Exhibit 10.1
COMMERCIAL PAPER DEALER AGREEMENT
4 (2) PROGRAM
- --------------------------------------------------------------------------------
Between:
NELNET, INC., AS ISSUER
and
SUNTRUST CAPITAL MARKETS, INC., AS DEALER
Concerning Notes to be issued pursuant to an
Issuing and Paying Agency Agreement dated as of December 29, 2006
between the Issuer and
Deutsche Bank Trust Company Americas, as Issuing and Paying Agent
Dated as of December 29, 2006
COMMERCIAL PAPER DEALER AGREEMENT
4(2) PROGRAM
This agreement (the "Agreement") sets forth the understandings between the
Issuer and the Dealer, each named on the cover page hereof, in connection with
the issuance and sale by the Issuer of its short-term promissory notes (the
"Notes") through the Dealer.
Certain terms used in this Agreement are defined in Section 6 hereof.
The Addendum to this Agreement, and any Annexes or Exhibits described in this
Agreement or such Addendum, are hereby incorporated into this Agreement and made
fully a part hereof.
1. OFFERS, SALES AND RESALES OF NOTES.
1.1 While (i) the Issuer has and shall have no obligation to sell the Notes
to the Dealer or to permit the Dealer to arrange any sale of the Notes
for the account of the Issuer, and (ii) the Dealer has and shall have
no obligation to purchase the Notes from the Issuer or to arrange any
sale of the Notes for the account of the Issuer, the parties hereto
agree that in any case where the Dealer purchases Notes from the
Issuer, or arranges for the sale of Notes by the Issuer, such Notes
will be purchased or sold by the Dealer in reliance on the
representations, warranties, covenants and agreements of the Issuer
contained herein or made pursuant hereto and on the terms and
conditions and in the manner provided herein.
1.2 So long as this Agreement shall remain in effect, and in addition to
the limitations contained in Section 1.7 hereof, the Issuer shall not,
without the consent of the Dealer, offer, solicit or accept offers to
purchase, or sell, any Notes except (a) in transactions with one or
more dealers which may from time to time after the date hereof become
dealers with respect to the Notes by executing with the Issuer one or
more agreements which contain provisions substantially identical to
those contained in Section 1 of this Agreement, of which the Issuer
hereby undertakes to provide the Dealer prompt notice or (b) in
transactions with the other dealers listed on the Addendum hereto,
which are executing agreements with the Issuer which contain provisions
substantially identical to Section 1 of this Agreement
contemporaneously herewith. In no event shall the Issuer offer, solicit
or accept offers to purchase, or sell, any Notes directly on its own
behalf in transactions with persons other than broker-dealers as
specifically permitted in this Section 1.2.
1.3 The Notes shall be in a minimum denomination of $250,000 or integral
multiples of $1,000 in excess thereof, will bear such interest rates,
if interest bearing, or will be sold at such discount from their face
amounts, as shall be agreed upon by the Dealer and the Issuer, shall
have a maturity not exceeding 397 days from the date of issuance and
may have such terms as are specified in Exhibit C hereto or the Private
Placement Memorandum.(1) The Notes shall not contain any provision for
extension, renewal or automatic "rollover."
- -------------------
(1) In the event that, in order to be exempt from the definition of "investment
company" under the Investment Company Act of 1940, the Issuer must rely on
Section 3(c)(1) of that Act, the maturity of the Notes may not exceed 270
days.
2
1.4 The authentication and issuance of, and payment for, the Notes shall be
effected in accordance with the Issuing and Paying Agency Agreement,
and the Notes shall be either individual physical certificates or
book-entry notes evidenced by one or more master notes (each, a "Master
Note") registered in the name of The Depository Trust Company ("DTC")
or its nominee, in the form or forms annexed to the Issuing and Paying
Agency Agreement. (2)
1.5 If the Issuer and the Dealer shall agree on the terms of the purchase
of any Note by the Dealer or the sale of any Note arranged by the
Dealer (including, but not limited to, agreement with respect to the
date of issue, purchase price, principal amount, maturity and interest
rate or interest rate index and margin (in the case of interest-bearing
Notes) or discount thereof (in the case of Notes issued on a discount
basis), and appropriate compensation for the Dealer's services
hereunder) pursuant to this Agreement, the Issuer shall cause such Note
to be issued and delivered in accordance with the terms of the Issuing
and Paying Agency Agreement and payment for such Note shall be made by
the purchaser thereof, either directly or through the Dealer, to the
Issuing and Paying Agent, for the account of the Issuer. Except as
otherwise agreed, in the event that the Dealer is acting as an agent
and a purchaser shall either fail to accept delivery of or make payment
for a Note on the date fixed for settlement, the Dealer shall promptly
notify the Issuer, and if the Dealer has theretofore paid the Issuer
for the Note, the Issuer will promptly return such funds to the Dealer
against its return of the Note to the Issuer, in the case of a
certificated Note, and upon notice of such failure in the case of a
book-entry Note. If such failure occurred for any reason other than
default by the Dealer, the Issuer shall reimburse the Dealer on an
equitable basis for the Dealer's loss of the use of such funds for the
period such funds were credited to the Issuer's account.
1.6 The Dealer and the Issuer hereby establish and agree to observe the
following procedures in connection with offers, sales and subsequent
resales or other transfers of the Notes:
(a) Offers and sales of the Notes by or through the Dealer shall be
made only to: (i) investors reasonably believed by the Dealer to be
Qualified Institutional Buyers, Institutional Accredited Investors
or Sophisticated Individual Accredited Investors and (ii) non-bank
fiduciaries or agents that will be purchasing Notes for one or more
accounts, each of which is reasonably believed by the Dealer to be
an Institutional Accredited Investor or Sophisticated Individual
Accredited Investor.
(b) Resales and other transfers of the Notes by the holders thereof
shall be made only in accordance with the restrictions in the
legend described in clause (e) below.
(c) No general solicitation or general advertising shall be used in
connection with the offering of the Notes. Without limiting the
generality of the foregoing, without the prior written approval of
the Dealer, the Issuer shall not issue any press release or place
or publish any "tombstone" or other advertisement relating to the
Notes.
(d) No sale of Notes to any one purchaser shall be for less than
$250,000 principal or face amount, and no Note shall be issued in a
smaller principal or face amount. If the purchaser is a non-bank
fiduciary acting on behalf of others, each person for whom such
purchaser is acting must purchase at least $250,000 principal or
face amount of Notes.
- ---------------------
(2) If the form or forms of Notes are not annexed to the Issuing and Paying
Agency Agreement, they should be annexed to this Agreement or delivered to the
Dealer, with appropriate certification by the Secretary of the Issuer,
pursuant to section 3.6 of the Agreement.
3
(e) Offers and sales of the Notes by the Issuer through the Dealer
acting as agent for the Issuer shall be made in accordance with
Rule 506 under the Securities Act, and shall be subject to the
restrictions described in the legend appearing on Exhibit A
hereto. A legend substantially to the effect of such Exhibit A
shall appear as part of the Private Placement Memorandum used in
connection with offers and sales of Notes hereunder, as well as on
each individual certificate representing a Note and each Master
Note representing book-entry Notes offered and sold pursuant to
this Agreement.
(f) The Dealer shall furnish or shall have furnished to each purchaser
of Notes for which it has acted as the Dealer a copy of the
then-current Private Placement Memorandum unless such purchaser
has previously received a copy of the Private Placement Memorandum
as then in effect. The Private Placement Memorandum shall
expressly state that any person to whom Notes are offered shall
have an opportunity to ask questions of, and receive information
from, the Issuer and the Dealer and shall provide the names,
addresses and telephone numbers of the persons from whom
information regarding the Issuer may be obtained.
(g) The Issuer agrees, for the benefit of the Dealer and each of the
holders and prospective purchasers from time to time of the Notes
that, if at any time the Issuer shall not be subject to Section 13
or 15(d) of the Exchange Act, the Issuer will furnish, upon request
and at its expense, to the Dealer and to holders and prospective
purchasers of Notes information required by Rule 144A(d)(4)(i) in
compliance with Rule 144A(d).
(h) In the event that any Note offered or to be offered by the Dealer
would be ineligible for resale under Rule 144A, the Issuer shall
immediately notify the Dealer (by telephone, confirmed in writing)
of such fact and shall promptly prepare and deliver to the Dealer
an amendment or supplement to the Private Placement Memorandum
describing the Notes that are ineligible, the reason for such
ineligibility and any other relevant information relating thereto.
(i) The Issuer represents that it is not currently issuing commercial
paper in the United States market in reliance upon the exemption
provided by Section 3(a)(3) of the Securities Act. The Issuer
agrees that, if it shall issue commercial paper after the date
hereof in reliance upon such exemption (a) the proceeds from the
sale of the Notes will be segregated from the proceeds of the sale
of any such commercial paper by being placed in a separate
account; (b) the Issuer will institute appropriate corporate
procedures to ensure that the offers and sales of notes issued by
the Issuer pursuant to the Section 3(a)(3) exemption are not
integrated with offerings and sales of Notes hereunder; and (c)
the Issuer will comply with each of the requirements of Section
3(a)(3) of the Securities Act in selling commercial paper or other
short-term debt securities other than the Notes in the United
States.
4
1.7 The Issuer hereby represents and warrants to the Dealer, in connection
with offers, sales and resales of Notes, as follows:
(a) The Issuer hereby confirms to the Dealer that (except as permitted
by Section 1.6(i)) within the preceding six months neither the
Issuer nor any person other than the Dealer or the other dealers
referred to in Section 1.2 hereof acting on behalf of the Issuer
has offered or sold any Notes, or any substantially similar
security of the Issuer (including, without limitation, medium-term
notes issued by the Issuer), to, or solicited offers to buy any
such security from, any person other than the Dealer or the other
dealers referred to in Section 1.2 hereof. The Issuer also agrees
that (except as permitted by Section 1.6(i)), as long as the Notes
are being offered for sale by the Dealer and the other dealers
referred to in Section 1.2 hereof as contemplated hereby and until
at least six months after the offer of Notes hereunder has been
terminated, neither the Issuer nor any person other than the
Dealer or the other dealers referred to in Section 1.2 hereof
(except as contemplated by Section 1.2 hereof) will offer the
Notes or any substantially similar security of the Issuer for sale
to, or solicit offers to buy any such security from, any person
other than the Dealer or the other dealers referred to in Section
1.2 hereof, it being understood that such agreement is made with a
view to bringing the offer and sale of the Notes within the
exemption provided by Section 4(2) of the Securities Act and Rule
506 thereunder and shall survive any termination of this
Agreement. The Issuer hereby represents and warrants that it has
not taken or omitted to take, and will not take or omit to take,
any action that would cause the offering and sale of Notes
hereunder to be integrated with any other offering of securities,
whether such offering is made by the Issuer or some other party or
parties.
(b) The Issuer represents and agrees that the proceeds of the sale of
the Notes are not currently contemplated to be used for the
purpose of buying, carrying or trading securities within the
meaning of Regulation T and the interpretations thereunder by the
Board of Governors of the Federal Reserve System. In the event
that the Issuer determines to use such proceeds for the purpose of
buying, carrying or trading securities, whether in connection with
an acquisition of another company or otherwise, the Issuer shall
give the Dealer at least five business days' prior written notice
to that effect. The Issuer shall also give the Dealer prompt
notice of the actual date that it commences to purchase securities
with the proceeds of the Notes. Thereafter, in the event that the
Dealer purchases Notes as principal and does not resell such Notes
on the day of such purchase, to the extent necessary to comply
with Regulation T and the interpretations thereunder, the Dealer
will sell such Notes either (i) only to offerees it reasonably
believes to be Qualified Institutional Buyers or to Qualified
Institutional Buyers it reasonably believes are acting for other
Qualified Institutional Buyers, in each case in accordance with
Rule 144A or (ii) in a manner which would not cause a violation of
Regulation T and the interpretations thereunder.
2. REPRESENTATIONS AND WARRANTIES OF ISSUER.
The Issuer represents and warrants that:
2.1 The Issuer is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation and has all the requisite power and authority to execute,
deliver and perform its obligations under the Notes, this Agreement and
the Issuing and Paying Agency Agreement.
5
2.2 This Agreement and the Issuing and Paying Agency Agreement have been
duly authorized, executed and delivered by the Issuer and constitute
legal, valid and binding obligations of the Issuer enforceable against
the Issuer in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
2.3 The Notes have been duly authorized, and when issued as provided in the
Issuing and Paying Agency Agreement, will be duly and validly issued
and will constitute legal, valid and binding obligations of the Issuer
enforceable against the Issuer in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
2.4 The offer and sale of the Notes in the manner contemplated hereby do
not require registration of the Notes under the Securities Act,
pursuant to the exemption from registration contained in Section 4(2)
thereof, and no indenture in respect of the Notes is required to be
qualified under the Trust Indenture Act of 1939, as amended.
2.5 The Notes will rank at least pari passu with all other unsecured and
unsubordinated indebtedness of the Issuer.
2.6 No consent or action of, or filing or registration with, any
governmental or public regulatory body or authority, including the SEC,
is required to authorize, or is otherwise required in connection with
the execution, delivery or performance of, this Agreement, the Notes or
the Issuing and Paying Agency Agreement, except as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Notes.
2.7 Neither the execution and delivery of this Agreement and the Issuing
and Paying Agency Agreement, nor the issuance of the Notes in
accordance with the Issuing and Paying Agency Agreement, nor the
fulfillment of or compliance with the terms and provisions hereof or
thereof by the Issuer, will (i) result in the creation or imposition of
any mortgage, lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of the Issuer, or (ii) violate or
result in a breach or a default under any of the terms of the Issuer's
charter documents or by-laws, any contract or instrument to which the
Issuer is a party or by which it or its property is bound, or any law
or regulation, or any order, writ, injunction or decree of any court or
government instrumentality, to which the Issuer is subject or by which
it or its property is bound, which breach or default might have a
material adverse effect on the condition (financial or otherwise),
operations or business prospects of the Issuer or the ability of the
Issuer to perform its obligations under this Agreement, the Notes or
the Issuing and Paying Agency Agreement.
6
2.8 There is no litigation or governmental proceeding pending, or to the
knowledge of the Issuer threatened, against or affecting the Issuer or
any of its subsidiaries which might result in a material adverse change
in the condition (financial or otherwise), operations or business
prospects of the Issuer or the ability of the Issuer to perform its
obligations under this Agreement, the Notes or the Issuing and Paying
Agency Agreement.
2.9 The Issuer is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
2.10 Neither the Private Placement Memorandum nor the Company Information
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
2.11 Each (a) issuance of Notes by the Issuer hereunder and (b) amendment or
supplement of the Private Placement Memorandum shall be deemed a
representation and warranty by the Issuer to the Dealer, as of the date
thereof, that, both before and after giving effect to such issuance and
after giving effect to such amendment or supplement, (i) the
representations and warranties given by the Issuer set forth in this
Section 2 remain true and correct on and as of such date as if made on
and as of such date, (ii) in the case of an issuance of Notes, the
Notes being issued on such date have been duly and validly issued and
constitute legal, valid and binding obligations of the Issuer,
enforceable against the Issuer in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and (iii) in the case of an
issuance of Notes, since the date of the most recent Private Placement
Memorandum, there has been no material adverse change in the condition
(financial or otherwise), operations or business prospects of the
Issuer which has not been disclosed to the Dealer in writing.
3. COVENANTS AND AGREEMENTS OF ISSUER.
The Issuer covenants and agrees that:
3.1 The Issuer will give the Dealer prompt notice (but in any event prior
to any subsequent issuance of Notes hereunder) of any amendment to,
modification of or waiver with respect to, the Notes or the Issuing and
Paying Agency Agreement, including a complete copy of any such
amendment, modification or waiver.
3.2 The Issuer shall, whenever there shall occur any change in the Issuer's
condition (financial or otherwise), operations or business prospects or
any development or occurrence in relation to the Issuer that would be
material to holders of the Notes or potential holders of the Notes
(including any downgrading or receipt of any notice of intended or
potential downgrading or any review for potential change in the rating
accorded any of the Issuer's securities by any nationally recognized
statistical rating organization which has published a rating of the
Notes), promptly, and in any event prior to any subsequent issuance of
Notes hereunder, notify the Dealer (by telephone, confirmed in writing)
of such change, development or occurrence.
7
3.3 The Issuer shall from time to time furnish to the Dealer such
information as the Dealer may reasonably request, including, without
limitation, any press releases or material provided by the Issuer to
any national securities exchange or rating agency, regarding (i) the
Issuer's operations and financial condition, (ii) the due authorization
and execution of the Notes and (iii) the Issuer's ability to pay the
Notes as they mature.
3.4 The Issuer will take all such action as the Dealer may reasonably
request to ensure that each offer and each sale of the Notes will
comply with any applicable state Blue Sky laws; provided, however, that
the Issuer shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or subject itself to
taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject.
3.5 The Issuer will not be in default of any of its obligations hereunder,
under the Notes or under the Issuing and Paying Agency Agreement, at
any time that any of the Notes are outstanding.
3.6 The Issuer shall not issue Notes hereunder until the Dealer shall have
received (a) an opinion of counsel to the Issuer, addressed to the
Dealer, satisfactory in form and substance to the Dealer, (b) a copy of
the executed Issuing and Paying Agency Agreement as then in effect, (c)
a copy of resolutions adopted by the Board of Directors of the Issuer,
satisfactory in form and substance to the Dealer and certified by the
Secretary or similar officer of the Issuer, authorizing execution and
delivery by the Issuer of this Agreement, the Issuing and Paying Agency
Agreement and the Notes and consummation by the Issuer of the
transactions contemplated hereby and thereby, (d) prior to the issuance
of any book-entry Notes represented by a master note registered in the
name of DTC or its nominee, a copy of the executed Letter of
Representations among the Issuer, the Issuing and Paying Agent and DTC
and of the executed master note, (e) prior to the issuance of any Notes
in physical form, a copy of such form (unless attached to this Agreement
or the Issuing and Paying Agency Agreement) and (f) such other
certificates, opinions, letters and documents as the Dealer shall have
reasonably requested.
3.7 The Issuer shall reimburse the Dealer for all of the Dealer's
out-of-pocket expenses related to this Agreement, including expenses
incurred in connection with its preparation and negotiation, and the
transactions contemplated hereby (including, but not limited to, the
printing and distribution of the Private Placement Memorandum), and, if
applicable, for the reasonable fees and out-of-pocket expenses of the
Dealer's counsel.
4. DISCLOSURE.
4.1 The Private Placement Memorandum and its contents (other than the
Dealer Information) shall be the sole responsibility of the Issuer. The
Private Placement Memorandum shall contain a statement expressly
offering an opportunity for each prospective purchaser to ask questions
of, and receive answers from, the Issuer concerning the offering of
Notes and to obtain relevant additional information which the Issuer
possesses or can acquire without unreasonable effort or expense.
8
4.2 The Issuer agrees to promptly furnish the Dealer the Company
Information as it becomes available.
4.3 (a) The Issuer further agrees to notify the Dealer promptly upon the
occurrence of any event relating to or affecting the Issuer that would
cause the Company Information then in existence to include an untrue
statement of a material fact or to omit to state a material fact
necessary in order to make the statements contained therein, in light
of the circumstances under which they are made, not misleading.
(b) In the event that the Issuer gives the Dealer notice pursuant to
Section 4.3(a) and the Dealer notifies the Issuer that it then has
Notes it is holding in inventory, the Issuer agrees promptly to
supplement or amend the Private Placement Memorandum so that the
Private Placement Memorandum, as amended or supplemented, shall not
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
and the Issuer shall make such supplement or amendment available to the
Dealer.
(c) In the event that (i) the Issuer gives the Dealer notice pursuant
to Section 4.3(a), (ii) the Dealer does not notify the Issuer that it
is then holding Notes in inventory and (iii) the Issuer chooses not to
promptly amend or supplement the Private Placement Memorandum in the
manner described in clause (b) above, then all solicitations and sales
of Notes shall be suspended until such time as the Issuer has so
amended or supplemented the Private Placement Memorandum, and made such
amendment or supplement available to the Dealer.
(d) Without limiting the generality of Section 4.3(a), the Issuer shall
review, amend and supplement the Private Placement Memorandum on a
periodic basis, but no less than at least once annually, to incorporate
current financial information of the Issuer to the extent necessary to
ensure that the information provided in the Private Placement
Memorandum is accurate and complete.
5. INDEMNIFICATION AND CONTRIBUTION.
5.1 The Issuer will indemnify and hold harmless the Dealer, each
individual, corporation, partnership, trust, association or other
entity controlling the Dealer, any affiliate of the Dealer or any such
controlling entity and their respective directors, officers, employees,
partners, incorporators, shareholders, servants, trustees and agents
(hereinafter the "Indemnitees") against any and all liabilities,
penalties, suits, causes of action, losses, damages, claims, costs and
expenses (including, without limitation, fees and disbursements of
counsel) or judgments of whatever kind or nature (each a "Claim"),
imposed upon, incurred by or asserted against the Indemnitees arising
out of or based upon (i) any allegation that the Private Placement
Memorandum, the Company Information or any information provided by the
Issuer to the Dealer included (as of any relevant time) or includes an
untrue statement of a material fact or omitted (as of any relevant
time) or omits to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading or (ii) arising out of or based upon the breach by
the Issuer of any agreement, covenant or representation made in or
pursuant to this Agreement. This indemnification shall not apply to the
extent that the Claim arises out of or is based upon Dealer
Information.
9
5.2 Provisions relating to claims made for indemnification under this
Section 5 are set forth on Exhibit B to this Agreement.
5.3 In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section
5 is held to be unavailable or insufficient to hold harmless the
Indemnitees, although applicable in accordance with the terms of this
Section 5, the Issuer shall contribute to the aggregate costs incurred
by the Dealer in connection with any Claim in the proportion of the
respective economic interests of the Issuer and the Dealer; provided,
however, that such contribution by the Issuer shall be in an amount
such that the aggregate costs incurred by the Dealer do not exceed the
aggregate of the commissions and fees earned by the Dealer hereunder
with respect to the issue or issues of Notes to which such Claim
relates. The respective economic interests shall be calculated by
reference to the aggregate proceeds to the Issuer of the Notes issued
hereunder and the aggregate commissions and fees earned by the Dealer
hereunder.
6. DEFINITIONS.
6.1 "Claim" shall have the meaning set forth in Section 5.1.
6.2 "Company Information" at any given time shall mean the Private
Placement Memorandum together with, to the extent applicable, (i) the
Issuer's most recent report on Form 10-K filed with the SEC and each
report on Form 10-Q or 8-K filed by the Issuer with the SEC since the
most recent Form 10-K, (ii) the Issuer's most recent annual audited
financial statements and each interim financial statement or report
prepared subsequent thereto, if not included in item (i) above, (iii)
the Issuer's and its affiliates' other publicly available recent
reports, including, but not limited to, any publicly available filings
or reports provided to their respective shareholders, (iv) any other
information or disclosure prepared pursuant to Section 4.3 hereof and
(v) any information prepared or approved by the Issuer for
dissemination to investors or potential investors in the Notes.
6.3 "Dealer Information" shall mean material concerning the Dealer provided
by the Dealer in writing expressly for inclusion in the Private
Placement Memorandum.
6.4 "Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended.
6.5 "Indemnitee" shall have the meaning set forth in Section 5.1.
6.6 "Institutional Accredited Investor" shall mean an institutional
investor that is an accredited investor within the meaning of Rule 501
under the Securities Act and that has such knowledge and experience in
financial and business matters that it is capable of evaluating and
bearing the economic risk of an investment in the Notes, including, but
not limited to, a bank, as defined in Section 3(a)(2) of the Securities
Act, or a savings and loan association or other institution, as defined
in Section 3(a)(5)(A) of the Securities Act, whether acting in its
individual or fiduciary capacity.
10
6.7 "Issuing and Paying Agency Agreement" shall mean the issuing and paying
agency agreement described on the cover page of this Agreement, as such
agreement may be amended or supplemented from time to time.
6.8 "Issuing and Paying Agent" shall mean the party designated as such on
the cover page of this Agreement, as issuing and paying agent under the
Issuing and Paying Agency Agreement, or any successor thereto in
accordance with the Issuing and Paying Agency Agreement.
6.9 "Non-bank fiduciary or agent" shall mean a fiduciary or agent other
than (a) a bank, as defined in Section 3(a)(2) of the Securities Act,
or (b) a savings and loan association, as defined in Section 3(a)(5)(A)
of the Securities Act.
6.10 "Private Placement Memorandum" shall mean offering materials prepared
in accordance with Section 4 (including materials referred to therein
or incorporated by reference therein, if any) provided to purchasers
and prospective purchasers of the Notes, and shall include amendments
and supplements thereto which may be prepared from time to time in
accordance with this Agreement (other than any amendment or supplement
that has been completely superseded by a later amendment or
supplement).
6.11 "Qualified Institutional Buyer" shall have the meaning assigned to that
term in Rule 144A under the Securities Act.
6.12 "Rule 144A" shall mean Rule 144A under the Securities Act.
6.13 "SEC" shall mean the U.S. Securities and Exchange Commission.
6.14 "Securities Act" shall mean the U.S. Securities Act of 1933, as
amended.
6.15 "Sophisticated Individual Accredited Investor" shall mean an individual
who (a) is an accredited investor within the meaning of Regulation D
under the Securities Act and (b) based on his or her pre-existing
relationship with the Dealer, is reasonably believed by the Dealer to
be a sophisticated investor (i) possessing such knowledge and
experience (or represented by a fiduciary or agent possessing such
knowledge and experience) in financial and business matters that he or
she is capable of evaluating and bearing the economic risk of an
investment in the Notes and (ii) having not less than $5 million in
investments (as defined, for purposes of this section, in Rule 2a51-1
under the Investment Company Act of 1940, as amended).
7. GENERAL
7.1 Unless otherwise expressly provided herein, all notices under this
Agreement to parties hereto shall be in writing and shall be effective
when received at the address of the respective party set forth in the
Addendum to this Agreement.
7.2 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to its conflict of
laws provisions.
11
7.3 The Issuer agrees that any suit, action or proceeding brought by the
Issuer against the Dealer in connection with or arising out of this
Agreement or the Notes or the offer and sale of the Notes shall be
brought solely in the United States federal courts located in the
Borough of Manhattan or the courts of the State of New York located in
the Borough of Manhattan. EACH OF THE DEALER AND THE ISSUER WAIVES ITS
RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
7.4 This Agreement may be terminated, at any time, by the Issuer, upon one
business day's prior notice to such effect to the Dealer, or by the
Dealer upon one business day's prior notice to such effect to the
Issuer. Any such termination, however, shall not affect the obligations
of the Issuer under Sections 3.7, 5 and 7.3 hereof or the respective
representations, warranties, agreements, covenants, rights or
responsibilities of the parties made or arising prior to the
termination of this Agreement.
7.5 This Agreement is not assignable by either party hereto without the
written consent of the other party; provided, however, that the Dealer
may assign its rights and obligations under this Agreement to any
affiliate of the Dealer.
7.6 This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
7.7 This Agreement is for the exclusive benefit of the parties hereto, and
their respective permitted successors and assigns hereunder, and shall
not be deemed to give any legal or equitable right, remedy or claim to
any other person whatsoever.
7.8 The Issuer acknowledges and agrees that (i) the purchase and sale of
the Notes pursuant to this Agreement is an arm's-length commercial
transaction between the Issuer, on the one hand, and the Dealer, on the
other, (ii) in connection therewith and with the process leading to
such transaction the Dealer is acting solely as a principal and not the
agent or fiduciary of the Issuer, (iii) the Dealer has not assumed an
advisory or fiduciary responsibility in favor of the Issuer with
respect to the offering contemplated hereby or the process leading
thereto (irrespective of whether the Dealer has advised or is currently
advising the Issuer on other matters) or any other obligation to the
Issuer except the obligations expressly set forth in this Agreement and
(iv) the Issuer has consulted its own legal and financial advisors to
the extent it deemed appropriate. The Issuer agrees that it will not
claim that the Dealer has rendered advisory services of any nature or
respect, or owes a fiduciary or similar duty to the Issuer, in
connection with such transaction or the process leading thereto.
12
7.9 In the case of any agreement by a Dealer to purchase a Note hereunder
(other than as agent) which provides for a settlement date that is three
Business Days or more after the date of such agreement, the obligation of the
Dealer to purchase the Note under such agreement shall be subject to the
following conditions:
a) the representations and warranties given by the Issuer set forth above
in Section 2 shall be true and correct on and as of the settlement date
as if made on and as of such date, and the Issuer shall have performed
all of its obligations hereunder to be performed as of such date,
b) since the date of the most recent Company Information, there shall have
been no material adverse change in the condition (financial or
otherwise), operations or business prospects of the Issuer (whether
occurring before or after such agreement was entered into) which was not
disclosed to the Dealer in writing prior to the time such agreement was
entered into,
c) the Issuer shall not be in default of any of its obligations hereunder,
under the Notes or under the Issuing and Paying Agency Agreement.
d) on or after the date of such agreement there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a suspension
or material limitation in trading in the securities onthe New York Stock
Exchange; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities or a material
disruption in commercial banking or securities settlement or clearance
services in the United States; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United
States of a national emergency or war or (v) the occurrence of any other
calamity or crisis or any change in financial, political or economic
conditions in the United States or elsewhere, if the effect of any such
event specified in clause (iv) or (v) in the judgment of the Dealer
makes it impracticable or inadvisable to proceed with the offering or
the delivery of the Note on the terms and in the manner contemplated in
thePrivate Placement Memorandum,
e) on or after the date of such agreement, (i) no downgrading shall have
occurred in the rating accorded the Issuer's debt securities by any
nationally recognized statistical rating organization and (ii) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating
of any of the Issuer's debt securities.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
This Agreement supersedes all prior agreements and understandings (whether
written or oral) between the Issuer and the Dealer, or any of them, with respect
to the subject matter hereof.
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above written.
NELNET, INC., AS ISSUER SUNTRUST CAPITAL MARKETS, INC., AS DEALER
By: /s/ Terry J. Heimes By: /s/ Bethany Bowman
--------------------------------- ---------------------------------
Name: Terry J. Heimes Name: Bethany Bowman
------------------------------- ---------------------------------
Title: CFO Title: Vice President
------------------------------ ---------------------------------
14
Addendum(3)
The following additional clauses shall apply to the Agreement and be deemed a
part thereof.
1. The other dealer referred to in clause (b) of Section 1.2 of the Agreement
is Banc of America Securities LLC.
2. The addresses of the respective parties for purposes of notices under
Section 7.1 are as follows:
For the Issuer:
Address: 121 South 13th Street
Suite 201
Lincoln, NE 68508
Attention: Greer McCurley
Telephone number: 402-458-2747
Fax number: 402-458-2399
For the Dealer:
Address: 303 Peachtree Street
Atlanta, GA 30308
Attention: Money Markets Desk
Telephone number: 404-588-8445
Fax number: 404-588-7005
- --------------------
(3) There may be added to this Addendum any changes or additions to the model
Agreement, as agreed between the parties.
15
EXHIBIT A
FORM OF LEGEND FOR PRIVATE PLACEMENT MEMORANDUM AND NOTES
THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW, AND OFFERS AND SALES
THEREOF MAY BE MADE ONLY IN COMPLIANCE WITH AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER WILL BE DEEMED TO REPRESENT THAT (I)
IT HAS BEEN AFFORDED AN OPPORTUNITY TO INVESTIGATE MATTERS RELATING TO THE
ISSUER AND THE NOTES, (II) IT IS NOT ACQUIRING SUCH NOTE WITH A VIEW TO ANY
DISTRIBUTION THEREOF AND (III) IT IS EITHER (A)(1) AN INSTITUTIONAL INVESTOR OR
SOPHISTICATED INDIVIDUAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE
MEANING OF RULE 501(a) UNDER THE ACT AND WHICH, IN THE CASE OF AN INDIVIDUAL,
(i) POSSESSES SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS
THAT HE OR SHE IS CAPABLE OF EVALUATING AND BEARING THE ECONOMIC RISK OF AN
INVESTMENT IN THE NOTES AND (ii) HAS NOT LESS THAN $5 MILLION IN INVESTMENTS (AN
"INSTITUTIONAL ACCREDITED INVESTOR" OR "SOPHISTICATED INDIVIDUAL ACCREDITED
INVESTOR", RESPECTIVELY) AND (2)(i) PURCHASING NOTES FOR ITS OWN ACCOUNT, (ii) A
BANK (AS DEFINED IN SECTION 3(a)(2) OF THE ACT) OR A SAVINGS AND LOAN
ASSOCIATION OR OTHER INSTITUTION (AS DEFINED IN SECTION 3(a)(5)(A) OF THE ACT)
ACTING IN ITS INDIVIDUAL OR FIDUCIARY CAPACITY OR (iii) A FIDUCIARY OR AGENT
(OTHER THAN A U.S. BANK OR SAVINGS AND LOAN ASSOCIATION) PURCHASING NOTES FOR
ONE OR MORE ACCOUNTS EACH OF WHICH ACCOUNTS IS SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR OR SOPHISTICATED INDIVIDUAL ACCREDITED INVESTOR; OR (B) A QUALIFIED
INSTITUTIONAL BUYER ("QIB") WITHIN THE MEANING OF RULE 144A UNDER THE ACT THAT
IS ACQUIRING NOTES FOR ITS OWN ACCOUNT OR FOR ONE OR MORE ACCOUNTS, EACH OF
WHICH ACCOUNTS IS A QIB; AND THE PURCHASER ACKNOWLEDGES THAT IT IS AWARE THAT
THE SELLER MAY RELY UPON THE EXEMPTION FROM THE REGISTRATION PROVISIONS OF
SECTION 5 OF THE ACT PROVIDED BY RULE 144A. BY ITS ACCEPTANCE OF A NOTE, THE
PURCHASER THEREOF SHALL ALSO BE DEEMED TO AGREE THAT ANY RESALE OR OTHER
TRANSFER THEREOF WILL BE MADE ONLY (A) IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE ACT, EITHER (1) TO THE ISSUER OR TO A PLACEMENT AGENT DESIGNATED BY
THE ISSUER AS A PLACEMENT AGENT FOR THE NOTES (COLLECTIVELY, THE "PLACEMENT
AGENTS"), NONE OF WHICH SHALL HAVE ANY OBLIGATION TO ACQUIRE SUCH NOTE, (2)
THROUGH A PLACEMENT AGENT TO AN INSTITUTIONAL ACCREDITED INVESTOR, SOPHISTICATED
INDIVIDUAL ACCREDITED INVESTOR OR A QIB, OR (3) TO A QIB IN A TRANSACTION THAT
MEETS THE REQUIREMENTS OF RULE 144A AND (B) IN MINIMUM AMOUNTS OF $250,000.
16
EXHIBIT B
FURTHER PROVISIONS RELATING TO INDEMNIFICATION
(a) The Issuer agrees to reimburse each Indemnitee for all expenses (including
reasonable fees and disbursements of internal and external counsel) as they
are incurred by it in connection with investigating or defending any loss,
claim, damage, liability or action in respect of which indemnification may
be sought under Section 5 of the Agreement (whether or not it is a party to
any such proceedings).
(b) Promptly after receipt by an Indemnitee of notice of the existence of a
Claim, such Indemnitee will, if a claim in respect thereof is to be made
against the Issuer, notify the Issuer in writing of the existence thereof;
provided that (i) the omission so to notify the Issuer will not relieve the
Issuer from any liability which it may have hereunder unless and except to
the extent it did not otherwise learn of such Claim and such failure results
in the forfeiture by the Issuer of substantial rights and defenses, and (ii)
the omission so to notify the Issuer will not relieve it from liability
which it may have to an Indemnitee otherwise than on account of this
indemnity agreement. In case any such Claim is made against any Indemnitee
and it notifies the Issuer of the existence thereof, the Issuer will be
entitled to participate therein, and to the extent that it may elect by
written notice delivered to the Indemnitee, to assume the defense thereof,
with counsel reasonably satisfactory to such Indemnitee; provided that if
the defendants in any such Claim include both the Indemnitee and the Issuer,
and the Indemnitee shall have concluded that there may be legal defenses
available to it which are different from or additional to those available to
the Issuer, the Issuer shall not have the right to direct the defense of
such Claim on behalf of such Indemnitee, and the Indemnitee shall have the
right to select separate counsel to assert such legal defenses on behalf of
such Indemnitee. Upon receipt of notice from the Issuer to such Indemnitee
of the Issuer's election so to assume the defense of such Claim and approval
by the Indemnitee of counsel, the Issuer will not be liable to such
Indemnitee for expenses incurred thereafter by the Indemnitee in connection
with the defense thereof (other than reasonable costs of investigation)
unless (i) the Indemnitee shall have employed separate counsel in connection
with the assertion of legal defenses in accordance with the proviso to the
next preceding sentence (it being understood, however, that the Issuer shall
not be liable for the expenses of more than one separate counsel (in
addition to any local counsel in the jurisdiction in which any Claim is
brought), approved by the Dealer, representing the Indemnitee who is party
to such Claim), (ii) the Issuer shall not have employed counsel reasonably
satisfactory to the Indemnitee to represent the Indemnitee within a
reasonable time after notice of existence of the Claim or (iii) the Issuer
has authorized in writing the employment of counsel for the Indemnitee. The
indemnity, reimbursement and contribution obligations of the Issuer
hereunder shall be in addition to any other liability the Issuer may
otherwise have to an Indemnitee and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of
the Issuer and any Indemnitee. The Issuer agrees that without the Dealer's
prior written consent, it will not settle, compromise or consent to the
entry of any judgment in any Claim in respect of which indemnification may
be sought under the indemnification provision of the Agreement (whether or
not the Dealer or any other Indemnitee is an actual or potential party to
such Claim), unless such settlement, compromise or consent (i) includes an
unconditional release of each Indemnitee from all liability arising out of
such Claim and (ii) does not include a statement as to or an admission of
fault, culpability or failure to act, by or on behalf of any Indemnitee.
17
EXHIBIT C
STATEMENT OF TERMS FOR INTEREST - BEARING
COMMERCIAL PAPER NOTES OF NELNET, INC.
THE PROVISIONS SET FORTH BELOW ARE QUALIFIED TO THE EXTENT APPLICABLE BY THE
TRANSACTION SPECIFIC PRICING SUPPLEMENT (THE "SUPPLEMENT") (IF ANY) SENT TO EACH
PURCHASER AT THE TIME OF THE TRANSACTION.
1. General. (a) The obligations of the Issuer to which these terms apply
(each a "Note") are represented by one or more Master Notes (each, a
"Master Note") issued in the name of (or of a nominee for) The Depository
Trust Company ("DTC"), which Master Note includes the terms and provisions
for the Issuer's Interest-Bearing Commercial Paper Notes that are set
forth in this Statement of Terms, since this Statement of Terms
constitutes an integral part of the Underlying Records as defined and
referred to in the Master Note.
(b) "Business Day" means any day other than a Saturday or Sunday that is
neither a legal holiday nor a day on which banking institutions are
authorized or required by law, executive order or regulation to be closed
in New York City and, with respect to LIBOR Notes (as defined below) is
also a London Business Day. "London Business Day" means, a day, other than
a Saturday or Sunday, on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
2. Interest. (a) Each Note will bear interest at a fixed rate (a "Fixed Rate
Note") or at a floating rate (a "Floating Rate Note").
(b) The Supplement sent to each holder of such Note will describe the
following terms: (i) whether such Note is a Fixed Rate Note or a Floating
Rate Note and whether such Note is an Original Issue Discount Note (as
defined below); (ii) the date on which such Note will be issued (the
"Issue Date"); (iii) the Stated Maturity Date (as defined below); (iv) if
such Note is a Fixed Rate Note, the rate per annum at which such Note will
bear interest, if any, and the Interest Payment Dates; (v) if such Note is
a Floating Rate Note, the Base Rate, the Index Maturity, the Interest
Reset Dates, the Interest Payment Dates and the Spread and/or Spread
Multiplier, if any (all as defined below), and any other terms relating to
the particular method of calculating the interest rate for such Note; and
(vi) any other terms applicable specifically to such Note. "Original Issue
Discount Note" means a Note which has a stated redemption price at the
Stated Maturity Date that exceeds its Issue Price by more than a specified
de minimis amount and which the Supplement indicates will be an "Original
Issue Discount Note".
(c) Each Fixed Rate Note will bear interest from its Issue Date at the
rate per annum specified in the Supplement until the principal amount
thereof is paid or made available for payment. Interest on each Fixed Rate
Note will be payable on the dates specified in the Supplement (each an
"Interest Payment Date" for a Fixed Rate Note) and on the Maturity Date
(as defined below). Interest on Fixed Rate Notes will be computed on the
basis of a 360-day year of twelve 30-day months.
If any Interest Payment Date or the Maturity Date of a Fixed Rate Note falls on
a day that is not a Business Day, the required payment of principal, premium, if
any, and/or interest will be payable on the next succeeding Business Day, and no
additional interest will accrue in respect of the payment made on that next
succeeding Business Day.
18
(d) The interest rate on each Floating Rate Note for each Interest Reset Period
(as defined below) will be determined by reference to an interest rate basis (a
"Base Rate") plus or minus a number of basis points (one basis point equals
one-hundredth of a percentage point) (the "Spread"), if any, and/or multiplied
by a certain percentage (the "Spread Multiplier"), if any, until the principal
thereof is paid or made available for payment. The Supplement will designate
which of the following Base Rates is applicable to the related Floating Rate
Note: (a) the CD Rate (a "CD Rate Note"), (b) the Commercial Paper Rate (a
"Commercial Paper Rate Note"), (c) the Federal Funds Rate (a "Federal Funds Rate
Note"), (d) LIBOR (a "LIBOR Note"), (e) the Prime Rate (a "Prime Rate Note"),
(f) the Treasury Rate (a "Treasury Rate Note") or (g) such other Base Rate as
may be specified in such Supplement.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly or semi-annually (the "Interest Reset Period"). The date or
dates on which interest will be reset (each an "Interest Reset Date") will be,
unless otherwise specified in the Supplement, in the case of Floating Rate Notes
which reset daily, each Business Day, in the case of Floating Rate Notes (other
than Treasury Rate Notes) that reset weekly, the Wednesday of each week; in the
case of Treasury Rate Notes that reset weekly, the Tuesday of each week; in the
case of Floating Rate Notes that reset monthly, the third Wednesday of each
month; in the case of Floating Rate Notes that reset quarterly, the third
Wednesday of March, June, September and December; and in the case of Floating
Rate Notes that reset semiannually, the third Wednesday of the two months
specified in the Supplement. If any Interest Reset Date for any Floating Rate
Note is not a Business Day, such Interest Reset Date will be postponed to the
next day that is a Business Day, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Business Day. Interest on each Floating
Rate Note will be payable monthly, quarterly or semiannually (the "Interest
Payment Period") and on the Maturity Date. Unless otherwise specified in the
Supplement, and except as provided below, the date or dates on which interest
will be payable (each an "Interest Payment Date" for a Floating Rate Note) will
be, in the case of Floating Rate Notes with a monthly Interest Payment Period,
on the third Wednesday of each month; in the case of Floating Rate Notes with a
quarterly Interest Payment Period, on the third Wednesday of March, June,
September and December; and in the case of Floating Rate Notes with a semiannual
Interest Payment Period, on the third Wednesday of the two months specified in
the Supplement. In addition, the Maturity Date will also be an Interest Payment
Date.
If any Interest Payment Date for any Floating Rate Note (other than an Interest
Payment Date occurring on the Maturity Date) would otherwise be a day that is
not a Business Day, such Interest Payment Date shall be postponed to the next
day that is a Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day. If the Maturity Date of a
Floating Rate Note falls on a day that is not a Business Day, the payment of
principal and interest will be made on the next succeeding Business Day, and no
interest on such payment shall accrue for the period from and after such
maturity.
Interest payments on each Interest Payment Date for Floating Rate Notes will
include accrued interest from and including the Issue Date or from and including
the last date in respect of which interest has been paid, as the case may be,
to, but excluding, such Interest Payment Date. On the Maturity Date, the
interest payable on a Floating Rate Note will include interest accrued to, but
excluding, the Maturity Date. Accrued interest will be calculated by multiplying
the principal amount of a Floating Rate Note by an accrued interest factor. This
19
accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. The interest factor (expressed as a decimal) for each such day will
be computed by dividing the interest rate applicable to such day by 360, in the
cases where the Base Rate is the CD Rate, Commercial Paper Rate, Federal Funds
Rate, LIBOR or Prime Rate, or by the actual number of days in the year, in the
case where the Base Rate is the Treasury Rate. The interest rate in effect on
each day will be (i) if such day is an Interest Reset Date, the interest rate
with respect to the Interest Determination Date (as defined below) pertaining to
such Interest Reset Date, or (ii) if such day is not an Interest Reset Date, the
interest rate with respect to the Interest Determination Date pertaining to the
next preceding Interest Reset Date, subject in either case to any adjustment by
a Spread and/or a Spread Multiplier.
The "Interest Determination Date" where the Base Rate is the CD Rate or the
Commercial Paper Rate will be the second Business Day next preceding an Interest
Reset Date. The Interest Determination Date where the Base Rate is the Federal
Funds Rate or the Prime Rate will be the Business Day next preceding an Interest
Reset Date. The Interest Determination Date where the Base Rate is LIBOR will be
the second London Business Day next preceding an Interest Reset Date. The
Interest Determination Date where the Base Rate is the Treasury Rate will be the
day of the week in which such Interest Reset Date falls when Treasury Bills are
normally auctioned. Treasury Bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is held
on the following Tuesday or the preceding Friday. If an auction is so held on
the preceding Friday, such Friday will be the Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week.
The "Index Maturity" is the period to maturity of the instrument or obligation
from which the applicable Base Rate is calculated.
The "Calculation Date," where applicable, shall be the earlier of (i) the tenth
calendar day following the applicable Interest Determination Date or (ii) the
Business Day preceding the applicable Interest Payment Date or Maturity Date.
All times referred to herein reflect New York City time, unless otherwise
specified.
The Issuer shall specify in writing to the Issuing and Paying Agent which party
will be the calculation agent (the "Calculation Agent") with respect to the
Floating Rate Notes. The Calculation Agent will provide the interest rate then
in effect and, if determined, the interest rate which will become effective on
the next Interest Reset Date with respect to such Floating Rate Note to the
Issuing and Paying Agent as soon as the interest rate with respect to such
Floating Rate Note has been determined and as soon as practicable after any
change in such interest rate.
All percentages resulting from any calculation on Floating Rate Notes will be
rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards. For example,
9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655). All dollar
amounts used in or resulting from any calculation on Floating Rate Notes will be
rounded, in the case of U.S. dollars, to the nearest cent or, in the case of a
foreign currency, to the nearest unit (with one-half cent or unit being rounded
upwards).
20
CD RATE NOTES
"CD Rate" means the rate on any Interest Determination Date for negotiable
certificates of deposit having the Index Maturity as published by the Board
of Governors of the Federal Reserve System (the "FRB") in "Statistical
Release H.15(519), Selected Interest Rates" or any successor publication of
the FRB ("H.15(519)") under the heading "CDs (Secondary Market)".
If the above rate is not published in H.15(519) by 3:00 p.m. on the
Calculation Date, the CD Rate will be the rate on such Interest
Determination Date set forth in the daily update of H.15(519), available
through the world wide website of the FRB at
http://www.federalreserve.gov/releases/h15/Update, or any successor site or
publication or other recognized electronic source used for the purpose of
displaying the applicable rate ("H.15 Daily Update") under the caption "CDs
(Secondary Market)".
If such rate is not published in either H.15(519) or H.15 Daily Update by
3:00 p.m. on the Calculation Date, the Calculation Agent will determine the
CD Rate to be the arithmetic mean of the secondary market offered rates as
of 10:00 a.m. on such Interest Determination Date of three leading nonbank
dealers(4) in negotiable U.S. dollar certificates of deposit in New York
City selected by the Calculation Agent for negotiable U.S. dollar
certificates of deposit of major United States money center banks of the
highest credit standing in the market for negotiable certificates of deposit
with a remaining maturity closest to the Index Maturity in the denomination
of $5,000,000.
If the dealers selected by the Calculation Agent are not quoting as set
forth above, the CD Rate will remain the CD Rate then in effect on such
Interest Determination Date.
COMMERCIAL PAPER RATE NOTES
"Commercial Paper Rate" means the Money Market Yield (calculated as
described below) of the rate on any Interest Determination Date for
commercial paper having the Index Maturity, as published in H.15(519) under
the heading "Commercial Paper-Nonfinancial".
If the above rate is not published in H.15(519) by 3:00 p.m. on the
Calculation Date, then the Commercial Paper Rate will be the Money Market
Yield of the rate on such Interest Determination Date for commercial paper
of the Index Maturity as published in H.15 Daily Update under the heading
"Commercial Paper-Nonfinancial".
If by 3:00 p.m. on such Calculation Date such rate is not published in
either H.15(519) or H.15 Daily Update, then the Calculation Agent will
determine the Commercial Paper Rate to be the Money Market Yield of the
arithmetic mean of the offered rates as of 11:00 a.m. on such Interest
Determination Date of three leading dealers of U.S. dollar commercial paper
in New York City selected by the Calculation Agent for commercial paper of
the Index Maturity placed for an industrial issuer whose bond rating is
"AA," or the equivalent, from a nationally recognized statistical rating
organization.
- --------------------
(4) Such nonbank dealers referred to in this Statement of Terms may include
affiliates of the Dealer.
21
If the dealers selected by the Calculation Agent are not quoting as
mentioned above, the Commercial Paper Rate with respect to such Interest
Determination Date will remain the Commercial Paper Rate then in effect on
such Interest Determination Date.
"Money Market Yield" will be a yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = ------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal and "M" refers to
the actual number of days in the interest period for which interest is being
calculated.
FEDERAL FUNDS RATE NOTES
"Federal Funds Rate" means the rate on any Interest Determination Date for
federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)" and displayed on Moneyline Telerate (or any successor service)
on page 120 (or any other page as may replace the specified page on that
service) ("Telerate Page 120").
If the above rate does not appear on Telerate Page 120 or is not so
published by 3:00 p.m. on the Calculation Date, the Federal Funds Rate will
be the rate on such Interest Determination Date as published in H.15 Daily
Update under the heading "Federal Funds/(Effective)".
If such rate is not published as described above by 3:00 p.m. on the
Calculation Date, the Calculation Agent will determine the Federal Funds
Rate to be the arithmetic mean of the rates for the last transaction in
overnight U.S. dollar federal funds arranged by each of three leading
brokers of Federal Funds transactions in New York City selected by the
Calculation Agent prior to 9:00 a.m. on such Interest Determination Date.
If the brokers selected by the Calculation Agent are not quoting as
mentioned above, the Federal Funds Rate will remain the Federal Funds Rate
then in effect on such Interest Determination Date.
LIBOR NOTES
The London Interbank offered rate ("LIBOR") means, with respect to any
Interest Determination Date, the rate for deposits in U.S. dollars having
the Index Maturity that appears on the Designated LIBOR Page as of 11:00
a.m., London time, on such Interest Determination Date.
If no rate appears, LIBOR will be determined on the basis of the rates at
approximately 11:00 a.m., London time, on such Interest Determination Date
at which deposits in U.S. dollars are offered to prime banks in the London
interbank market by four major banks in such market selected by the
Calculation Agent for a term equal to the Index Maturity and in principal
amount equal to an amount that in the Calculation Agent's judgment is
representative for a single transaction in U.S. dollars in such market at
such time (a "Representative Amount"). The Calculation Agent will request
the principal London office of each of such banks to provide a quotation of
22
its rate. If at least two such quotations are provided, LIBOR will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR for such interest period will be the arithmetic mean of the
rates quoted at approximately 11:00 a.m., in New York City, on such Interest
Determination Date by three major banks in New York City, selected by the
Calculation Agent, for loans in U.S. dollars to leading European banks, for
a term equal to the Index Maturity and in a Representative Amount; provided,
however, that if fewer than three banks so selected by the Calculation Agent
are providing such quotations, the then existing LIBOR rate will remain in
effect for such Interest Payment Period.
"Designated LIBOR Page" means the display designated as page "3750" on
Moneyline Telerate (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the British
Bankers' Association for the purposes of displaying London interbank offered
rates for U.S. dollar deposits).
PRIME RATE NOTES
"Prime Rate" means the rate on any Interest Determination Date as published
in H.15(519) under the heading "Bank Prime Loan".
If the above rate is not published in H.15(519) prior to 3:00 p.m. on the
Calculation Date, then the Prime Rate will be the rate on such Interest
Determination Date as published in H.15 Daily Update opposite the caption
"Bank Prime Loan".
If the rate is not published prior to 3:00 p.m. on the Calculation Date in
either H.15(519) or H.15 Daily Update, then the Calculation Agent will
determine the Prime Rate to be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters Screen US PRIME1
Page (as defined below) as such bank's prime rate or base lending rate as of
11:00 a.m., on that Interest Determination Date.
If fewer than four such rates referred to above are so published by 3:00
p.m. on the Calculation Date, the Calculation Agent will determine the Prime
Rate to be the arithmetic mean of the prime rates or base lending rates
quoted on the basis of the actual number of days in the year divided by 360
as of the close of business on such Interest Determination Date by three
major banks in New York City selected by the Calculation Agent.
If the banks selected are not quoting as mentioned above, the Prime Rate
will remain the Prime Rate in effect on such Interest Determination Date.
"Reuters Screen US PRIME1 Page" means the display designated as page "US
PRIME1" on the Reuters Monitor Money Rates Service (or such other page as
may replace the US PRIME1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
23
TREASURY RATE NOTES
"Treasury Rate" means:
(1) the rate from the auction held on the Interest Determination Date (the
"Auction") of direct obligations of the United States ("Treasury Bills")
having the Index Maturity specified in the Supplement under the caption
"INVESTMENT RATE" on the display on Moneyline Telerate (or any successor
service) on page 56 (or any other page as may replace that page on that
service) ("Telerate Page 56") or page 57 (or any other page as may replace
that page on that service) ("Telerate Page 57"), or
(2) if the rate referred to in clause (1) is not so published by 3:00 p.m.
on the related Calculation Date, the Bond Equivalent Yield (as defined
below) of the rate for the applicable Treasury Bills as published in H.15
Daily Update, under the caption "U.S. Government Securities/Treasury
Bills/Auction High", or
(3) if the rate referred to in clause (2) is not so published by 3:00 p.m.
on the related Calculation Date, the Bond Equivalent Yield of the auction
rate of the applicable Treasury Bills as announced by the United States
Department of the Treasury, or
(4) if the rate referred to in clause (3) is not so announced by the United
States Department of the Treasury, or if the Auction is not held, the Bond
Equivalent Yield of the rate on the particular Interest Determination Date
of the applicable Treasury Bills as published in H.15(519) under the caption
"U.S. Government Securities/Treasury Bills/Secondary Market", or
(5) if the rate referred to in clause (4) not so published by 3:00 p.m. on
the related Calculation Date, the rate on the particular Interest
Determination Date of the applicable Treasury Bills as published in H.15
Daily Update, under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market", or
(6) if the rate referred to in clause (5) is not so published by 3:00 p.m.
on the related Calculation Date, the rate on the particular Interest
Determination Date calculated by the Calculation Agent as the Bond
Equivalent Yield of the arithmetic mean of the secondary market bid rates,
as of approximately 3:30 p.m. on that Interest Determination Date, of three
primary United States government securities dealers selected by the
Calculation Agent, for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified in the Supplement, or
(7) if the dealers so selected by the Calculation Agent are not quoting as
mentioned in clause (6), the Treasury Rate in effect on the particular
Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
D x N
Bond Equivalent Yield = -------------- x 100
360 - (D x M)
24
where "D" refers to the applicable per annum rate for Treasury Bills quoted
on a bank discount basis and expressed as a decimal, "N" refers to 365 or
366, as the case may be, and "M" refers to the actual number of days in the
applicable Interest Reset Period.
3. Final Maturity. The Stated Maturity Date for any Note will be the date so
specified in the Supplement, which shall be no later than 397 days from the
date of issuance. On its Stated Maturity Date, or any date prior to the Stated
Maturity Date on which the particular Note becomes due and payable by the
declaration of acceleration, each such date being referred to as a Maturity
Date, the principal amount of each Note, together with accrued and unpaid
interest thereon, will be immediately due and payable.
4. Events of Default. The occurrence of any of the following shall constitute an
"Event of Default" with respect to a Note: (i) default in any payment of
principal of or interest on such Note (including on a redemption thereof);
(ii) the Issuer makes any compromise arrangement with its creditors generally
including the entering into any form of moratorium with its creditors
generally; (iii) a court having jurisdiction shall enter a decree or order for
relief in respect of the Issuer in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
there shall be appointed a receiver, administrator, liquidator, custodian,
trustee or sequestrator (or similar officer) with respect to the whole or
substantially the whole of the assets of the Issuer and any such decree, order
or appointment is not removed, discharged or withdrawn within 60 days
thereafter; or (iv) the Issuer shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment of or taking possession by a
receiver, administrator, liquidator, assignee, custodian, trustee or
sequestrator (or similar official), with respect to the whole or substantially
the whole of the assets of the Issuer or make any general assignment for the
benefit of creditors. Upon the occurrence of an Event of Default, the
principal of each obligation evidenced by such Note (together with interest
accrued and unpaid thereon) shall become, without any notice or demand,
immediately due and payable. (5)
5. Obligation Absolute. No provision of the Issuing and Paying Agency Agreement
under which the Notes are issued shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on each Note at the times, place and rate, and in the coin or
currency, herein prescribed.
6. Supplement. Any term contained in the Supplement shall supercede any
conflicting term contained herein.
- -----------------
(5) Unlike single payment notes, where a default arises only at the stated
maturity, interest-bearing notes with multiple payment dates should contain a
default provision permitting acceleration of the maturity if the Issuer
defaults on an interest payment.
25