Exhibit 10.3
COMMERCIAL PAPER
ISSUING AND PAYING AGENT AGREEMENT
(BOOK-ENTRY AND OBLIGATIONS
USING DTC FACILITIES
AND PHYSICAL NOTES)
THIS AGREEMENT ("Agreement") dated as of December 29, 2006 ("Effective Date") is
entered into by and between Nelnet, Inc (the "Issuer") with offices at 121 South
13th Street, Suite 201 Lincoln, NE 68508 and Deutsche Bank Trust Company
Americas (the "Bank") with offices at 60 Wall St, 27th Floor, New York, NY
10005.
SECTION 1. APPOINTMENT
The Issuer requests and authorizes the Bank to act as agent for the
Issuer in connection with the issuance and payment of unsecured (a)
book-entry obligations (each an "Obligation" and collectively the
"Obligations") as evidenced by Master Note Certificate(s) (the "Note
Certificate(s)") and (b) bearer short term promissory notes of the
Issuer (each a "Note" and collectively the "Notes"), both (a) and (b) in
the forms appended hereto in Exhibit A. The Bank agrees to act as such
agent for the Issuer subject to the provisions of this Agreement
commencing on the Effective Date shown above.
Insofar as the context requires, all references herein to an Issuer's
"Obligation" shall be deemed to include the Issuer's Note, and all
references herein to an Issuer's "Obligations" or "Book-entry
Obligations" shall be deemed to include the Issuer's Notes.
SECTION 2. CERTIFICATE AGREEMENT
The Issuer acknowledges that the Bank has previously entered into a
commercial paper certificate agreement (the "Certificate Agreement")
which copy is appended hereto as Exhibit E, with the Depository Trust
Company (DTC) and the Issuer also acknowledges that the continuation in
effect of the Certificate Agreement is a necessary prerequisite to the
Bank's providing services related to issuance of the Obligations. The
Issuer understands and agrees that the Certificate Agreement shall
supplement the provisions of this Agreement and that the Issuer is bound
by the provisions of the Certificate Agreement.
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SECTION 3. LETTER OF REPRESENTATIONS; RESOLUTIONS;AUTHORIZED OFFICERS
The Issuer will, prior to the Effective Date, deliver to the Bank an
executed Letter of Representations (the "Representations"), a copy of
which is appended hereto as Exhibit F. Further, the Issuer understands
and agrees that such Representations when executed by the Issuer, the
Bank and DTC shall supplement the provisions of this Agreement and that
the Issuer, the Bank, and DTC shall be bound by the provisions of the
Representations. The Bank and the Issuer agree to comply with the
relevant portions of DTC's Commercial Paper Issuing and Paying Agent
Manual, and the DTC Same Day Settlement System Rules (collectively the
"DTC Rules").
The Issuer has delivered to the Bank (a) a certified copy of the
resolutions adopted by the Board of Directors of the Issuer concerning
the issuance of Obligations by the Issuer (the "Resolutions"), which
copy is appended hereto as Exhibit B, and (b) a certified original of
the Issuer's certificate of incumbency (the "Certificate of
Incumbency"), containing the name, title, and true signature of those
officers of the Issuer authorized by the Resolutions to take action with
respect to the Obligations (the "Authorized Officers"), which
certificate is appended hereto as Exhibit C. The Issuer agrees to
provide the Bank with revised certified Resolutions and/or Certificates
of Incumbency when and as required by changes in authorization of
personnel.
SECTION 4. AUTHORIZED PERSONS
The Issuer authorizes the Bank to accept and to execute Instructions, as
defined in and given pursuant to Section 6 hereof by any one of the
employees and/or Agents (defined as sales agents or dealers authorized
by a separate agreement between the Issuer and its sales agents or
dealers) of the Issuer who are designated in a writing that is signed by
the requisite number of Authorized Officers. Such designated employees
or Agents shall be hereinafter collectively referred to as "Authorized
Persons". The initial written designation of Authorized Person(s) is
appended hereto as Exhibit D. The Issuer agrees to provide the Bank with
revised written designations in the form of Exhibit D when and as
required by changes in authorization or personnel.
SECTION 5. NOTE CERTIFICATES
(X) Book entry Obligations:
The Issuer will, prior to the Effective Date, deliver to the Bank
a Note Certificate evidencing Obligations issued, such Note
Certificate bearing the manual or facsimile signatures of the
requisite number of Authorized Officers and specifying the date
of issuance, the full legal name of the Issuer, the name of the
state in which the Issuer is incorporated, and the name of the
Bank, acting as paying agent for the Issuer, in each case the
Note Certificate being registered in the name of Cede & Co., a
nominee of DTC.
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(Y) Physical Notes and Signature Stamps:
For use as described in Section 7 hereof, the Issuer will, prior
to the Effective Date, (a) deliver to the Bank a supply of the
Issuer's sequentially numbered, blank Notes bearing the manual or
facsimile signatures of the requisite number of Authorized
Officers and having spaces to show the face or principal amount,
payee, date of issue, maturity date and amount of interest (if an
interest bearing Note), and/or (b) authorize the Bank to use the
Bank's commercial paper universal note stock, which has spaces to
show the face or principal amount, payee, date of issue, maturity
date, amount of interest (if an interest bearing Note) and
signature(s) of the Authorized Officers. If the Issuer elects
(b), or if the Notes described in (a) do not bear such
signature(s) when delivered to the Bank, then the Issuer will
deliver to the Bank for each signature required to be placed on
the Notes two (2) stamps bearing the facsimile signature of an
Authorized Officer.
(Z) Book Entry Obligations, Physical Notes and Signature Stamps:
Any Obligation (as evidenced by the Note Certificate or Note
bearing the manual or facsimile signature of an Authorized
Officer) shall, upon the Bank's issuance of such Obligation on
behalf of the Issuer, bind the Issuer notwithstanding that such
Authorized Officer shall have died or shall have otherwise ceased
to hold office on the date such Obligation is issued by the Bank.
Furthermore, the Issuer agrees that the Bank shall have no duty
or responsibility to determine the genuineness of the facsimile
and/or manual signatures appearing on the Note Certificate(s),
Notes or stamps.
SECTION 6. INSTRUCTIONS
The term "Instructions" shall mean a communication, purporting to be
from an Authorized Officer or Authorized Person, in the form of either
(a) a written notice including those transmitted through facsimile
transmittal equipment; (b) a telephone call; and/or (c) a transmission
through an instruction and reporting communication service ("Noteline
Direct") offered by the Bank pursuant to Section 10 hereof, in each case
received by the Bank at the address specified in Section 15 prior to
1:00 p.m. New York time on the day on which the Instructions are to be
operative, which shall be a day the Bank is open for business.
If the Bank, at its option, acts upon Instructions transmitted after
1:00 p.m. New York time on the day on which the Instructions are to be
operative, the Issuer understands and agrees that (a) such Instructions
shall be acted upon, on a best efforts basis, by the Bank pursuant to
the custom and practice of the commercial paper market, and (b) the Bank
makes no representations or warranties that the issuance and delivery of
any Note or Obligation pursuant to Section 7 hereof shall be completed
prior to the close of business on the issue date specified in the
Instructions.
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Any Instructions given by telephone shall be confirmed to the Bank in a
writing purporting to be from an Authorized Officer or Authorized Person
prior to 1:00 p.m. New York time on the day on which such Instructions
are to be operative. In the absence of the Bank's timely receipt of such
written confirmation or in the event the Bank acts upon Instructions
received after 1:00 p.m. New York time on the day on which the
Instructions are to be operative, the Issuer understands and agrees that
the Instructions given by telephone or received after the aforementioned
1:00 p.m. New York time, as understood by the Bank, shall be the true
and controlling Instructions for all purposes of this Agreement.
Notwithstanding anything to the contrary in this Section 6, the Issuer
acknowledges that the Bank may act upon the Instructions without any
duty to make any inquiry regarding the genuineness of such Instructions.
SECTION 7. ISSUANCE
(X) Book Entry Obligations:
The Bank's sole duties in connection with the issuance of the
Obligations when the Issuer delivers the Note Certificate(s) to
the Bank in the form described in Section 5(X) herein, shall be
as follows:
(a) to hold Note Certificates in safekeeping;
(b) to assign to each Instruction received from the Issuer a
CUSIP number as specified in and in accordance with the
CUSIP number assignment received by the Bank from the
Issuer;
(c) to cause to deliver an Obligation on behalf of the Issuer
upon receipt of Instructions from the Issuer, or its
designated agent(s), as to the face or principal amount,
net dollar amount, date of issue, maturity date, interest
rate (if any), and amount of interest due at maturity (if
an interest bearing Obligation), by way of data entry or
data transfer to the DTC Same Day Funds Settlement System
("SDFS"), and to receive from SDFS a confirmation receipt
that such delivery was effected; and
(d) to credit the net proceeds of all deliveries of the
Obligations to the Issuer's account with the Bank (Account
No. 53895) under advice to the Issuer at the address
specified in Section 15 hereof.
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Y. Physical Notes:
The Bank's sole duties in connection with the issuance of the
Notes when the Issuer delivers a supply of the Issuer's blank
Notes to the Bank or uses the Bank's commercial paper universal
note stock pursuant to Section 5(Y) hereof shall be as follows:
(a) to hold the blank Notes in safekeeping, pending receipt of
the Issuer's Instructions;
(b) to complete each Note pursuant to the Instructions as to
the face or principal amount, net dollar amount, payee
(which shall be "BEARER" unless otherwise specified in the
Instructions), date of issue, maturity date, interest rate
(if any) and amount of interest due at maturity (if an
interest bearing Note);
(c) to cause a duly authorized officer or duly authorized
employee of the Bank to countersign each Note for purposes
of authentication of the Note only;
(d) to deliver the Notes in accordance with the Instructions
(i) by hand, against receipt for payment, (ii) by United
States Post Office registered mail, addressed as provided
in the Instructions or (iii) as otherwise provided in the
Instructions; and
(e) to credit the net proceeds of all deliveries of Notes to
the Issuer's account with the Bank (Account No. 53895)
under advice to the Issuer at the address specified in
Section 15 hereof.
The Bank's additional duties in connection with the issuance of
the Notes when the Issuer delivers facsimile signature stamps to
the Bank pursuant to Section 5(Y) hereof shall be as follows:
(f) to hold the facsimile signature stamps delivered pursuant
to Section 5(Y) hereof in safekeeping pending receipt of
the Instructions; and
(g) to apply the facsimile signature stamp(s) to the Notes
pursuant to the Instructions.
Z. Book Entry Obligations and Physical Notes:
The Issuer acknowledges that pursuant to the custom and practice
of the commercial paper market, the delivery or mailing of an
Obligation against payment of the net amount of the Obligation
(i.e., the principal amount of the Obligation less the discount
specified in the Instructions or the principal amount of an
interest bearing Obligation) and the actual receipt of payment
thereof are not simultaneous transactions.
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Therefore, whenever the Instructions direct the Bank to deliver
any Obligation against payment, the Bank is authorized to and
will deliver such Obligation to the party specified in the
Instructions and hold as receipt a confirmation copy generated by
SDFS (in the case of Book Entry transactions), or (a) the receipt
of the party specified in the Instructions or (b) the United
States Post Office's registered mail (both (a) and (b) in the
case of physical Notes) in lieu of immediate payment by the
purchaser of the Obligation (the "Purchaser"). The Issuer also
acknowledges that pursuant to the custom and practice of the
commercial paper market, the Purchaser is obligated to settle in
immediately available funds at or before the close of business on
the Issue Date specified on the Obligation. The Issuer
understands and agrees that whenever the Bank delivers an
Obligation against receipt of funds as set forth above, the
Issuer and not the Bank shall bear the risk of the Purchaser's
failure to remit the net amount of the Obligation purchased, and
of the loss or theft of Notes after such Notes are placed in the
United States mail.
The Bank shall have no duty or responsibility to make any
transfer of the proceeds of the sale of the Issuer's Obligations,
or to advance any monies or effect any credit with respect to
such proceeds or transfers unless and until (i) the Bank has
actually received the proceeds of the sale of the Obligations,
and (ii) such receipt of the proceeds is not subject to reversal
or cancellation. If the Bank, at its sole option, effects any
such transfer that results in an overdraft in any account of the
Issuer, the amount of such overdraft shall be considered as a
loan to the Issuer, and the Issuer agrees to pay the Bank on
demand the amount of such loan together with interest thereon at
the rate customarily charged by the Bank on similar loans.
SECTION 8. PAYMENT
Bank's sole duties in connection with payment of the Obligations shall
be, upon presentment at maturity of an issued Obligation, to pay the
principal amount of a discounted Obligation or principal plus interest
of an interest-at-maturity Obligation to the party appearing to be
entitled thereto, and to debit the Issuer's account with the Bank
(Account No.53895) for such amount under advice to the Issuer at the
address specified in Section 15 hereof.
The Bank shall have no obligation to pay, at maturity, the amount
referred to in this Section 8 unless sufficient funds have been received
by the Bank in collected funds. If the Bank, at its sole option, makes
any such payment that results in an overdraft in any account of the
Issuer, the amount of such overdraft shall be considered a loan to the
Issuer, and the Issuer agrees to pay the Bank on demand the amount of
such loan together with interest thereon at the rate customarily charged
by the Bank on similar loans.
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SECTION 9. UNITED STATES DOLLARS
The Issuer agrees that the Obligations issued or presented hereunder
shall be denominated in United States dollars. The Issuer further agrees
that payment of any and all amounts due pursuant to the provisions of
this Agreement shall be made solely in United States dollars.
SECTION 10. NOTELINE DIRECT
The Issuer is granted a personal, non-transferable and non-exclusive
right to use the instruction and reporting communication service
Noteline Direct to transmit through the Noteline Direct system
Instructions made pursuant to Section 6 hereof. The Issuer may, by
separate agreement between the Issuer and one or more of its Agents,
authorize the Agent (in each case other than the Bank) to directly
access Noteline Direct for the purposes of transmitting Instructions to
the Bank or obtaining reports with respect to the Obligations.
The Issuer acknowledges that (a) some or all of the services utilized in
connection with Noteline Direct are furnished by Financial Sciences
Corporation ("FSC"), (b) Noteline Direct is provided to the Issuer "AS
IS" without warranties or representations of any kind whatsoever by FSC
or the Bank, and (c) Noteline Direct is proprietary and confidential
property disclosed to the Issuer in confidence and only on the terms and
conditions and for purposes set forth in this Agreement.
By this Agreement, the Issuer acquires no title, ownership or
sublicensing rights whatsoever in Noteline Direct or in any trade
secret, trademark, copyright or patent of the Bank or FSC now or to
become applicable to Noteline Direct. The Issuer may not transfer,
sublicense, assign, rent, lease, convey, modify, translate, convert to a
programming language, decompile, disassemble, recirculate, republish or
redistribute Noteline Direct for any purpose without the prior written
consent of the Bank and, where necessary FSC.
In the event (a) any action is taken or threatened which may result in a
disclosure or transfer of Noteline Direct or any part thereof, other
than as authorized by this Agreement, or (b) the use of any trademark,
trade name, service mark, service name, copyright or patent of the Bank
or FSC by the Issuer amounts to unfair competition, or otherwise
constitutes a possible violation of any kind, then the Bank and/or FSC
shall have the right to take any and all action deemed necessary to
protect their rights in Noteline Direct, and to avoid the substantial
and irreparable damage which would result from such disclosure, transfer
or use, including the immediate termination of the Issuer's right to use
Noteline Direct.
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To permit the use of Noteline Direct to issue Instructions and/or obtain
reports with respect to the Obligations, the Bank will supply the Issuer
with an identification number and initial passwords. From time to time
thereafter, the Issuer may change its passwords directly through
Noteline Direct. The Issuer will keep all information relating to its
identification number and passwords strictly confidential and will be
responsible for the maintenance of adequate security over its customer
identification number and passwords. For security purposes, the Issuer
should change its passwords frequently (at least once a year).
Instructions transmitted over Noteline Direct and received by the Bank
pursuant to Section 6 hereof accompanied by the Issuer's identification
number and the passwords, shall be deemed conclusive evidence that such
Instructions are correct and complete and that the issuance or
redemption of the Obligation(s) directed thereby has been duly
authorized by the Issuer.
SECTION 11. REPRESENTATIONS AND WARRANTIES OF ISSUER
THE ISSUER REPRESENTS AND WARRANTS AS FOLLOWS:
(a) This Agreement and the Obligations have been duly authorized and
this Agreement when executed and the Obligations when issued in
accordance with Instructions, will be valid and binding
obligations of the Issuer, enforceable against the Issuer in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights
and to general equity principles;
(b) This Agreement and the consummation of the transactions herein
contemplated will not (i) conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument for money borrowed to which the Issuer is
a party or by which the Issuer is bound or to which any of the
property or assets of the Issuer is subject, or (ii) result in
any violation of (x) the provisions of the Articles of
Incorporation or the By-Laws of the Issuer or (y) to the best
knowledge of the Issuer, any statute or any order, rule or
regulation of any court or government agency or body having
jurisdiction over the Issuer or any of its properties, in any
manner which, in the case of clauses (i) and (ii) (y), would have
a material adverse effect on the business of the Issuer and its
subsidiaries taken as a whole;
(c) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
having jurisdiction over the Issuer or any of its properties is
required for the issue and sale of the Obligations, except such
as have been, or will have been obtained prior to the issue and
sale of the Obligations, and such consents, approvals,
authorizations, registrations or qualifications as may be
required under "blue sky" or state securities laws or insurance
laws in connection with the issue and sale of the Obligations by
the Issuer; and
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(d) Each Obligation issued under this Agreement will be exempt from
registration under the Securities Act of 1933, as amended. Each
Instruction by the Issuer to issue Obligations under this
Agreement shall be deemed a representation and warranty by the
Issuer as of the date thereof that the representations and
warranties herein are true and correct as if made on and as of
such date.
SECTION 12. COMPENSATION
The Issuer agrees to pay such compensation for the Bank's issuing and
paying agent services pursuant to this Agreement in accordance with the
Bank's schedule of fees, as amended from time to time.
SECTION 13. INDEMNIFICATION
The Issuer agrees that the Bank shall not be liable for any losses,
damages, liabilities or costs suffered or incurred by the Issuer as a
result of (a) the Bank's having executed Instructions, (b) the Bank's
improperly executing or failing to execute any Instructions because of
unclear Instructions, failure of communications media or any other
circumstances beyond the Bank's control, (c) the actions or inactions of
DTC, any Agent or any broker, dealer, consignee or agent not selected by
the Bank, or (d) any other acts or omissions of the Bank (or of any of
its agents or correspondents) relating to this Agreement or the
transactions or activities contemplated hereby except to the extent, if
any, that such other acts or omissions constitute negligence or willful
misconduct by the Bank. The Issuer, in the absence of negligence or
willful misconduct by the Bank, agrees to indemnify the Bank and hold it
harmless from and against (a) any and all actions, claims (groundless or
otherwise), suits, losses, fines and penalties arising out of the Bank's
having executed any Instructions or otherwise having performed any of
its obligations hereunder and (b) any damages, costs, expenses
(including reasonable legal fees and disbursements), losses or
liabilities relating to any such actions, claims, suits, losses fines or
penalties or to any breach of this Agreement by the Issuer. In no event
shall the Bank be liable for special, indirect or consequential damages.
This Section 13, Indemnification, shall survive any termination of this
Agreement and the issuance and payment of any Note(s).
14. TERMINATION
Either the Bank or the Issuer may terminate this Agreement at any time
by not less than ten (10) days' prior written notice to the other. No
such termination shall affect the rights and obligations of the Issuer
and the Bank which have accrued under this Agreement prior to
termination.
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15. ADDRESSES
Instructions hereunder shall be (a) mailed, (b) telephoned, (c)
transmitted by facsimile device, and/or (d) transmitted via Noteline
Direct to the Bank at the address, telephone number, and/or facsimile
number specified below and shall be deemed delivered upon actual receipt
by the Bank's Commercial Paper Issuance Operations at the address,
telephone number, and/or facsimile number specified below.
Deutsche Bank Trust Company Americas
Trust & Securities Services
60 Wall St - 27th Floor
New York, NY 10005
Attention: Money Market Instruments Operations
Telephone: (212) 250-7539 / 2972
Facsimile: (212) 797-8616
All notices, requests, demands and other communications hereunder
(excluding Instructions) shall be in writing and shall be deemed to have
been duly given (a) upon delivery by hand (against receipt), or (b) by
United States Post Office registered mail (against receipt) or by
regular mail (upon receipt) to the party and at the address set forth
below or at such other address as either party may designate by written
notice:
(a) "ISSUER"
Nelnet, Inc
121 South 13th Street, Suite 201
Lincoln, NE 68508
Attn: Managing Director
Telephone: 402-458-2747
Facsimile: 402-458-2399
(b) Deutsche Bank Trust Company Americas
Trust & Securities Services
60 Wall St. - 27th Floor
New York, NY 10005
Attention: Money
Market Instruments Operations
Telephone: (212) 250-7539 / 2972
Facsimile: (212) 797-8616
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16. MISCELLANEOUS
(a) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York and as applicable,
operating circulars of the Federal Reserve Bank, federal laws and
regulations as amended, New York Clearing House rules, the DTC
Rules, and general commercial bank practices applicable to
commercial paper issuance and payment, funds transfer and related
activities.
(b) This Agreement may not be assigned by the Issuer and may not be
modified, or amended or supplemented except by a writing or
writings duly executed by the duly authorized representatives of
the Issuer and the Bank.
(c) This Agreement contains the entire understanding and agreement
between the parties with respect to the subject matter hereof.
All prior agreements, understandings, representations,
statements, promises, inducements, negotiations, and undertakings
and all existing contracts previously executed between said
parties with respect to said subject matter are superseded
hereby.
(d) With respect to all references herein to nouns, insofar as the
context requires, the singular form shall be deemed to include
the plural, and the plural form shall be deemed to include the
singular.
(e) In no event shall the Bank be liable for any failure or delay in
the performance of its obligations hereunder because
circumstances beyond the Bank control, including, but not limited
to, acts of God, flood, war (whether declared or undeclared),
terrorism, fire, riot, embargo, government action, including any
laws, ordinances, regulations or the like which restrict or
prohibit the providing of the services contemplated by this
Agreement.
(f) The Bank shall incur no liability in acting upon telephonic,
facsimile or other electronic instructions which the Bank
believes in good faith to have been given by an authorized
person, including but not limited to Instructions received in
connection with the issuance of Obligations. In addition, in the
event that the Issuer or an Agent currently or in the future
utilizes a trading system that produces issuance instructions
that do not include signatures or initials, the Bank may
conclusively rely upon such instructions absent such signatures
or initials.
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Agreed to and Accepted by:
Deutsche Bank Trust Company Americas Nelnet, Inc
/s/ Evangelos Ntavos /s/ Terry J. Heimes
- --------------------------------- ------------------------------------
Authorized Officer's Signature Authorized Officer's Signature
Name: Evangelos Ntavos Name: Terry J. Heimes
--------------------------- ------------------------------------
Title: Assistant Vice President Title: CFO
--------------------------- ------------------------------------
Date: December 29, 2006 Date: December 29, 2006
--------------------------- ------------------------------------
/s/ Wuendith Encalada
- --------------------------------- ------------------------------------
Authorized Officer's Signature Authorized Officer's Signature
Name: Wuendith Encalada Name:
---------------------------- ---------------------------------
Title: Assistant Vice President Title:
--------------------------- -------------------------------
Date: December 29, 2006 Date:
---------------------------- --------------------------------
List of Exhibits
Exhibit A DTC Master Note & Universal Note
Exhibit B Board Resolutions & Certificate of Incumbency
Exhibit C Authorized Officers & Certificate ofIncumbency
Exhibit D Authorized Persons
Exhibit E DTC Certificate Agreement
Exhibit F DTC Letter of Representations