secretary of Education's or a Guarantee Agency's
designation, as the case may be, as an "eligible lender" under the
Higher Education Act, and the Lender has entered into all agreements
required to be entered into for participation in the Federal Family
Education Loan Program under the Higher Education Act.
(f) The Lender (and the Eligible Lender Trustee, if applicable)
is the sole owner and holder of each FFELP Loan and has full right and
authority to sell and assign the same free and clear of all liens,
pledges or encumbrances; no FFELP Loan has been pledged or assigned for
L-9
any purpose; and each FFELP Loan is free of any and all liens, charges,
encumbrances and security interests of any description. The Participant
has a valid and perfected first priority ownership or security interest
in the Pledged Collateral (as defined herein).
(g) Each FFELP Loan is Guaranteed; such Guarantee is in full
force and effect, is freely transferable as an incident to the sale of
each FFELP Loan; all amounts due and payable to a Guarantee Agency have
been or will be paid in full by the Lender, and none of the FFELP Loans
has at any time been tendered to any Guarantee Agency for payment.
(h) There are no circumstances or conditions with respect to any
FFELP Loan, the Borrower thereunder or the creditworthiness of said
Borrower that would reasonably cause prudent private investors to regard
any of the FFELP Loans as an unacceptable investment, or adversely
affect the value or marketability thereof or any applicable Guarantee.
(i) Each FFELP Loan was made in compliance with all applicable
local, State and federal laws, rules and regulations, including, without
limitation, all applicable nondiscrimination, truth-in-lending, consumer
credit and usury laws.
(j) The Lender has, and its officers acting on its behalf have,
full legal authority to engage in the transactions contemplated by this
Agreement; the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and compliance with
the terms, conditions and provisions of this Agreement do not and will
not conflict with or result in a breach of any of the terms, conditions
or provisions of the charter, articles or bylaws of the Lender or any
agreement or instrument to which the Lender is a party or by which it is
bound or constitute a default thereunder, or conflict with any law, rule
or regulation to which the Lender is subject; the Lender is not a party
to or bound by any agreement or instrument or subject to any charter or
other restriction or judgment, order, writ, injunction, decree, law,
rule or regulation which may materially and adversely affect the ability
of the Lender to perform its obligations under this Agreement and this
Agreement constitutes a valid and binding obligation of the Lender
enforceable against it in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, moratorium, or other similar laws
affecting the rights of creditors and (ii) general principles of equity,
whether such enforceability is considered in a proceeding in equity or
at law, and does not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect to
any of its properties, and no consent, approval or authorization of any
government or governmental body, including, without limitation, the
Federal Savings and Loan Insurance Corporation, the Federal Deposit
Insurance Corporation, the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System or any state bank regulatory
agency, is required in connection with the consummation of the
transactions herein contemplated.
(k) The Lender is duly organized, validly existing and in good
standing under the laws of its applicable jurisdiction and has the power
and authority to own its assets and carry on its business as now being
conducted.
L-10
(l) The Lender and its servicer have each exercised (and shall
continue to exercise) due diligence and reasonable care in making,
administering, servicing and collecting the FFELP Loans, and the Lender
has conducted a reasonable investigation of sufficient scope and content
to enable it duly to make the representations and warranties contained
in this Agreement. The Lender shall be solely responsible for the
payment of the costs and expenses incident to origination of FFELP
Loans, without any right of reimbursement therefor from the Participant.
(m) With respect to all Guaranteed Eligible Loans in which a
participation interest is being acquired, a Guarantee Agreement is in
effect with respect thereto and is valid and binding upon the parties
thereto; and the Lender is not in default in the performance of any of
its covenants and agreements made in such Guarantee Agreement.
(n) The Lender does not (i) discriminate by pattern or practice
against any particular class or category of students by requiring, as a
condition to the receipt of a student loan, that a student or his family
maintain a business relationship with the Lender, except as may be
permitted under applicable laws; or (ii) discriminate on the basis of
race, sex, color, creed or national origin.
(o) The FFELP Loans are a representative sample of all student
loans held by the Lender with respect to the educational institution
attended by, or the age, sex, race, national origin or place of
residence of, the Borrowers to whom such loans were made, or with
respect to any other identifying characteristic of such Borrowers.
(p) Each participation interest transferred to the Participant
under this Agreement is a participation interest in a FFELP Loan which
constitutes an Eligible Loan.
(q) The fair salable value of the assets on a going concern
basis of the Lender and its subsidiaries, on a consolidated basis, as of
the time of each sale of participation interests hereunder is in excess
of the total amount of their liabilities.
(r) The Lender has carefully reviewed the Loan Purchase
Regulations supplied by the Participant and has complied, and shall
continue to comply, with all applicable Loan Purchase Regulations.
(s) Each FFELP Loan in which a participation interest is
purchased pursuant to this Agreement includes all Eligible Loans of any
one Borrower held by the Lender.
(t) The Lender hereby represents and warrants that the Lender is
transferring all of its right title and interest in the MPN Loans to the
Participant, that it has not assigned any interest in such MPN Loans
(other than security interests that have been released or ownership
interests that the Lender has reacquired) to any person other than the
Participant, and that no prior holder of the MPN Loans has assigned any
interest in such MPN Loans (other than security interests that have been
released or ownership interests that such prior holder has reacquired)
to any person other that a predecessor in title to the Lender. The
Lender hereby covenants that the Lender shall not attempt to transfer to
any other person any interest in any MPN Loan assigned hereunder.
L-11
(u) No promissory note evidencing an Eligible Loan bears any
apparent evidence of forgery or alteration or is otherwise so irregular
or incomplete as to call into question its authenticity.
(v) Except as may have been disclosed by the UCC Lien Search
required by Section 2.05(c) hereof for the Lender, no other financing
statements or assignment filings naming the Lender as debtor or assignor
under its legal name or trade names has been filed.
(w) The transfer, assignment and conveyance of the participation
interests in the Eligible Loans by the Lender pursuant to this Agreement
are not subject to the bulk transfer or any similar statutory provisions
in effect in any applicable jurisdiction. The Lender is not transferring
the participation interests in the Eligible Loans with an actual intent
to hinder, delay or defraud any of its creditors. The Lender is solvent,
will not be rendered insolvent by the transfer of the participation
interests in the Eligible Loans hereunder nor is aware of any pending
insolvency of the Lender.
SECTION 3.02. PARTICIPANT'S REPRESENTATIONS AND WARRANTIES. The
Participant hereby represents and warrants to the Lender that the execution,
delivery and performance of this Agreement by the Participant (a) has been duly
authorized or ratified effective as of the date of execution by all necessary
corporate action on the part of the Participant; (b) does not and will not
conflict with, or result in a violation of, any applicable laws; (c) does not
and will not require any consent or approval of any creditor or constitute a
violation of or default under any agreement or instrument to which the
Participant is a party or whereby any of its property may be bound; and (d)
constitute a legal, valid and binding obligation of the Participant enforceable
against the Participant in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, moratorium, or other similar laws affecting the rights
of creditors, and (ii) general principles of equity, whether such enforceability
is considered in a proceeding in equity or at law.
SECTION 3.03. ORGANIZATIONAL JURISDICTION OF LENDER. The Lender shall
not organize under the law of any jurisdiction other than the State under which
is it organized as of the Closing Date (whether changing its jurisdiction of
organization or organizing under an additional jurisdiction) or, change its
location for purposes of Section 9-307 of the applicable UCC, without giving 30
days prior written notice of such action to the Participant and the
Administrative Agent. Before effecting such change, the Lender shall prepare and
file in the appropriate filing office any financing statements or other
statements necessary to continue the perfection of the Participant's interest in
the FFELP Loans.
ARTICLE IV
TERM
Section 4.01. Termination. The term of this Agreement shall be from the
date first set forth above until the termination of the Commitment Period. If
the Lender or the Eligible Lender Trustee transfers title to a specific Eligible
Loan covered by the Participation Certificate to the Participant, the
participation interest with respect to such transferred Eligible Loan shall
L-12
terminate on the date of such transfer. Immediately upon termination (without
renewal) of this Agreement and of the Participation Certificate, or any portion
thereof, the Lender's Retained Interest, as then accrued and unpaid, shall be
paid and if the Participant is not in material default of its obligations under
this Agreement, the Lender shall immediately transfer to the Participant or its
designee legal title to the Eligible Loans covered by the terminated portion of
the Participation Certificate. At or prior to such transfer of legal title, the
Lender shall execute and deliver to the Participant or its designee an executed
Loan Purchase Agreement, together with all documents of transfer in connection
therewith, between the Lender as seller and the Participant or its designee as
purchaser, effective to transfer title to the Eligible Loans covered in the
terminated portion of the Participation Certificate as of the termination of the
participation, free and clear of any liens, encumbrances, pledges, or security
interests of any nature. Title to an Eligible Loan which is partially disbursed
as of the termination of this Agreement shall be transferred as described in the
preceding sentence as soon as possible after such Eligible Loan is fully
disbursed.
ARTICLE V
OTHER PROVISIONS
SECTION 5.01. INDEMNIFICATION. The Lender specifically acknowledges that
the Participant will be making representations and warranties regarding the
Eligible Loans based in part on the accuracy of the Lender's representations and
warranties in this Agreement. The Lender agrees to indemnify and hold the
Participant, the parties to the Warehouse Note Purchase and Security Agreement
(together with each of their respective successors, assigns. officers,
directors, agents and employees) harmless from and against any and all loss,
liability, cost, damage or expense (including reasonable attorneys fees and
costs of litigation) incurred by reason of any breach of the Lender's
representations, warranties or covenants hereunder or any false or misleading
representations or any failure to disclose any matter which makes the warranties
and representations herein misleading or any inaccuracy in any information
furnished by the Lender in connection herewith. This indemnity obligation shall
survive execution of this Agreement and termination of the Commitment Period.
SECTION 5.02. ASSIGNMENT. The rights of the Participant under this
Agreement may be freely assigned or subparticipated, in whole or in part,
without prior written consent of the Lender. The rights and obligations of the
Lender under this Agreement may not be assigned in whole or in part without the
prior written consent of the Participant. This Agreement shall be binding upon
the parties hereto and their permitted successors and assigns. The Lender
acknowledges that the Participant has assigned all of its right, title and
interest in and to the Participation Certificate and this Agreement to the
Trustee under the Warehouse Note Purchase and Security Agreement with the power
and right to enforce the provisions thereof and hereof.
SECTION 5.03. NO PARTNERSHIP. This Agreement shall not be construed to
create a partnership or joint venture between the Lender and the Participant.
The transaction evidenced by this Agreement is a loan participation transaction
pursuant to which the Lender and the Participant are participating in the
Eligible Loans.
L-13
SECTION 5.04. AMENDMENT. This Agreement may be modified or otherwise
amended only if such modification or amendment is in writing and signed by the
Lender and the Participant. The parties agree to make such modifications or
amendments to this Agreement from time to time as may be reasonably necessary to
maintain compliance with the Higher Education Act.
SECTION 5.05. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered with a written receipt from the recipient or mailed by certified
United States mail, sufficient postage pre-paid, or sent by nationally
recognized overnight delivery service such as Federal Express, addressed as
follows:
If to the Lender: [Name of Lender]
[Address of Lender]
Attention: __________
If to the Participant: NHELP-III, INC.
121 South 13th Street, Suite 201
Lincoln, Nebraska 68508
Attention: Terry Heimes
If to the Administrative Agent: JPMorgan Chase Bank
-------------------------
-------------------------
Attn:
-------------------
or to any such address as either party may direct in writing delivered to the
other party as set forth herein. Notice shall be effective (a) if mailed or
delivered, upon receipt, refusal of receipt or the date marked as uncollected,
or (b) if sent by overnight delivery, the earlier of receipt of two business
days after deposit with the delivery service.
SECTION 5.06. CONTINUING REPRESENTATIONS AND OBLIGATIONS. The warranties
and representations of the parties contained in Article III hereof and the
repurchase obligation of the Lender contained in Section 2.06 hereof shall
survive execution of this Agreement and termination of the Commitment Period and
bind the parties hereto as continuing covenants.
SECTION 5.07. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nebraska.
Section 5.08. Counterparts. This Agreement may be simultaneously
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
SECTION 5.09. SEVERABILITY. If any provision of this Agreement shall be
held, deemed to be or shall, in fact, be inoperative or unenforceable as applied
to any particular situation, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
situation or of rendering any other provision or provisions herein 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.
L-14
SECTION 5.10. NON-EXCLUSIVE REMEDIES. No remedy by the terms of this
Agreement conferred upon or reserved to the Participant is intended to be
exclusive of any other remedy, but each and every other remedy shall be
cumulative and in addition to every other remedy given under this Agreement or
existing at law or in equity (including, without limitation, the right to such
equitable relief by way of injunction) or by statute on or after the date of
this Agreement.
SECTION 5.11. SERVICING. Each Eligible Loan covered by the Participation
Certificate shall be serviced pursuant to a Servicing Agreement or a
Subservicing Agreement for the life of such loan by a Servicer or Subservicer
and shall not be removed from the servicing system of such Servicer or
Subservicer, except as provided below. The Participant agrees that each FFELP
Loan participated pursuant to this Agreement which is held by or on behalf of
the Participant or any of the Participant's affiliates after the date of this
Agreement shall be serviced by a Servicer under a Servicing Agreement or a
Subservicing Agreement for a term of the life of such loan and shall not be
removed from the servicing system of such Servicer or Subservicer; provided,
however, that the Participant may engage a servicing agent other than a Servicer
only if the Administrative Agent approves such servicing agent in writing and
the Borrower attends an educational institution which expressly requires
servicing of all student loans made to its students to be performed exclusively
by a servicing agent other than a Servicer or Subservicer, and provided further,
however, that the Participant may, at its option, require transfer of servicing
to a new servicing agent as approved by the Administrative Agent upon a Servicer
Event of Default (as defined in the Warehouse Note Purchase and Security
Agreement), a material default under the appropriate Servicing Agreement or
Subservicing Agreement or the insolvency or filing of bankruptcy by such
Servicer or Subservicer.
SECTION 5.12. TERMINATION OF AGREEMENT OR BANKRUPTCY OF LENDER. Upon the
termination of this Agreement or the filing of bankruptcy or receivership by the
Lender, the Lender shall cause title to each Eligible Loan covered by the
Participation Certificate to be transferred by the Lender or the Eligible Lender
Trustee to the Participant or its designee.
SECTION 5.13. FURTHER ASSURANCES. The Lender shall, at its expense,
execute all other documents and take all other steps as may be requested by the
Participant from time to time to affect the sale of the participation interests
in the FFELP Loans hereunder.
SECTION 5.14. INFORMATION. The Lender shall, at its expense, furnish to
the Participant such additional information concerning the Lender's FFELP Loan
portfolio as the Participant may reasonably request.
SECTION 5.15. SECURITY INTEREST. The parties to this Agreement intend
that the conveyance of the Lender's right, title and interest in and to the
FFELP Loans shall constitute an absolute sale, conveying good title free and
clear of any liens, claims, encumbrances or rights of others from the Lender to
the Participant. The parties to this Agreement intend that the arrangements with
respect to the participation interests in FFELP Loans shall constitute a
purchase and sale of such participation interests and not a loan. In the event,
L-15
however, that it were determined by a court of competent jurisdiction that the
transactions evidenced by this Agreement shall constitute a loan and not a
purchase and sale, the parties hereto intend that this Agreement would
constitute a security agreement under applicable law and that the Lender shall
be deemed to have granted, and hereby does grant (subject to the condition
above), to the Participant a first priority perfected security interest in all
of the Lender's right, title and interest, whether now owned or hereafter
acquired, in, to and under all accounts, general intangibles, chattel paper,
instruments, documents, goods, investment property, money, deposit accounts,
certificates of deposit, letters of credit, advices of credit and other property
consisting of, arising from or related to the following collateral to secure the
rights of the Participant hereunder and the obligations of the Lender hereunder
(collectively, the "Pledged Collateral"):
(a) all participation interests in FFELP Loans;
(b) all revenues and recoveries of principal received with
respect to any participation interests in FFELP Loans, including all
borrower payments and reimbursements of principal and accrued interest
on default claims received from any Guarantor;
(c) any other revenues and recoveries of principal and interest
received with respect to any participation interests in FFELP Loans, any
other collection of cash with respect to such FFELP Loans (including,
but not limited to, Interest Subsidy Payments and Special Allowance
Payments) received and all other cash collections, tax refunds and other
cash proceeds of the Pledged Collateral;
(d) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
participation interests in FFELP Loans, whether pursuant to the contract
related to such participation interests in FFELP Loans or otherwise;
(e) all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch
cards, data processing software and related property and rights)
maintained with respect to participation interests in FFELP Loans
otherwise in respect of the Pledged Collateral; and
(f) all proceeds of the foregoing (including, but not by way of
limitation, all cash proceeds, accounts, accounts receivable, general
intangibles, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of
any and every kind, and other forms of obligations and receivables or
other liquidated property which at any time constitute all or part or
are included in the proceeds of any of the foregoing property).
The Lender agrees that from time to time, at its expense, it will
properly execute and deliver all further instruments and documents (including,
without limitation, UCC-1 financing statements and custodian agreements with
each Servicer or Subservicer, as appropriate), and take all further action that
the Participant may reasonably request in order to perfect, protect or more
fully evidence the Participant's interest in the Pledged Collateral or to enable
the Participant to exercise or enforce any of its rights hereunder.
L-16
SECTION 5.16. INFORMATION AND REPORTING. The Lender shall furnish to the
Participant: (a) upon execution of this Agreement, the Lender's most recent
audited financial statement prepared in accordance with generally accepted
accounting principles and duly certified by nationally recognized independent
certified public accountants selected by the Lender, as well as the Lender's
most recent unaudited financial statement and balance sheet; (b) as soon as
available and in any event within 90 days after the end of each fiscal year of
the Lender, an updated audited financial statement prepared in accordance with
generally accepted accounting principles and duly certified by nationally
recognized independent certified public accountants selected by the Lender; and
(c) such other financial information as the Participant may reasonably request
from time to time. The Lender shall verify and reconcile Eligible Loan
disbursements and cancellations of Eligible Loans covered by the Participation
Certificate, in such manner as the Participant may reasonably request from time
to time. The Lender shall furnish to the Participant a certificate of good
standing and a certified copy of resolutions of the Lender's board of directors
approving and authorizing execution and performance of this Agreement and all
ancillary documents with respect thereto in a form reasonably satisfactory to
the Participant.
L-17
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by officers duly authorized as of the day first above written.
NHELP-III, INC.
By
--------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
[NAME OF LENDER]
By
--------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
L-18
SCHEDULE A TO PARTICIPATION AGREEMENT
FORM OF LOAN PURCHASE AGREEMENT
L-19
SCHEDULE B TO PARTICIPATION AGREEMENT
FORM OF PARTICIPATION CERTIFICATE
PARTICIPATION CERTIFICATE
Pursuant to that certain Participation Agreement (the "Agreement") dated
____________, 20___, by and between NHELP-III, Inc. (the "Participant") and
[Name of Lender] (the "Lender"), the Lender hereby issues and delivers this
Participation Certificate to evidence the Participant's participation interests
in student loans guaranteed under the Higher Education Act of 1965, as amended,
which are identified by the schedule marked as Schedule "A," attached hereto and
incorporated herein by this reference, which may be amended or supplemented from
time to time, which loans or interests therein are owned by the Lender and are
serviced by _______________ and designated a separate account, in accordance
with the terms of the Agreement. This Participation Certificate shall be
governed, in all respects, by the Agreement, the terms of which are incorporated
herein by this reference as if fully stated herein.
[NAME OF LENDER]
By
--------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Accepted this ______ day of _____________, 20____.
NHELP-III, INC.
By
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
L-20
SCHEDULE A TO PARTICIPATION CERTIFICATE
SCHEDULE OF LOANS
L-21
EXHIBIT M
PREMIUM SCHEDULE
- --------------------------------------- ---------------------------------------------
Average Principal Balance Ranges of Maximum Note Purchase Percentage
Eligible Loans to be Purchased
- ------------------------------------- ----------------------------------------------
Low High Non-Consolidation Loans Consolidation Loans
- -------------------- ---------------- ------------------------ ---------------------
$0 $4,000 100.000% 100.000%
- -------------------- ---------------- ------------------------ ---------------------
$4,001 $4,750 100.000% 100.000%
- -------------------- ---------------- ------------------------ ---------------------
$4,751 $5,250 100.750% 100.000%
- -------------------- ---------------- ------------------------ ---------------------
$5,251 $5,750 101.000% 100.000%
- -------------------- ---------------- ------------------------ ---------------------
$5,751 $6,250 101.250% 100.000%
- -------------------- ---------------- ------------------------ ---------------------
$6,251 $6,750 101.500% 100.000%
- -------------------- ---------------- ------------------------ ---------------------
$6,751 $7,250 101.500% 100.000%
- -------------------- ---------------- ------------------------ ---------------------
$7,251 $7,750 101.750% 100.000%
- -------------------- ---------------- ------------------------ ---------------------
$7,751 $8,750 102.000% 100.250%
- -------------------- ---------------- ------------------------ ---------------------
$8,751 $9,750 102.000% 100.750%
- -------------------- ---------------- ------------------------ ---------------------
$9,751 $11,750 102.250% 101.500%
- -------------------- ---------------- ------------------------ ---------------------
$11,751 $15,000 102.250% 102.000%
- -------------------- ---------------- ------------------------ ---------------------
$15,001 $20,000 102.500% 102.250%
- -------------------- ---------------- ------------------------ ---------------------
$20,001 $25,000 102.500% 102.250%
- -------------------- ---------------- ------------------------ ---------------------
$25,001 $30,000 102.500% 102.500%
- -------------------- ---------------- ------------------------ ---------------------
$30,001 and up 102.500% 102.500%
- -------------------- ---------------- ------------------------ ---------------------
SCHEDULE I
COMMITMENT AMOUNT SCHEDULE
Note Purchaser Commitment Amount
Delaware Funding Company LLC ___%
Park Avenue Receivables Company LLC ___
Three Rivers Funding Corporation ___
SCHEDULE II
TRUSTEE GUARANTEE AGREEMENTS
(a) the Lender Agreements for Guarantee of Student Loans with
Federal Reinsurance between the Trustee and the Nebraska Student Loan
Program, Inc., as amended;
(b) the Agreement to Guarantee Loans between the Trustee and
United Student Aid Funds, as amended;
(c) the Lender Participation Agreement between the Trustee and
the Colorado Student Loan Program, as amended;
(d) the Student Loan Guaranty between the Trustee and Great Lakes
Higher Education Guaranty Corporation, as amended;
(e) the Lender Agreement for Guarantee of Student Loans with
Federal Reinsurance between the Trustee and Education Assistance
Corporation, as amended;
(f) the Lender Participation Agreement and Contract of Insurance
between the Trustee and Kentucky Higher Education Assistance Authority,
as amended;
(g) the Holder Agreement for Payment on Guarantee of Student
Loans with Federal Reinsurance between the Trustee and Educational
Credit Management Corporation, as amended;
(h) the Agreement to Endorse Loans between the Trustee and
Oklahoma Guaranteed Student Loan Program, as amended;
(i) the Lender Participation Agreement between the Trustee and
Texas Guaranteed Student Loan Program, as amended;
(j) the Agreement to Guarantee Loans for Secondary Market between
the Trustee and Student Loan Guarantee Foundation of Arkansas, Inc., as
amended;
(k) the Loan Holder Agreement between the Trustee and Georgia
Higher Education Assistance Corporation, as amended;
(l) the Lender Agreement between the Trustee and Illinois Student
Assistance Commission, as amended;
(m) the Loan Guarantee Agreement with Lending Institution between
the Trustee and New York State Higher Education Services Corporation, as
amended;
(n) the Lending Institution Participation Agreement and Federal
Consolidation Loans Lender Participation Agreement between the Trustee
and Florida Department of Education, Office of Student Financial
Assistance, as amended;
(o) the Agreement with Lender between the Trustee and Connecticut
Student Loan Foundation, as amended;
(p) the Participation Agreement and Agreement to Guarantee
Consolidation Loans between the Trustee and Louisiana Student Financial
Assistance Commission, as amended;
(q) the Guaranty Loan Agreement between the Trustee and State of
New Jersey Higher Education Student Assistance Authority, as amended;
(r) the Lender Agreement for Guarantee of Student Loans with
Federal Reinsurance and Eligible Holder Agreement between the Trustee
and Pennsylvania Higher Education Assistance Agency, as amended;
(s) the Memorandum of Understanding between the Trustee and
Tennessee Student Assistance Corporation, as amended;
(t) the Agreement to Guarantee Loans between the Trustee and the
Finance Authority of Maine, as amended;
(u) the Guarantee Agreement between Massachusetts Higher
Education Assistance Corporation doing business as American Student
Assistance and the Trustee, as amended;
(v) the Agreement between the Trustee and California Student Aid
Commission, as amended;
(w) the Agreement to Guarantee Federal Family Education Loans
between the Trustee and Montana Guaranteed Student Loan Program, as
amended
(x) the Agreement to Guarantee Loans between the Trustee and
Northwest Education Loan Association, as amended;
(y) the Agreement to Guarantee Federal Stafford Loans between the
Trustee and Missouri Coordinating Board for Higher Education, as amended
(z) Agreement to Guaranty Loans between the Trustee and Michigan
Higher Education Assistance Authority, as amended;
(aa) Agreement to Endorse Federal Stafford and Federal Plus Loans
between the Trustee and Oregon State Scholarship Commission; and
(bb) any other guarantee or agreement issued by any Guarantor to
the Trustee, and any amendment thereto entered into in accordance with
the provisions thereof and the Agreement.