Exhibit 4.1
INDENTURE OF TRUST
by and among
NELNET EDUCATION LOAN FUNDING, INC.
and
WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
and
wells fargo bank minnesota, national association
as Eligible Lender Trustee
Dated as of June 1, 2003
NELNET EDUCATION LOAN FUNDING, INC.
Reconciliation and tie between Trust Indenture Act of 1939 and Indenture
of Trust dated as of June 1, 2003.
Trust Indenture Act Section Indenture Section
Section 310(a)(1) 7.23
310(a)(2) 7.23
310(b) 7.23, 7.09
Section 311(a) 7.08
311(b) 7.08
Section 312(b) 9.16
312(c) 9.16
Section 313(a) 4.16
313(b) 4.16
313(c) 4.16, 8.04
Section 314(a)(1) 4.17
314(a)(2) 4.17
314(a)(3) 4.17
314(a)(4) 4.17
314(c) 2.02, 5.09
314(d)(1) 5.09
Section 315(b) 8.04
Section 317(a)(1) 4.18
317(a)(2) 7.24
Section 318(a) 9.09
318(c) 9.09
- --------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
Attention should also be directed to Section 318(c) of the 1939 Act, which
provides that the provisions of Sections 310 to and including 317 of the 1939
Act are a part of and govern every qualified indenture, whether or not
physically contained therein.
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and is not
intended to define, limit or describe the purpose or intent of any provisions of
this Indenture of Trust.)
Page
ARTICLE I
DEFINITIONS AND USE OF PHRASES.................................................3
ARTICLE II
NOTE DETAILS, FORM OF NOTES, REDEMPTION OF NOTES AND
USE OF PROCEEDS OF NOTES
Section 2.01. Note Details................................................14
Section 2.02. Execution of Notes..........................................14
Section 2.03. Registration, Transfer and Exchange of Notes; Persons
Treated as Registered Owners................................15
Section 2.04. Lost, Stolen, Destroyed and Mutilated Notes.................15
Section 2.05. Indenture Trustee's Authentication Certificate..............16
Section 2.06. Cancellation and Destruction of Notes by the
Indenture Trustee...........................................16
Section 2.07. Temporary Notes.............................................16
Section 2.08. Issuance of Notes...........................................17
ARTICLE III
PARITY AND PRIORITY OF LIEN; OTHER OBLIGATIONS; AND DERIVATIVE PRODUCTS
Section 3.01. Parity and Priority of Lien.................................18
Section 3.02. Other Obligations...........................................18
Section 3.03. Derivative Products; Counterparty Payments; Issuer
Derivative Payments.........................................19
ARTICLE IV
PROVISIONS APPLICABLE TO THE NOTES; DUTIES OF THE ISSUER
Section 4.01. Payment of Principal, Interest and Premium..................19
Section 4.02. Representations and Warranties of the Issuer................19
Section 4.03. Covenants as to Additional Conveyances......................20
Section 4.04. Further Covenants of the Issuer.............................20
Section 4.05. Enforcement of Servicing Agreements.........................21
Section 4.06. Procedures for Transfer of Funds............................22
Section 4.07. Additional Covenants with Respect to the Act................22
Section 4.08. Financed Eligible Loans; Collections Thereof;
Assignment Thereof..........................................23
Section 4.09. Appointment of Agents, Etc..................................24
Section 4.10. Capacity to Sue.............................................24
Section 4.11. Continued Existence; Successor to Issuer....................24
Section 4.12. Amendment of Student Loan Purchase Agreements...............24
Section 4.13. Representations; Negative Covenants.........................24
Section 4.14. Additional Covenants........................................30
Section 4.15. Providing of Notice.........................................31
Section 4.16. Reports by Issuer...........................................32
Section 4.17. Statement as to Compliance..................................32
Section 4.18. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee........................................33
Section 4.19. Representations of the Issuer Regarding the Indenture
Trustee's Security Interest.................................33
Section 4.20. Covenants of the Issuer Regarding the Indenture Trustee's
Security Interest...........................................34
Section 4.21. Tax Treatment...............................................34
Section 4.22. Opinions as to Indenture Trust Estate.......................35
ARTICLE V
FUNDS
Section 5.01. Creation and Continuation of Funds and Accounts.............35
Section 5.02. Acquisition/Redemption Fund.................................36
Section 5.03. Collection Fund.............................................38
Section 5.04. Reserve Fund................................................39
Section 5.05. Operating Fund..............................................40
Section 5.06. Transfers to Issuer.........................................41
Section 5.07. Investment of Funds Held by Indenture Trustee...............41
Section 5.08. Investment Securities.......................................42
Section 5.09. Release; Sale of Financed Eligible Loans....................45
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default Defined...................................46
Section 6.02. Remedy on Default; Possession of Trust Estate...............47
Section 6.03. Remedies on Default; Advice of Counsel......................48
Section 6.04. Remedies on Default; Sale of Trust Estate...................48
Section 6.05. Appointment of Receiver.....................................49
Section 6.06. Restoration of Position.....................................49
Section 6.07. Purchase of Properties by Indenture Trustee or Registered
Owners......................................................49
Section 6.08. Application of Sale Proceeds................................49
Section 6.09. Accelerated Maturity........................................49
Section 6.10. Remedies Not Exclusive......................................49
Section 6.11. Direction of Indenture Trustee..............................50
Section 6.12. Right to Enforce in Indenture Trustee.......................50
Section 6.13. Physical Possession of Obligations not Required.............51
Section 6.14. Waivers of Events of Default................................51
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ARTICLE VII
THE TRUSTEE
Section 7.01. Acceptance of Trust.........................................51
Section 7.02. Recitals of Others..........................................52
Section 7.03. As to Filing of Indenture...................................52
Section 7.04. Indenture Trustee May Act Through Agents....................52
Section 7.05. Indemnification of Indenture Trustee........................53
Section 7.06. Indenture Trustee's Right to Reliance.......................54
Section 7.07. Compensation of Indenture Trustee...........................55
Section 7.08. Indenture Trustee May Own Notes.............................55
Section 7.09. Resignation of Indenture Trustee............................55
Section 7.10. Removal of Indenture Trustee................................56
Section 7.11. Successor Indenture Trustee.................................56
Section 7.12. Manner of Vesting Title in Indenture Trustee................56
Section 7.13. Additional Covenants by the Indenture Trustee to Conform
to the Act..................................................57
Section 7.14. Right of Inspection.........................................57
Section 7.15. Limitation with Respect to Examination of Reports...........57
Section 7.16. Servicing Agreement.........................................57
Section 7.17. Additional Covenants of Indenture Trustee...................57
Section 7.18. Duty of Indenture Trustee with Respect to Rating Agencies...58
Section 7.19. Merger of the Indenture Trustee.............................58
Section 7.20. Receipt of Funds from Servicer..............................59
Section 7.21. Special Circumstances Leading to Resignation of
Indenture Trustee...........................................59
Section 7.22. Survival of Indenture Trustee's Rights to Receive
Compensation, Reimbursement and Indemnification.............59
Section 7.23. Corporate Indenture Trustee Required; Eligibility;
Conflicting Interests.......................................59
Section 7.24. Indenture Trustee May File Proofs of Claim..................59
Section 7.25. Payment of Taxes and Other Governmental Charges.............60
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.01. Supplemental Indentures Not Requiring Consent of Registered
Owners......................................................61
Section 8.02. Supplemental Indentures Requiring Consent of Registered
Owners......................................................62
Section 8.03. Additional Limitation on Modification of Indenture..........63
Section 8.04. Notice of Defaults..........................................63
Section 8.05. Conformity With the Trust Indenture Act.....................63
ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Notices.....................................................64
Section 9.02. Covenants Bind Issuer.......................................65
Section 9.03. Lien Created................................................65
Section 9.04. Severability of Lien........................................65
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Section 9.05. Consent of Registered Owners Binds Successors...............65
Section 9.06. Nonliability of Directors; No General Obligation............65
Section 9.07. Nonpresentment of Notes or Interest Checks..................66
Section 9.08. Security Agreement..........................................66
Section 9.09. Laws Governing..............................................66
Section 9.10. Severability................................................66
Section 9.11. Exhibits....................................................66
Section 9.12. Non-Business Days...........................................66
Section 9.13. Parties Interested Herein...................................66
Section 9.14. Obligations Are Limited Obligations.........................67
Section 9.15. Counterparty Rights.........................................67
Section 9.16. Disclosure of Names and Addresses of Registered Owners......67
Section 9.17. Aggregate Principal Amount of Obligations...................67
Section 9.18. Financed Eligible Loans.....................................67
Section 9.19. No Petition; Subordination..................................67
ARTICLE X
PAYMENT AND CANCELLATION OF NOTES AND SATISFACTION OF INDENTURE
Section 10.01. Trust Irrevocable...........................................68
Section 10.02. Satisfaction of Indenture...................................68
Section 10.03. Cancellation of Paid Notes..................................69
ARTICLE XI
TERMINATION
Section 11.01. Termination of the Trust....................................69
Section 11.02. Notice......................................................70
ARTICLE XII
REPORTING REQUIREMENTS
Section 12.01. Annual Statement as to Compliance...........................70
Section 12.02. Annual Independent Public Accountants' Servicing Report.....71
Section 12.03. Administrator's Certificate.................................71
Section 12.04. Statements to Noteholders...................................71
EXHIBIT A ELIGIBLE LOAN ACQUISITION CERTIFICATE
EXHIBIT B Form of Issuer Order
EXHIBIT C FORM OF STUDENT LOAN PURCHASE AGREEMENT
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of June 1, 2003 (this "Indenture"), is
by and among NELNET EDUCATION LOAN FUNDING, INC. (the "Issuer"), a corporation
duly organized and existing under the laws of the State of Nebraska (the
"State"), WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association duly organized and operating under the laws of the United States of
America (together with its successors, the "Indenture Trustee"), as indenture
trustee hereunder and WELLS FARGO BANK MINNESOTA, National Association (together
with its successors, the "Eligible Lender Trustee"), as eligible lender trustee
hereunder (all capitalized terms used in these preambles, recitals and granting
clauses shall have the same meanings assigned thereto in Article I hereof);
W I T N E S S E T H:
WHEREAS, the Issuer represents that it is duly created as a corporation
under the laws of the State and that by proper action of its governing body it
has duly authorized the execution and delivery of this Indenture, which
Indenture provides for the payment of student loan asset-backed notes (the
"Notes") and the payments to any Counterparty (as defined herein), all to be
issued pursuant to the terms of Supplemental Indentures; and
WHEREAS, this Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act" or "TIA"), that are
deemed to be incorporated into this Indenture and shall, to the extent
applicable, be governed by such provisions; and
WHEREAS, the Indenture Trustee has agreed to accept the trusts herein
created upon the terms herein set forth; and
WHEREAS, it is hereby agreed between the parties hereto, the Registered
Owners of any Notes (the Registered Owners evidencing their consent by their
acceptance of the Notes) and any Counterparty (the Counterparty evidencing its
consent by its execution and delivery of a Derivative Product (as defined
herein)) that in the performance of any of the agreements of the Issuer herein
contained, any obligation it may thereby incur for the payment of money shall
not be general debt on its part, but shall be secured by and payable solely from
the Trust Estate, payable in such order of preference and priority as provided
herein;
NOW, THEREFORE, the Issuer (and, with respect to the legal title to the
Financed Eligible Loans, the Eligible Lender Trustee), in consideration of the
premises and acceptance by the Indenture Trustee of the trusts herein created,
of the purchase and acceptance of the Notes by the Registered Owners thereof, of
the execution and delivery of any Derivative Product by a Counterparty and the
Issuer and the acknowledgement thereof by the Indenture Trustee, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, does hereby GRANT, CONVEY, PLEDGE, TRANSFER, ASSIGN AND DELIVER to
the Indenture Trustee, for the benefit of the Registered Owners of the Notes,
any Counterparty (to secure the payment of any and all amounts which may from
time to time become due and owing to a Counterparty pursuant to any Derivative
Product), all of their right, title and interest in and to the moneys, rights,
and properties described in the granting clauses A through F below (the "Trust
Estate"), as follows:
GRANTING CLAUSE A
The Revenues (other than Revenues deposited in the Operating Fund or
otherwise released from the lien of the Trust Estate as provided herein);
GRANTING CLAUSE B
All moneys and investments held in the Funds created under Section
5.01(a) hereof (other than the moneys and investments held in the Operating
Fund);
GRANTING CLAUSE C
The Financed Eligible Loans;
GRANTING CLAUSE D
The Servicing Agreements, the Administrative Services Agreement, the
Assignment Agreement, the Student Loan Purchase Agreements, the Custodian
Agreements and the Guarantee Agreements as the same relate to Financed Eligible
Loans;
GRANTING CLAUSE E
Any Derivative Product and any Counterparty Guarantee; provided,
however, that this Granting Clause E shall not be for the benefit of a
Counterparty with respect to its Derivative Product; and
GRANTING CLAUSE F
Any and all other property, rights and interests of every kind or
description that from time to time hereafter is granted, conveyed, pledged,
transferred, assigned or delivered to the Indenture Trustee as additional
security hereunder.
TO HAVE AND TO HOLD the Trust Estate, whether now owned or held or
hereafter acquired, unto the Indenture Trustee and its successors or assigns;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for
the equal and proportionate benefit and security of all present and future
Registered Owners of the Notes, without preference of any Note over any other,
except as provided herein, and for enforcement of the payment of the Notes in
accordance with their terms, and all other sums payable hereunder (including
payments due and payable to any Counterparty) or on the Notes, and for the
performance of and compliance with the obligations, covenants, and conditions of
this Indenture, as if all the Notes and other Obligations (as defined herein) at
any time Outstanding had been executed and delivered simultaneously with the
execution and delivery of this Indenture;
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PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall
well and truly pay, or cause to be paid, the principal of the Notes and the
interest due and to become due thereon, or provide fully for payment thereof as
herein provided, at the times and in the manner mentioned in the Notes according
to the true intent and meaning thereof, and shall make all required payments
into the Funds as required under Article V hereof, or shall provide, as
permitted hereby, for the payment thereof by depositing with the Indenture
Trustee sums sufficient to pay or to provide for payment of the entire amount
due and to become so due as herein provided (including payments due and payable
to any Counterparty), then this Indenture and the rights hereby granted shall
cease, terminate and be void; otherwise, this Indenture shall be and remain in
full force and effect;
NOW, THEREFORE, it is mutually covenanted and agreed as follows:
ARTICLE I
DEFINITIONS AND USE OF PHRASES
The following terms have the following meanings unless the context
clearly requires otherwise:
"Account" shall mean any of the accounts created and established within
any Fund by this Indenture.
"Acquisition Period" shall have the meaning described in the
Supplemental Indenture for each series of Notes.
"Acquisition/Redemption Fund" shall mean the Fund by that name created
in Section 5.01(a)(i) hereof and further described in Section 5.02 hereof,
including any Accounts and Subaccounts created therein.
"Act" shall mean the Higher Education Act of 1965, as amended or
supplemented from time to time, or any successor federal act and all
regulations, directives, bulletins, and guidelines promulgated from time to time
thereunder.
"Add-on Consolidation Loan" shall mean an Eligible Loan included in the
Trust Estate, the principal balance of which is added to an existing
Consolidation Loan during the Add-on Period, as required by the Act.
"Add-on Period" shall mean the period of 180 days after the date of
origination of any Consolidation Loan acquired by the Issuer.
"Administrative Services Agreement" shall mean the Administration
Agreement dated as of June 1, 2003, between Nelnet, Inc. and the Issuer and any
other administrative services agreement entered into between the Issuer and an
entity who will provide administrative services for the Issuer, as supplemented
and amended.
"Administrator" means Nelnet, Inc. in its capacity as administrator of
the Issuer and the Financed Student Loans, and any successor thereto.
"Agent Member" shall mean a member of, or participant in, the Securities
Depository.
3
"Aggregate Market Value" shall mean on any calculation date the sum of
the Values of all assets of the Trust Estate, less moneys in any Fund or Account
which the Issuer is then entitled to receive for deposit into the Operating Fund
but which has not yet been removed from the Trust Estate.
"Asset Release Test" shall have the meaning described in Section 5.06
hereof.
"Assignment Agreement" shall mean the Partial Assignment Agreement dated
as of June 1, 2003, between the Issuer and the Indenture Trustee assigning to
the Indenture Trustee certain rights of the Issuer under certain of its loan
purchase agreements and servicing agreements.
"Authorized Officer" shall mean, when used with reference to the Issuer,
its Chairman, President, any Vice President or Secretary, or any other officer
or board member authorized in writing by the Board to act on behalf of the
Issuer.
"Authorized Representative" shall mean, when used with reference to the
Issuer, (a) an Authorized Officer, (b) the Administrator, or (c) any officer or
board member of any affiliate organization or other entity authorized by the
Board to act on the Issuer's behalf.
"Board" or "Board of Directors" shall mean the Board of Directors of the
Issuer.
"Business Day" shall mean the definition of Business Day found in the
Supplemental Indenture authorizing a series of Notes.
"Certificate of Insurance" shall mean any Certificate evidencing a
Financed Eligible Loan is Insured pursuant to a Contract of Insurance.
"Closing Date" shall mean the date of original issuance and delivery of
any Notes to an Underwriter or placement agent.
"Commission" shall mean the Securities and Exchange Commission.
"Contract of Insurance" shall mean the contract of insurance between the
Eligible Lender and the Secretary.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time. Each reference to a section of the Code herein shall be deemed to
include the United States Treasury Regulations, including applicable temporary
and proposed regulations, relating to such section which are applicable to the
Notes or the use of the proceeds thereof. A reference to any specific section of
the Code shall be deemed also to be a reference to the comparable provisions of
any enactment which supersedes or replaces the Code thereunder from time to
time.
"Collection Fund" shall mean the Fund by that name created in Section
5.01(a)(ii) hereof and further described in Section 5.03 hereof.
4
"Consolidation Fee" shall mean any federal origination fee, Monthly
Rebate Fee or similar fee payable to the Department relating to the origination
or ownership of Consolidation Loans.
"Consolidation Loan" shall mean an Eligible Loan made pursuant to
Section 428C of the Act to consolidate the borrower's obligations under various
federally authorized student loan programs into a single loan, as supplemented
by the addition of any related Add-on Consolidation Loan.
"Counterparty Payments " shall mean any payment to be made to, or for
the benefit of, the Issuer under a Derivative Product.
"Counterparty" shall mean any counterparty under a Derivative Product.
"Custodian Agreement" shall mean, collectively, the custodian agreements
with any Servicer or other custodian or bailee related to Financed Eligible
Loans.
"Derivative Payment Date" shall mean, with respect to a Derivative
Product, any date specified in the Derivative Product on which both or either of
the Issuer Derivative Payment and/or a Counterparty Payment is due and payable
under the Derivative Product.
"Derivative Product" shall mean a written contract or agreement between
the Issuer and a Counterparty entered into pursuant to Section 3.03 hereof.
"Derivative Value" shall mean the value of the Derivative Product, if
any, to the Counterparty, provided that such value is defined and calculated in
substantially the same manner as amounts are defined and calculated pursuant to
the applicable provisions of an ISDA Master Agreement.
"Dissolution" shall mean, with respect to Article XI and the Issuer, the
occurrence of any of the events which would cause a dissolution of a limited
partnership organized under the laws of the State of Delaware, the sole general
partner of which is the Issuer.
"Eligible Lender" shall mean any "eligible lender," as defined in the
Act, and which has received an eligible lender designation from the Secretary
with respect to Eligible Loans made under the Act.
"Eligible Lender Trustee" shall mean Wells Fargo Bank Minnesota,
National Association, a national banking association, not in its individual
capacity but solely as Eligible Lender Trustee under the Eligible Lender Trust
Agreement, or its successors and assigns.
"Eligible Lender Trust Agreement" shall mean the Eligible Lender Trust
Agreement dated as of June 1, 2003, between the Issuer and the Eligible Lender
Trustee.
"Eligible Loan" shall mean any loan made to finance post-secondary
education that is (a) made under the Act (including Consolidation Loans and
Add-on Consolidation Loans); (b) insured by the Secretary of Health and Human
Services pursuant to the Public Health Services Act; or (c) otherwise permitted
5
to be originated or acquired by the Issuer pursuant to its Program (provided a
Rating Confirmation is received with respect thereto); provided, however, that
if after any reauthorization or amendment of the Act loans authorized
thereunder, including, without limitation, their benefits, any provisions, or
the servicing thereof, are materially different from loans authorized prior to
such reauthorization or amendment, such loans shall not constitute Eligible
Loans unless a Rating Confirmation is obtained.
"Eligible Loan Acquisition Certificate" shall mean a certificate signed
by an Authorized Representative of the Issuer in substantially the form attached
as Exhibit A hereto.
"Event of Bankruptcy" shall mean (a) the Issuer shall have commenced a
voluntary case or other proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official of it or any
substantial part of its property, or shall have made a general assignment for
the benefit of creditors, or shall have declared a moratorium with respect to
its debts or shall have failed generally to pay its debts as they become due, or
shall have taken any action to authorize any of the foregoing; or (b) an
involuntary case or other proceeding shall have been commenced against the
Issuer seeking liquidation, reorganization, or other relief with respect to it
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or any substantial part
of its property provided such action or proceeding is not dismissed within 60
days.
"Event of Default" shall have the meaning specified in Article VI
hereof.
"Financed" or "Financing" when used with respect to Eligible Loans,
shall mean or refer to Eligible Loans (a) acquired by the Issuer with balances
in the Acquisition/Redemption Fund or otherwise deposited in or accounted for in
the Acquisition/Redemption Fund or otherwise constituting a part of the Trust
Estate and (b) Eligible Loans substituted or exchanged for Financed Eligible
Loans, but does not include Eligible Loans released from the lien of this
Indenture and sold or transferred, to the extent permitted by this Indenture.
"Fiscal Year" shall mean the fiscal year of the Issuer ending December
31, or as otherwise established from time to time.
"Fitch" shall mean Fitch, Inc., a corporation organized and existing
under the laws of the State of Delaware, its successors and assigns.
"Funds" shall mean each of the Funds created pursuant to Section 5.01(a)
and (b) hereof.
"Guarantee" or "Guaranteed" shall mean, with respect to an Eligible
Loan, the insurance or guarantee by the Guaranty Agency pursuant to such
Guaranty Agency's Guarantee Agreement of the maximum percentage of the principal
of and accrued interest on such Eligible Loan allowed by the terms of the Act
with respect to such Eligible Loan at the time it was originated and the
coverage of such Eligible Loan by the federal reimbursement contracts,
providing, among other things, for reimbursement to the Guaranty Agency for
payments made by it on defaulted Eligible Loans insured or guaranteed by the
Guaranty Agency of at least the minimum reimbursement allowed by the Act with
respect to a particular Eligible Loan.
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"Guarantee Agreements" shall mean a guaranty or lender agreement between
the Indenture Trustee and any Guaranty Agency, and any amendments thereto.
"Guaranty Agency" shall mean any entity authorized to guarantee student
loans under the Act and with which the Indenture Trustee maintains a Guarantee
Agreement.
"Highest Priority Obligations" shall mean, (a) at any time when Senior
Obligations are Outstanding, the Senior Obligations, (b) at any time when no
Senior Obligations are Outstanding, the Subordinate Obligations, and (c) at any
time when no Senior Obligations or Subordinate Obligations are Outstanding, the
Junior-Subordinate Obligations (and any priorities as between Junior-Subordinate
Obligations as shall be established by Supplemental Indentures).
"Indenture" shall mean this Indenture of Trust, including all
supplements and amendments hereto.
"Insurance" or "Insured" or "Insuring" shall mean, with respect to an
Eligible Loan, the insuring by the Secretary (as evidenced by a Certificate of
Insurance or other document or certification issued under the provisions of the
Act) under the Act of 100% of the principal of and accrued interest on such
Eligible Loan.
"Interest Benefit Payment" shall mean an interest payment on Eligible
Loans received pursuant to the Act and an agreement with the federal government,
or any similar payments.
"Interest Payment Date" shall mean the Interest Payment Dates specified
for Notes in the Supplemental Indenture authorizing the issuance of such Notes.
"Investment Agreement" shall mean, collectively, (a) the Investment
Agreement dated as of July 10, 2003, between the Indenture Trustee and Trinity
Plus Funding Company, LLC and (b) any other investment agreement approved by the
Rating Agencies.
"Investment Securities" shall mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form, all purchased at a price not in excess of par, which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws
of the United States of America or any State (or any domestic branch of
a foreign bank) and subject to supervision and examination by federal or
state banking or depository institution authorities (including
depository receipts issued by any such institution or trust company as
custodian with respect to any obligation referred to in paragraph (a)
above or portion of such obligation for the benefit of the holders of
such depository receipts); provided, however, that at the time of the
investment therein (which shall be deemed to be made again each time
funds are reinvested following each Payment Date), the commercial paper
or other short-term senior unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other
than such depository institution or trust company) thereof shall have a
credit rating from each of the Rating Agencies in the highest investment
category granted thereby;
7
(c) commercial paper and auction rate securities having, at the
time of the investment or contractual commitment to invest therein, a
rating from each of the Rating Agencies in the highest investment
category granted thereby;
(d) investments in money market funds having a rating from each
of the Rating Agencies rating such fund, in the highest investment
category granted thereby provided at least Moody's has rated such fund
(including funds for which the Indenture Trustee, the Servicer or the
Eligible Lender Trustee or any of their respective Affiliates is
investment manager or advisor); provided, however, that such Fitch
rating shall be AA/F1+ or higher for any money market fund which has the
ability to maintain a stable one-dollar net asset value per share and
whose shares are freely transferable on a daily basis;
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (b) above;
(g) any Investment Agreement; and
(h) any other investment permitted by each of the Rating Agencies
as evidenced by a Rating Confirmation delivered to the Indenture
Trustee.
Notwithstanding the foregoing, for purposes of clauses (b), (c), (e) and (f)
above, the provider must have a Moody's long term rating of Aaa if the
investment is longer than 6 months, Aa3 if the investment is between 90 and 180
days, and A1 if the investment is between 30 and 90 days. No obligation will be
considered to be rated in the highest investment category if it has an "r"
highlighter affixed to its rating.
"ISDA Master Agreement" shall mean the ISDA Interest Rate and Currency
Exchange Agreement, copyright 1992, as amended from time to time, and as in
effect with respect to any Derivative Product.
"Issuer" shall mean Nelnet Education Loan Funding, Inc., a corporation
organized and existing under the laws of the State, and any successor thereto.
"Issuer Order" shall mean a written order signed in the name of the
Issuer by an Authorized Representative.
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"Issuer Derivative Payment" shall mean a payment required to be made by
or on behalf of the Issuer due to a Counterparty pursuant to a Derivative
Product (including Priority Termination Payments, but excluding other
Termination Payments).
"Junior-Subordinate Notes" shall mean Notes, the principal of and
interest on which is payable on a subordinated basis to the payment of the
principal of and interest on the Senior Notes and the Subordinate Notes;
provided, however, that any series of the Junior-Subordinate Notes need not
necessarily be payable on a parity with all other series of the
Junior-Subordinate Notes.
"Junior-Subordinate Obligations" shall mean Junior-Subordinate Notes and
any Derivative Product, the priority of payment of which is equal with that of
any series or subseries of Junior-Subordinate Notes.
"Liquidated Financed Eligible Loan" shall mean any defaulted Financed
Eligible Loan liquidated by a Servicer (which shall not include any Financed
Eligible Loan on which payments are received from a Guaranty Agency) or which a
Servicer has, after using all reasonable efforts to realize upon such Financed
Eligible Loan, determined to charge off.
"Liquidation Proceeds" shall mean, with respect to any Liquidated
Financed Eligible Loan which became a Liquidated Financed Eligible Loan during
the current calendar quarter in accordance with a Servicer's customary servicing
procedures, the moneys collected in respect of the liquidation thereof from
whatever source, other than moneys collected with respect to any Liquidated
Financed Eligible Loan which was written off in prior calendar quarters or
during the current calendar quarter, net of the sum of any amounts expended by a
Servicer in connection with such liquidation and any amounts required by law to
be remitted to the obligor on such Liquidated Financed Eligible Loan.
"Master Promissory Note" shall mean a note (a) that evidences one or
more loans made to finance post-secondary education financing and (b) that is in
the form mandated by Section 432(m)(1) of the Act, as added by Public Law No:
105-244, ss. 427, 112 Stat. 1702 (1998), as amended by Public Law No: 106-554
(enacted December 21, 2000) and as codified in 20 U.S.C. ss. 1082(m)(1).
"Maturity" when used with respect to any Note, shall mean the date on
which the principal thereof becomes due and payable as therein or herein
provided, whether at its Stated Maturity, by earlier redemption, by declaration
of acceleration, or otherwise.
"Moody's" shall mean Moody's Investors Service, its successors and
assigns.
"Note Payment Date" shall mean, for any Note, any Interest Payment Date,
its Stated Maturity or the date of any other regularly scheduled principal
payment with respect thereto.
"Notes" shall mean any notes or other debt obligations issued pursuant
to Section 2.08 of this Indenture.
"Obligations" shall mean Senior Obligations, Subordinate Obligations and
Junior-Subordinate Obligations.
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"Operating Fund" shall mean the fund by that name referenced in Section
5.01 and further described in Section 5.05 hereof.
"Outstanding" shall mean, when used in connection with any Note, a Note
which has been executed and delivered pursuant to this Indenture which at such
time remains unpaid as to principal or interest, unless provision has been made
for such payment pursuant to Section 10.02 hereof, excluding Notes which have
been replaced pursuant to Section 2.03 hereof.
"Person" shall mean an individual, corporation, partnership, joint
venture, association, joint stock company, trust, limited liability company,
unincorporated organization, or government or agency or political subdivision
thereof.
"Principal Office" shall mean the principal office of the party
indicated, as set forth in Section 9.01 hereof or elsewhere in this Indenture.
"Principal Reduction Payment Date" shall mean, for any Note, any date
described on a Supplemental Indenture for the payment of Principal Reduction
Payments.
"Principal Reduction Payments" shall mean principal payments, other than
mandatory sinking fund payments, made prior to a Stated Maturity from the
Acquisition/Redemption Fund, as set forth in a Supplemental Indenture.
"Priority Termination Payment" shall mean, with respect to a Derivative
Product, any termination payment payable by the Issuer under such Derivative
Product relating to an early termination of such Derivative Product by the
Counterparty, as the non-defaulting party, following (i) a payment default by
the Issuer thereunder (ii) the occurrence of an Event of Default specified in
Section 6.01(h) of this Indenture or (iii) the Indenture Trustee's taking any
action hereunder to liquidate the entire Trust Estate following an Event of
Default and acceleration of the Notes pursuant to Section 6.09 hereof.
"Program" shall mean the Issuer's program for the origination and the
purchase of Eligible Loans, as the same may be modified from time to time.
"Program Expenses" shall mean (a) the fees and expenses of the Indenture
Trustee and the Eligible Lender Trustee; (b) the fees and expenses of any
auction agent, any market agent, any calculation agent and any broker-dealer
then acting under a Supplemental Indenture; (c) the fees and expenses of any
remarketing agent then acting under a Supplemental Indenture with respect to
variable rate Notes; (d) the fees and expenses due to any credit provider of any
Notes for which a credit facility or liquidity facility is in place; (e) the
fees of any Servicer and/or Custodian under any servicing agreement or custodian
agreement; (f) the fees and expenses of any Administrator and the Issuer
incurred in connection with the preparation of legal opinions and other
authorized reports or statements attributable to the Notes and the Financed
Eligible Loans; (g) transfer fees, purchase premiums, loan origination fees,
Consolidation Fees and all other fees due to the Department of Education on
Financed Eligible Loans; (h) fees and expenses associated with the delivery of a
substitute credit facility or liquidity facility under a Supplemental Indenture;
(i) fees and expenses associated with (but not payments under) Derivative
Products; (j) the costs of remarketing any variable rate Notes and (k) expenses
incurred for the Issuer's maintenance and operation of its Program as a direct
consequence of this Indenture, the Notes or the Financed Eligible Loans;
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including, but not limited to, taxes, the reasonable fees and expenses of
attorneys, agents, financial advisors, consultants, accountants and other
professionals, attributable to such maintenance and operation, marketing
expenses for the Program and a prorated portion of the rent, personnel
compensation, office supplies and equipment, travel expenses and other lawful
payments made to members of the Board.
"Rating" shall mean one of the rating categories of Fitch, Moody's and
S&P or any other Rating Agency, provided Fitch, Moody's and S&P or any other
Rating Agency, as the case may be, is currently rating the Notes.
"Rating Agency" shall mean, collectively, Fitch, Moody's and S&P and
their successors and assigns or any other Rating Agency; provided that in each
such case the Issuer has requested such Rating Agency to maintain a Rating on
any of the Notes. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, notice of
which designation shall be given to the Indenture Trustee.
"Rating Agency Condition" shall mean, with respect to any action, that
each Rating Agency shall have been given prior notice thereof and that each of
the Rating Agencies shall have issued a Rating Confirmation.
"Rating Confirmation" shall mean a letter from each Rating Agency then
providing a Rating for any of the Notes at the request of the Issuer, confirming
that the action proposed to be taken by the Issuer will not, in and of itself,
result in a downgrade of any of the Ratings then applicable to the Notes, or
cause any Rating Agency to suspend or withdraw the Ratings then applicable to
the Notes.
"Realized Loss" shall mean the excess of the principal balance
(including any interest that had been or had been expected to be capitalized) of
any Liquidated Financed Eligible Loan over Liquidation Proceeds with respect to
such Financed Eligible Loan to the extent allocable to principal (including any
interest that had been or had been expected to be capitalized).
"Record Date" shall mean the Record Date established for any Notes
pursuant to the Supplemental Indenture authorizing the issuance of such Notes.
"Recoveries of Principal" shall mean all amounts received by the
Indenture Trustee from or on account of any Financed Eligible Loan as a recovery
of the principal amount thereof, including scheduled, delinquent and advance
payments, payouts or prepayments, proceeds from insurance or from the sale,
assignment, transfer, reallocation or other disposition of a Financed Eligible
Loan and any payments representing such principal from the guarantee or
insurance of any Financed Eligible Loan, net of accrued interest which will be
capitalized at a later date.
"Registered Owner" shall mean the Person in whose name a Note is
registered on the Note registration books maintained by the Indenture Trustee,
and shall also mean with respect to a Derivative Product, any Counterparty,
unless the context otherwise requires.
"Regulations" shall mean the Regulations promulgated from time to time
by the Secretary or any Guaranty Agency guaranteeing Financed Eligible Loans.
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"Reserve Fund" shall mean the Fund by that name created in Section
5.01(a)(iii) hereof and further described in Section 5.04 hereof, including any
Accounts and Subaccounts created therein.
"Reserve Fund Requirement" shall mean an amount, if any, required to be
on deposit in the Reserve Fund with respect to any Notes issued pursuant to the
Supplemental Indenture authorizing the issuance of such Notes.
"Reserve Fund Surety Bond" means a letter of credit, surety bond,
insurance policy, agreement guaranteeing payment or other undertaking by a
financial institution to ensure that cash in an amount required to meet a
Reserve Fund Requirement is available to the Indenture Trustee.
"Resolution" shall mean a resolution duly adopted by the Board.
"Revenue" or "Revenues" shall mean all Recoveries of Principal,
payments, proceeds, charges and other income received by the Indenture Trustee
or the Issuer from or on account of any Financed Eligible Loan (including
scheduled, delinquent and advance payments of and any insurance proceeds with
respect to, interest, including Interest Benefit Payments, on any Financed
Eligible Loan and any Special Allowance Payment received by the Issuer with
respect to any Financed Eligible Loan) and all interest earned or gain realized
from the investment of amounts in any Fund or Account and all payments received
by the Issuer pursuant to a Derivative Product.
"S&P" shall mean Standard & Poor's Ratings Group, a Division of The
McGraw-Hill Companies, Inc., its successors and assigns.
"Secretary" shall mean the Secretary of the United States Department of
Education or any successor to the pertinent functions thereof under the Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Depository" or "Depository" shall mean The Depository Trust
Company and its successors and assigns or if, (a) the then Securities Depository
resigns from its functions as depository of the Notes or (b) the Issuer
discontinues use of the Securities Depository, any other securities depository
which agrees to follow the procedures required to be followed by a securities
depository in connection with the Notes and which is selected by the Issuer with
the consent of the Indenture Trustee.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Seller" shall mean an Eligible Lender from which the Issuer is
purchasing or has purchased or agreed to purchase Eligible Loans pursuant to a
Student Loan Purchase Agreement between the Issuer and such Eligible Lender.
"Senior Notes" shall mean all Notes secured on a senior priority to the
Subordinate Obligations and the Junior-Subordinate Obligations.
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"Senior Obligations" shall mean Senior Notes and any Derivative Product,
the priority of payment of which is equal with that of Senior Notes.
"Servicer" shall mean, collectively, Nelnet, Inc., Nelnet Loan Services,
Inc., InTuition, Inc., Sallie Mae Servicing L.P., EFS Services, Inc., ACS
Educational Services, Inc., Pennsylvania Higher Education Assistance Agency,
Great Lakes Educational Loan Services, Inc. and any other additional Servicer,
Subservicer or successor Servicer or Subservicer selected by the Issuer,
including an affiliate of the Issuer, so long as the Issuer obtains a Rating
Confirmation as to each such other Servicer or Subservicer.
"Servicing Agreement" shall mean the servicing agreements with any
Servicer relating to Financed Eligible Loans, as amended from time to time.
"Special Allowance Payments" shall mean the special allowance payments
authorized to be made by the Secretary by Section 438 of the Act, or similar
allowances, if any, authorized from time to time by federal law or regulation.
"Special Record Date" shall have the meaning set forth in a Supplemental
Indenture.
"State" shall mean the State of Nebraska.
"Stated Maturity" shall mean the date specified in the Notes as the
fixed date on which principal of such Notes is due and payable.
"Student Loan Purchase Agreement" shall mean a loan purchase agreement
entered into for the purchase of Eligible Loans into the Trust Estate from a
third party seller, substantially in the form attached hereto as Exhibit C.
"Subaccount" shall mean any of the subaccounts which may be created and
established within any Account by this Indenture.
"Subordinate Notes" shall mean any Notes secured on a priority
subordinate to the Senior Obligations and on a priority senior to the
Junior-Subordinate Obligations.
"Subordinate Obligations" shall mean Subordinate Notes and any
Derivative Product, the priority of payment of which is equal with that of
Subordinate Notes.
"Supplemental Indenture" shall mean an agreement supplemental hereto
executed pursuant to Article VIII hereof.
"Termination Payment" shall mean, with respect to a Derivative Product,
any termination payment payable by the Issuer under such Derivative Product
relating to an early termination of such Derivative Product by the Counterparty,
as the non-affected party or non-defaulting party, after the occurrence of a
termination event or event of default specified in such Derivative Product,
including any Priority Termination Payment.
"Trust Estate" shall mean the property described as such in the granting
clauses hereto.
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"Trust Indenture Act" or "TIA" shall mean the Trust Indenture Act of
1939, as amended, and as in force at the date as of which this Indenture was
executed, except as provided in Section 8.05.
"Indenture Trustee" shall mean Wells Fargo Bank Minnesota, National
Association, acting in its capacity as Indenture Trustee under this Indenture,
or any successor trustee designated pursuant to this Indenture.
"Underwriter" shall mean the underwriter or underwriters of the Notes.
"Value" on any calculation date when required under this Indenture shall
mean the value of the Trust Estate calculated by the Issuer with respect to (a)
and by the Indenture Trustee with respect to (b) through (c), inclusive as
follows:
(a) with respect to any Eligible Loan, the unpaid principal
amount thereof plus any accrued but unpaid interest, unamortized
premiums, Interest Benefit Payments and Special Allowance Payments;
(b) with respect to any funds of the Issuer held under this
Indenture and on deposit in any commercial bank or as to any banker's
acceptance or repurchase agreement or investment contract, the amount
thereof plus accrued but unpaid interest; and
(c) with respect to any Investment Securities, the par value
thereof, plus accrued but unpaid interest.
Words importing the masculine gender include the feminine gender, and
words importing the feminine gender include the masculine gender. Words
importing persons include firms, associations and corporations. Words importing
the singular number include the plural number and vice versa. Additional terms
are defined in the body of this Indenture.
ARTICLE II
NOTE DETAILS, FORM OF NOTES, REDEMPTION OF NOTES
AND USE OF PROCEEDS OF NOTES
Section 2.01. Note Details. The details of each series of Notes
authorized pursuant to this Indenture and a Supplemental Indenture, shall be
contained in the applicable Supplemental Indenture. Such details shall include,
but are not limited to, the principal amount, authorized denomination, dated
date, interest rate, principal maturity date, redemption provisions and
registration provisions.
Section 2.02. Execution of Notes. The Notes shall be executed in the
name and on behalf of the Issuer by the manual or facsimile signature of any of
its Authorized Officers. Any Note may be signed manually or by facsimile or
attested on behalf of the Issuer by any person who, at the date of such act,
shall hold the proper office, notwithstanding that at the date of
authentication, issuance or delivery, such person may have ceased to hold such
office.
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Section 2.03. Registration, Transfer and Exchange of Notes; Persons
Treated as Registered Owners. The Issuer shall cause books for the registration
and for the transfer of the Notes as provided in this Indenture to be kept by
the Indenture Trustee which is hereby appointed the transfer agent of the Issuer
for the Notes. Notwithstanding such appointment and with the prior written
consent of the Issuer, the Indenture Trustee is hereby authorized to make any
arrangements with other institutions which it deems necessary or desirable in
order that such institutions may perform the duties of transfer agent for the
Notes. Upon surrender for transfer of any Note at the designated corporate trust
office of the Indenture Trustee, duly endorsed for transfer or accompanied by an
assignment duly executed by the Registered Owner or his attorney duly authorized
in writing, the Issuer shall execute and the Indenture Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
fully registered Note or Notes of the same interest rate and for a like series,
subseries, if any, and aggregate principal amount of the same maturity.
Notes may be exchanged at the designated corporate trust office of the
Indenture Trustee for a like aggregate principal amount of fully registered
Notes of the same series, subseries, if any, interest rate and maturity in
authorized denominations. The Issuer shall execute and the Indenture Trustee
shall authenticate and deliver Notes which the Registered Owner making the
exchange is entitled to receive, bearing numbers not contemporaneously
outstanding. The execution by the Issuer of any fully registered Note of any
authorized denomination shall constitute full and due authorization of such
denomination and the Indenture Trustee shall thereby be authorized to
authenticate and deliver such fully registered Note.
The Indenture Trustee shall not be required to transfer or exchange any
Note during the period of 15 Business Days next preceding the mailing of notice
of redemption as herein provided. After the giving of such notice of redemption,
the Indenture Trustee shall not be required to transfer or exchange any Note,
which Note or portion thereof has been called for redemption.
As to any Note, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on any fully registered Note shall be
made only to or upon the written order of the Registered Owner thereof or his
legal representative but such registration may be changed as hereinabove
provided. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Note to the extent of the sum or sums paid.
The Indenture Trustee shall require the payment by any Registered Owner
requesting exchange or transfer of any tax or other governmental charge and all
expenses and charges of the Issuer and of the Indenture Trustee required to be
paid with respect to such exchange or transfer. The Registered Owner for any
such transfer or exchange may be required to pay all taxes and governmental
charges in connection with such transfer or exchange.
Section 2.04. Lost, Stolen, Destroyed and Mutilated Notes. Upon receipt
by the Indenture Trustee of evidence satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note and, in the case of a
lost, stolen or destroyed Note, of indemnity satisfactory to it, and upon
surrender and cancellation of the Note, if mutilated, (a) the Issuer shall
execute, and the Indenture Trustee shall authenticate and deliver, a new Note of
the same series, subseries, if any, interest rate, maturity and denomination in
15
lieu of such lost, stolen, destroyed or mutilated Note or (b) if such lost,
stolen, destroyed or mutilated Note shall have matured or have been called for
redemption, in lieu of executing and delivering a new Note as aforesaid, the
Issuer may pay such Note. Any such new Note shall bear a number not
contemporaneously outstanding. The Registered Owner for any such new Note may be
required to pay all taxes and governmental charges and all expenses and charges
of the Issuer and of the Indenture Trustee in connection with the issuance of
such Note. All Notes shall be held and owned upon the express condition that, to
the extent permitted by law, the foregoing conditions are exclusive with respect
to the replacement and payment of mutilated, destroyed, lost or stolen Notes,
negotiable instruments or other securities.
Section 2.05. Indenture Trustee's Authentication Certificate. The
Indenture Trustee's authentication certificate upon any Notes shall be
substantially in the form provided in the Supplemental Indenture authorizing the
issuance of such Notes. No Note shall be secured hereby or entitled to the
benefit hereof, or shall be valid or obligatory for any purpose, unless a
certificate of authentication, substantially in such form, has been duly
executed by the Indenture Trustee; and such certificate of the Indenture Trustee
upon any Note shall be conclusive evidence and the only competent evidence that
such Note has been authenticated and delivered hereunder and under a
Supplemental Indenture. The Indenture Trustee's certificate of authentication
shall be deemed to have been duly executed by it if manually signed by an
authorized officer or signatory of the Indenture Trustee, but it shall not be
necessary that the same person sign the certificate of authentication on all of
the Notes issued hereunder.
Section 2.06. Cancellation and Destruction of Notes by the Indenture
Trustee. Whenever any Outstanding Notes shall be delivered to the Indenture
Trustee for the cancellation thereof pursuant to this Indenture, upon payment of
the principal amount and interest represented thereby, or for replacement
pursuant to Section 2.03 hereof, such Notes shall be promptly cancelled and,
within a reasonable time, cremated or otherwise destroyed by the Indenture
Trustee and counterparts of a certificate of destruction evidencing such
cremation or other destruction shall be furnished by the Indenture Trustee to
the Issuer upon request.
Section 2.07. Temporary Notes. Pending the preparation of definitive
Notes, the Issuer may execute and the Indenture Trustee shall authenticate and
deliver temporary Notes. Temporary Notes shall be issuable as fully registered
Notes without coupons, of any denomination, and substantially in the form of the
definitive Notes but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Issuer. Every
temporary Note shall be executed by the Issuer and be authenticated by the
Indenture Trustee upon the same conditions and in substantially the same manner,
and with like effect, as the definitive Notes. As promptly as practicable the
Issuer shall execute and shall furnish definitive Notes and thereupon temporary
Notes may be surrendered in exchange therefor without charge at the designated
corporate trust office of the Indenture Trustee, and the Indenture Trustee shall
authenticate and deliver in exchange for such temporary Notes a like aggregate
principal amount of definitive Notes. Until so exchanged the temporary Notes
shall be entitled to the same benefits under this Indenture as definitive Notes.
16
Section 2.08. Issuance of Notes.
(a) The Issuer shall have the authority, upon complying with the
provisions of this Section, to issue and deliver from time to time Notes
secured by the Trust Estate on a parity with the Senior Notes, the
Subordinate Notes or the Junior-Subordinate Notes, if any, secured
hereunder as shall be determined by the Issuer. In addition, the Issuer
may enter into any Derivative Products it deems necessary or desirable
with respect to any or all of the Notes.
(b) No Notes shall be authenticated and delivered pursuant to
this Indenture until the following conditions have been satisfied:
(i) The Issuer and the Indenture Trustee have entered
into a Supplemental Indenture (which Supplemental Indenture
shall not require the approval of the Registered Owners of any
of the Outstanding Notes or Derivative Products, but subject to
the requirements of Article VIII to the extent such Supplemental
Indenture effects a change to the Indenture with respect to
Notes that are then Outstanding hereunder) providing the terms
and forms of the proposed Notes as described in Section 2.01
hereof, including the designation of such Notes as Senior Notes,
Subordinate Notes or Junior-Subordinate Notes, the redemption
and selection provisions applicable to such Notes, and the
Reserve Fund Requirement with respect to such Notes, if any.
(ii) The Indenture Trustee shall have received a Rating
Confirmation from each Rating Agency which has assigned a Rating
or Ratings to any Outstanding Notes that such Rating or Ratings
will not be reduced or withdrawn as a result of the issuance of
the proposed Notes.
(iii) Upon the issuance of the proposed Notes, an amount
equal to the Reserve Fund Requirement with respect to such
Notes, if any, shall be deposited in the Reserve Fund.
(iv) The Issuer and the Indenture Trustee shall have
received an opinion of counsel to the effect that the issuance
of the proposed Notes will not adversely affect the federal tax
treatment with respect to any of the Outstanding Notes and the
Issuer.
(v) The Indenture Trustee shall have received a written
order from the Issuer to authenticate and deliver the Notes.
(c) The Indenture Trustee is authorized to set up any additional
Funds or Accounts or Subaccounts under this Indenture which it deems
necessary or convenient in connection with the issuance and delivery of
any Notes.
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ARTICLE III
PARITY AND PRIORITY OF LIEN; OTHER OBLIGATIONS;
AND DERIVATIVE PRODUCTS
Section 3.01. Parity and Priority of Lien. The provisions, covenants and
agreements herein set forth to be performed by or on behalf of the Issuer shall
be for the equal benefit, protection and security of the Registered Owners of
any and all of the Obligations, all of which, regardless of the time or times of
their issuance or maturity, shall be of equal rank without preference, priority
or distinction of any of the Obligations over any other thereof, except as
expressly provided in this Indenture with respect to certain payment and other
priorities.
Section 3.02. Other Obligations.
(a) The Issuer reserves the right to issue other notes or
obligations which do not constitute or create a lien on the Trust
Estate, subject to receipt of a Rating Confirmation.
(b) The Issuer shall not commingle the Funds established by this
Indenture with funds, proceeds, or investment of funds relating to other
issues or series of notes heretofore or hereafter issued, except to the
extent such permitted commingling is required by the Indenture Trustee
for ease in administration of its duties and responsibilities; provided,
however, that should the Indenture Trustee require such permitted
commingling, it shall keep complete records in order that the funds,
proceeds, or investments under this Indenture may at all times be
identified by source and application, and if necessary, separated.
(c) The Revenues and other moneys, Financed Eligible Loans,
securities, evidences of indebtedness, interests, rights and properties
pledged under this Indenture are and will be owned by the Issuer (or the
Eligible Lender Trustee) free and clear of any pledge, lien, charge or
encumbrance thereon or with respect thereto prior to, of equal rank with
or subordinate to the respective pledges created by this Indenture,
except as otherwise expressly provided herein, and all action on the
part of the Issuer to that end has been duly and validly taken. If any
Financed Eligible Loan is found to have been subject to a lien at the
time such Financed Eligible Loan was acquired, the Issuer shall cause
such lien to be released, shall purchase such Financed Eligible Loan
from the Trust Estate for a purchase price equal to its principal amount
plus any unamortized premium, if any, and interest accrued thereon or
shall replace such Financed Eligible Loan with another Eligible Loan
with substantially identical characteristics which replacement Eligible
Loan shall be free and clear of liens at the time of such replacement.
Except as otherwise provided herein, the Issuer shall not create or
voluntarily permit to be created any debt, lien, or charge on the
Financed Eligible Loans which would be on a parity with, subordinate to,
or prior to the lien of this Indenture; shall not do or omit to do or
suffer to be done or omitted to be done any matter or things whatsoever
whereby the lien of this Indenture or the priority of such lien for the
Obligations hereby secured might or could be lost or impaired; and will
pay or cause to be paid or will make adequate provisions for the
satisfaction and discharge of all lawful claims and demands which if
unpaid might by law be given precedence to or any equality with this
Indenture as a lien or charge upon the Financed Eligible Loans;
18
provided, however, that nothing in this subsection (c) shall require the
Issuer to pay, discharge, or make provision for any such lien, charge,
claim, or demand so long as the validity thereof shall be by it in good
faith contested, unless thereby, in the opinion of the Indenture
Trustee, the same will endanger the security for the Obligations; and
provided further that any subordinate lien hereon (i.e., subordinate to
the lien securing the Senior Obligations, the Subordinate Obligations
and the Junior-Subordinate Obligations) shall be entitled to no payment
from the Trust Estate, nor may any remedy be exercised with respect to
such subordinate lien against the Trust Estate until all Obligations
have been paid or deemed paid hereunder.
Section 3.03. Derivative Products; Counterparty Payments; Issuer
Derivative Payments. The Issuer hereby authorizes and directs the Indenture
Trustee to acknowledge and agree to any Derivative Product hereafter entered
into by the Issuer and a Counterparty under which (a) the Issuer may be required
to make, from time to time, Issuer Derivative Payments and (b) the Indenture
Trustee may receive, from time to time, Counterparty Payments for the account of
the Issuer. No Derivative Product shall be entered into unless the Indenture
Trustee shall have received a Rating Confirmation from each Rating Agency that
such Derivative Product will not adversely affect the Rating on any of the
Notes.
ARTICLE IV
PROVISIONS APPLICABLE TO THE NOTES;
DUTIES OF THE ISSUER
Section 4.01. Payment of Principal, Interest and Premium. The Issuer
covenants that it will promptly pay, but solely from the Trust Estate, the
principal of and interest, if any, on each and every Obligation issued under the
provisions of this Indenture at the places, on the dates and in the manner
specified herein and in said Obligations and any premium required for the
retirement of said Obligations by purchase or redemption according to the true
intent and meaning thereof. The Obligations shall be and are hereby declared to
be payable from and equally secured by an irrevocable first lien on and pledge
of the properties constituting the Trust Estate, subject to the application
thereof as permitted by this Indenture, but in no event shall the Registered
Owners or any Counterparty have any right to possession of any Financed Eligible
Loans, which shall be held only by the Indenture Trustee or its agent or bailee.
Section 4.02. Representations and Warranties of the Issuer. The Issuer
represents and warrants that it is duly authorized under the laws of the State
to create and issue the Notes and to execute and deliver this Indenture and any
Derivative Product and to make the pledge to the payment of Notes and any Issuer
Derivative Payments hereunder, that all necessary action on the part of the
Issuer and the Board for the creation and issuance of the Notes and the
execution and delivery of this Indenture and any Derivative Product has been
duly and effectively taken; and that the Notes in the hands of the Registered
Owners thereof and the Issuer Derivative Payments are and will be valid and
enforceable special limited obligations of the Issuer secured by and payable
solely from the Trust Estate.
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Section 4.03. Covenants as to Additional Conveyances. At any and all
times, the Issuer will duly execute, acknowledge, and deliver, or will cause to
be done, executed, and delivered, all and every such further acts, conveyances,
transfers, and assurances in law as the Indenture Trustee shall reasonably
require for the better conveying, transferring, and pledging and confirming unto
the Indenture Trustee, all and singular, the properties constituting the Trust
Estate hereby transferred and pledged, or intended so to be transferred and
pledged.
Section 4.04. Further Covenants of the Issuer.
(a) The Issuer will cause financing statements and continuation
statements with respect thereto at all times to be filed in the office
of the Secretary of State of the State and any other jurisdiction
necessary to perfect and maintain the security interest granted by the
Issuer hereunder, and will provide the Indenture Trustee with copies of
all such statements.
(b) The Issuer will duly and punctually keep, observe and
perform each and every term, covenant, and condition on its part to be
kept, observed, and performed, contained in this Indenture and the other
agreements to which the Issuer is a party pursuant to the transactions
contemplated herein, and will punctually perform all duties required by
the Articles of Incorporation and Bylaws of the Issuer and the laws of
the State.
(c) The Issuer shall be operated on the basis of its Fiscal
Year.
(d) The Issuer shall cause to be kept full and proper books of
records and accounts, in which full, true, and proper entries will be
made of all dealings, business, and affairs of the Issuer which relate
to the Notes and any Derivative Product.
(e) The Issuer, upon written request of the Indenture Trustee,
will permit at all reasonable times the Indenture Trustee or its agents,
accountants, and attorneys, to examine and inspect the property, books
of account, records, reports, and other data relating to the Financed
Eligible Loans, and will furnish the Indenture Trustee such other
information as it may reasonably request. The Indenture Trustee shall be
under no duty to make any such examination unless requested in writing
to do so by the Registered Owners of not less than a majority of the
principal amount of the Notes, and unless such Registered Owners shall
have offered the Indenture Trustee security and indemnity satisfactory
to it against any costs, expenses and liabilities which might be
incurred thereby.
(f) The Issuer shall cause an annual audit to be made by an
independent auditing firm of national reputation and file one copy
thereof with the Indenture Trustee and each Rating Agency within 150
days of the close of each Fiscal Year. The Indenture Trustee shall be
under no obligation to review or otherwise analyze such audit.
(g) The Issuer covenants that all Financed Eligible Loans upon
receipt thereof shall be delivered to the Indenture Trustee or its agent
or bailee to be held pursuant to this Indenture and pursuant to the
Servicing Agreement or a Custodian Agreement.
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(h) Notwithstanding anything to the contrary contained herein,
except upon the occurrence and during the continuance of an Event of
Default hereunder, the Issuer hereby expressly reserves and retains the
privilege to receive and, subject to the terms and provisions of this
Indenture, to keep or dispose of, claim, bring suits upon or otherwise
exercise, enforce or realize upon its rights and interest in and to the
Financed Eligible Loans and the proceeds and collections therefrom, and
neither the Indenture Trustee nor any Registered Owner shall in any
manner be or be deemed to be an indispensable party to the exercise of
any such privilege, claim or suit and the Indenture Trustee shall be
under no obligation whatsoever to exercise any such privilege, claim or
suit; provided, however, that the Indenture Trustee shall have and
retain possession or control of the Financed Eligible Loans pursuant to
Section 5.02 hereof (which Financed Eligible Loans may be held by the
Indenture Trustee's agent or bailee pursuant to a Custodian Agreement)
so long as such loans are subject to the lien of this Indenture.
(i) The Issuer shall notify the Indenture Trustee and each
Rating Agency in writing prior to entering into any Derivative Product
and shall not enter into any Derivative Product unless the Indenture
Trustee has received a Rating Confirmation.
Section 4.05. Enforcement of Servicing Agreements. The Issuer shall
comply with and shall require the Servicer to comply with the following whether
or not the Issuer is otherwise in default under this Indenture:
(a) cause to be diligently enforced and taken all reasonable
steps, actions and proceedings necessary for the enforcement of all
terms, covenants and conditions of all Servicing Agreements;
(b) not permit the release of the obligations of any Servicer
under any Servicing Agreement except in conjunction with amendments or
modifications permitted by (h) below;
(c) at all times, to the extent permitted by law, cause to be
defended, enforced, preserved and protected the rights and privileges of
the Issuer and of the Registered Owners under or with respect to each
Servicing Agreement;
(d) at its own expense, the Issuer shall duly and punctually
perform and observe each of its obligations to the Servicer under the
Servicing Agreement in accordance with the terms thereof;
(e) the Issuer agrees to give the Indenture Trustee prompt
written notice of each default on the part of the Servicer of its
obligations under the Servicing Agreement coming to the Issuer's
attention;
(f) the Issuer shall not waive any default by the Servicer under
the Servicing Agreement without the written consent of the Indenture
Trustee;
(g) the Issuer shall cause the Servicer to deliver to the
Indenture Trustee and the Issuer, on or before April 30 of each year,
beginning with April 30, 2004, a certificate stating that (i) a review
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of the activities of the Servicer during the preceding calendar year and
of its performance under the Servicing Agreement has been made under the
supervision of the officer signing such certificate and (ii) to the best
of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under the Servicing Agreement throughout
such year, or, there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the
nature and statue thereof; and
(h) not consent or agree to or permit any amendment or
modification of any Servicing Agreement which will in any manner
materially adversely affect the rights or security of the Registered
Owners. The Issuer shall be entitled to receive and rely upon an opinion
of its counsel that any such amendment or modification will not
materially adversely affect the rights or security of the Registered
Owners.
Section 4.06. Procedures for Transfer of Funds. In any instance where
this Indenture requires a transfer of funds or money from one Fund to another, a
transfer of ownership in investments or an undivided interest therein may be
made in any manner agreeable to the Issuer and the Indenture Trustee, and in the
calculation of the amount transferred, interest on the investment which has or
will accrue before the date the money is needed in the fund to which the
transfer is made shall not be taken into account or considered as money on hand
at the time of such transfer.
Section 4.07. Additional Covenants with Respect to the Act. The Issuer
covenants that it will cause the Indenture Trustee to be, or replace the
Indenture Trustee with, an Eligible Lender under the Act, that it will acquire
or cause to be acquired Eligible Loans originated and held only by an Eligible
Lender and that it will not dispose of or deliver any Financed Eligible Loans or
any security interest in any such Financed Eligible Loans to any party who is
not an Eligible Lender so long as the Act or Regulations adopted thereunder
require an Eligible Lender to be the owner or holder of Guaranteed Eligible
Loans; provided, however, that nothing above shall prevent the Issuer from
delivering the Eligible Loans to the Servicer or the Guarantee Agency. The
Registered Owners of the Notes shall not in any circumstances be deemed to be
the owner or holder of the Guaranteed Eligible Loans.
The Issuer, or its designated agent, shall be responsible for each of
the following actions with respect to the Act:
(a) the Issuer, through its Authorized Representative, shall be
responsible for dealing with the Secretary with respect to the rights,
benefits and obligations under the Certificates of Insurance and the
Contract of Insurance, and the Issuer shall be responsible for dealing
with the Guarantee Agencies with respect to the rights, benefits and
obligations under the Guarantee Agreements with respect to the Financed
Eligible Loans;
(b) the Issuer, through its Authorized Representative, shall
cause to be diligently enforced, and shall cause to be taken all
reasonable steps, actions and proceedings necessary or appropriate for
the enforcement of all terms, covenants and conditions of all Financed
Eligible Loans and agreements in connection therewith, including the
prompt payment of all principal and interest payments and all other
amounts due thereunder;
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(c) the Issuer, through its Authorized Representative, shall
cause the Financed Eligible loans to be serviced by entering into the
Servicing Agreement or other agreement with the Servicer for the
collection of payments made for, and the administration of the accounts
of, the Financed Eligible Loans;
(d) the Issuer, through its Authorized Representative, shall
comply, and shall cause all of its officers, directors, employees and
agents to comply, with the provisions of the Act and any regulations or
rulings thereunder, with respect to the Financed Eligible Loans;
(e) the Issuer, through its Authorized Representative, shall
cause the benefits of the Guarantee Agreements, the Interest Subsidy
Payments and the Special Allowance Payments to flow to the Indenture
Trustee. The Indenture Trustee shall have no liability for actions taken
at the direction of the Issuer, except for negligence or willful
misconduct in the performance of its express duties hereunder. The
Indenture Trustee shall have no obligation to administer, service or
collect the loans in the Trust Estate or to maintain or monitor the
administration, servicing or collection of such loans; and
(f) the Issuer, through its Authorized Representative, shall
cause each Financed Eligible Loan evidenced by a Master Promissory Note
in the form mandated by Section 432(m)(1) of the Higher Education Act to
be acquired pursuant to a Student Loan Sale Agreement containing
language similar to the following:
"The [Seller] hereby represents and warrants that the
[Seller] is transferring all of its right title and interest in
the MPN Loan to the Indenture Trustee, that it has not assigned
any interest in such MPN Loan (other than security interests that
have been released or ownership interests that the [Seller] has
reacquired) to any person other than the Indenture Trustee, and
that no prior holder of the MPN Loan has assigned any interest in
such MPN Loan (other than security interests that have been
released or ownership interests that such prior holder has
reacquired) to any person other than a predecessor in title to
the [Seller]. The [Seller] hereby covenants that the [Seller]
shall not attempt to transfer to any other person any interest in
any MPN Loan assigned hereunder. The [Seller] hereby authorizes
the Indenture Trustee to file a UCC-1 financing statement
identifying the [Seller] as debtor and the Indenture Trustee as
secured party and describing the Loans sold pursuant to this
Agreement. The preparation or filing of such UCC-1 financing
statement is solely for additional protection of the Indenture
Trustee's interest in the MPN Loans and shall not be deemed to
contradict the express intent of the [Seller] and the Indenture
Trustee that the transfer of MPN Loans under this Agreement is an
absolute assignment of such MPN Loans and is not a transfer of
such MPN Loans as security for a debt."
Section 4.08. Financed Eligible Loans; Collections Thereof; Assignment
Thereof. The Issuer, through the Servicer, shall diligently collect all
principal and interest payments on all Financed Eligible Loans, and all Interest
Benefit Payments, insurance, guarantee and default claims and Special Allowance
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Payments which relate to such Financed Eligible Loans. The Issuer shall cause
the filing and assignment of such claims (prior to the timely filing deadline
for such claims under the Regulations) by the Servicer. The Issuer will comply
with the Act and Regulations which apply to the Program and to such Financed
Eligible Loans.
Section 4.09. Appointment of Agents, Etc. The Issuer shall employ and
appoint all employees, agents, consultants and attorneys which it may consider
necessary. No member of the Board, neither singly or collectively, shall be
personally liable for any act or omission not willfully fraudulent.
Section 4.10. Capacity to Sue. The Issuer shall have the power and
capacity to sue and to be sued on matters arising out of or relating to the
financing of the Financed Eligible Loans.
Section 4.11. Continued Existence; Successor to Issuer. The Issuer
agrees that it will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights and franchises as a Nebraska
corporation, except as otherwise permitted by this Section 4.11. The Issuer
further agrees that it will not (a) sell, transfer or otherwise dispose of all
or substantially all, of its assets (except Financed Eligible Loans if such
sale, transfer or disposition will discharge this Indenture in accordance with
Article X hereof); (b) consolidate with or merge into another corporation or
entity; or (c) permit one or more other corporations or entities to consolidate
with or merge into it. The preceding restrictions in (a), (b) and (c) shall not
apply to a transaction if the transferee or the surviving or resulting
corporation or entity, if other than the Issuer, by proper written instrument
for the benefit of the Indenture Trustee, irrevocably and unconditionally
assumes the obligation to perform and observe the agreements and obligations of
the Issuer under this Indenture.
If a transfer is made as provided in this Section 4.11, the provisions
of this Section 4.11 shall continue in full force and effect and no further
transfer shall be made except in compliance with the provisions of this Section
4.11.
Section 4.12. Amendment of Student Loan Purchase Agreements. The Issuer
shall notify the Indenture Trustee in writing of any proposed material
amendments to any existing Student Loan Purchase Agreement. No such material
amendment shall become effective unless and until the Indenture Trustee consents
thereto in writing. The consent of the Indenture Trustee shall not be
unreasonably withheld and shall not be withheld if the Indenture Trustee
receives an opinion of counsel acceptable to them that such an amendment is
required by the Act and is not materially prejudicial to the Registered Owners.
Notwithstanding the foregoing, however, the Indenture Trustee shall consent to
an amendment from time to time so long as it is not materially prejudicial to
the interests of the Registered Owners, and the Indenture Trustee may rely on an
opinion of counsel to such effect.
Section 4.13. Representations; Negative Covenants.
(a) The Issuer hereby makes the following representations and
warranties to the Indenture Trustee on which the Indenture Trustee
relies in authenticating the Notes and on which the Registered Owners
have relied in purchasing the Notes. Such representations and warranties
shall survive the grant of the Trust Estate to the Indenture Trustee
pursuant to this Indenture.
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(i) Organization and Good Standing. The Issuer is duly
organized and validly existing under the laws of the State, and
has the power to own its assets and to transact the business in
which it presently engages.
(ii) Due Qualification. The Issuer is duly qualified to
do business and is in good standing, and has obtained all
material necessary licenses and approvals, in all jurisdictions
where the failure to be so qualified, have such good standing or
have such licenses or approvals would have a material adverse
effect on the Issuer's business and operations or in which the
actions as required by this Indenture require or will require
such qualification.
(iii) Authorization. The Issuer has the power, authority
and legal right to execute, deliver and perform this Indenture
and to grant the Trust Estate to the Indenture Trustee and the
execution, delivery and performance of this Indenture and grant
of the Trust Estate to the Indenture Trustee have been duly
authorized by the Issuer by all necessary corporate action.
(iv) Binding Obligation. This Indenture, assuming due
authorization, execution and delivery by the Indenture Trustee,
constitutes a legal, valid and binding obligation of the Issuer
enforceable against the Issuer in accordance with its terms,
except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter
in effect relating to creditors' rights generally and (B) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought, whether a proceeding at law or in
equity.
(v) No Violation. The consummation of the transactions
contemplated by this Indenture and the fulfillment of the terms
hereof does not conflict with, result in any breach of any of
the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under the
organizational documents of the Issuer, or any material
indenture, agreement, mortgage, deed of trust or other
instrument to which the Issuer is a party or by which it is
bound, or result in the creation or imposition of any lien upon
any of its material properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other
instrument, other than this Indenture, nor violate any law or
any order, rule or regulation applicable to the Issuer of any
court or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having
jurisdiction over the Issuer or any of its properties.
(vi) No Proceedings. There are no proceedings,
injunctions, writs, restraining orders or investigations to
which the Issuer or any of such entity's affiliates is a party
pending, or, to the best of such entity's knowledge, threatened,
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before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality (A) asserting the
invalidity of this Indenture, (B) seeking to prevent the
issuance of any Notes or the consummation of any of the
transactions contemplated by this Indenture or (C) seeking any
determination or ruling that might materially and adversely
affect the performance by the Issuer of its obligations under,
or the validity or enforceability of this Indenture.
(vii) Approvals. All approvals, authorizations,
consents, orders or other actions of any person, corporation or
other organization, or of any court, governmental agency or body
or official, required on the part of the Issuer in connection
with the execution and delivery of this Indenture have been
taken or obtained on or prior to the Closing Date.
(viii) Place of Business. The Issuer's place of business
and chief executive office is 121 South 13 Street, Suite 301,
Lincoln, NE 68508.
(ix) Tax and Accounting Treatment. The Issuer intends to
treat the transactions contemplated by the Student Loan Purchase
Agreements as an absolute transfer rather than as a pledge of
the Financed Eligible Loans from the Seller for federal income
tax and financial accounting purposes and the Issuer will be
treated as the owner of the Financed Eligible Loans for all
purposes. The Issuer further intends to treat the Senior Notes
as its indebtedness for federal income tax and financial
accounting purposes.
(x) Taxes. The Issuer has filed (or caused to be filed)
all federal, state, county, local and foreign income, franchise
and other tax returns required to be filed by it through the
date hereof, and has paid all taxes reflected as due thereon.
The Issuer has taken all steps necessary to ensure that it is
eligible to file a consolidated federal income tax return with
Nelnet, Inc. and such returns will be filed for all taxable
years in which the Notes are Outstanding. There is no pending
dispute with any taxing authority that, if determined adversely
to the Issuer, would result in the assertion by any taxing
authority of any material tax deficiency, and the Issuer has no
knowledge of a proposed liability for any tax year to be imposed
upon such entity's properties or assets for which there is not
an adequate reserve reflected in such entity's current financial
statements.
(xi) Legal Name. The legal name of the Issuer is "Nelnet
Education Loan Funding, Inc.," formerly known as NEBHELP, Inc.
and Nebraska Higher Education Loan Program, Inc.
(xii) Business Purpose. The Issuer has (i) originated or
(ii) previously acquired or will acquire the Financed Eligible
Loans conveyed to it under student loan purchase agreements
substantially in the form of the Student Loan Purchase Agreement
attached hereto as Exhibit C for a bona fide business purpose
and has undertaken the transactions contemplated herein as
principal rather than as an agent of any other person. The
Issuer has no subsidiaries, has adopted and operated
consistently with all corporate formalities with respect to its
operations.
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(xiii) Compliance With Laws. The Issuer is in compliance
with all applicable laws and regulations with respect to the
conduct of its business and has obtained and maintains all
permits, licenses and other approvals as are necessary for the
conduct of its operations.
(xiv) Valid Business Reasons; No Fraudulent Transfers.
The transactions contemplated by this Indenture are in the
ordinary course of the Issuer's business and the Issuer has
valid business reasons for granting the Trust Estate pursuant to
this Indenture. At the time of each such grant: (A) the Issuer
granted the Trust Estate to the Indenture Trustee without any
intent to hinder, delay, or defraud any current or future
creditor of the Issuer; (B) the Issuer was not insolvent and did
not become insolvent as a result of any such grant; (C) the
Issuer was not engaged and was not about to engage in any
business or transaction for which any property remaining with
such entity was an unreasonably small capital or for which the
remaining assets of such entity are unreasonably small in
relation to the business of such entity or the transaction; (D)
the Issuer did not intend to incur, and did not believe or
should not have reasonably believed, that it would incur, debts
beyond its ability to pay as they become due; and (E) the
consideration paid received by the Issuer for the grant of the
Trust Estate was reasonably equivalent to the value of the
related grant.
(xv) No Management of Affairs of Seller. The Issuer is
not and will not be involved in the day-to-day management of the
Seller or the Issuer's parent or any affiliate.
(xvi) No Intercorporate Transfers with Seller or
Affiliates. Other than the transfer of assets and the transfer
of any Notes pursuant to this Indenture, the Issuer does not
engage in and will not engage in any intercorporate transactions
with the Seller and affiliates, except as provided herein with
respect to Program Expenses and the Administrative Services
Agreement or the payment of dividends to the Issuer's parent.
(xvii) Ability to Perform. There has been no material
impairment in the ability of the Issuer to perform its
obligations under this Indenture.
(xviii) Financial Condition. No material adverse change
has occurred in the Issuer's financial status since the date of
its formation.
(xix) Event of Default. No Event of Default has occurred
and no event has occurred that, with the giving of notice, the
passage of time, or both, would become an Event of Default.
(xx) Acquisition of Financed Eligible Loans Legal. The
Issuer has complied with all applicable federal, state and local
laws and regulations in connection with its acquisition of the
Financed Eligible Loans from the Seller.
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(b) The Issuer will not:
(i) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by
this Indenture;
(ii) claim any credit on, or make any deduction from,
the principal amount of any of the Notes by reason of the
payment of any taxes levied or assessed upon any portion of the
Trust Estate;
(iii) except as otherwise provided herein, dissolve or
liquidate in whole or in part, except with the prior written
consent of the Indenture Trustee, and to the extent Notes remain
Outstanding, approval of the Registered Owners and a Rating
Confirmation;
(iv) permit the validity or effectiveness of this
Indenture, any Supplemental Indenture or any grant hereunder to
be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit
any Person to be released from any covenants or obligations
under this Indenture, except as may be expressly permitted
hereby;
(v) except as otherwise provided herein, permit any
lien, charge, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or
extend to or otherwise arise upon or burden the Trust Estate or
any part thereof or any interest therein or the proceeds
thereof;
(vi) permit the lien of this Indenture not to constitute
a valid first priority, perfected security interest in the Trust
Estate;
(vii) guarantee any indebtedness of any Person whether
secured by any Financed Eligible Loans under this Indenture or
otherwise, except for such obligations as may be incurred by the
Issuer in connection with the issuance of the Notes pursuant to
this Indenture and unsecured trade payables in the ordinary
course of its business;
(viii) operate such that it would be consolidated with
its parent or any other affiliate and its separate corporate
existence disregarded in any federal or state proceeding;
(ix) act as agent of any Seller or, except as provided
in the Servicing Agreement, allow the Seller to act as its
agent;
(x) other than certain indemnifications provided to it
by its parent, the Issuer will not allow the Seller or its
parent or any other affiliate to pay its expenses, guarantee its
obligations or advance funds to it for payment of expenses; or
(xi) consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of
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or relating to the Issuer or of or relating to all or
substantially all of its property, or a decree or order of a
court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been
entered against the Issuer; or the Issuer shall not consent to
the appointment of a receiver, conservator or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities, voluntary liquidation or similar proceedings of or
relating to the Issuer or of or relating to all or substantially
all of its property; or admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency, bankruptcy or
reorganization statute, make an assignment for the benefit of
its creditors or voluntarily suspend payment of its obligations.
(c) The Issuer makes the following representations and
warranties as to the Trust Estate which is granted to the Indenture
Trustee hereunder on such date, on which the Indenture Trustee relies in
accepting the Trust Estate. Such representations and warranties shall
survive the grant of the Trust Estate to the Indenture Trustee pursuant
to this Indenture:
(i) Financed Eligible Loans. Each Financed Eligible Loan
acquired by the Issuer shall constitute an Eligible Loan and
contain the characteristics found in a Student Loan Purchase
Agreement.
(ii) Schedule of Financed Eligible Loans. The
information set forth in each schedule of Financed Eligible
Loans to the Student Loan Purchase Agreements is true and
correct in all material respects as of the opening of business
on the Closing Date.
(iii) Grant. It is the intention of the Issuer that the
transfer herein contemplated constitutes a grant of the Financed
Eligible Loans to the Indenture Trustee.
(iv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give
the Indenture Trustee a first priority perfected ownership and
security interest in the Trust Estate, including the Financed
Eligible Loans, have been made no later than the Closing Date
and copies of the file-stamped financing statements shall be
delivered to the Indenture Trustee within five Business Days of
receipt by the Issuer or its agent from the appropriate
secretary of state. The Issuer has not caused, suffered or
permitted any lien, pledges, offsets, defenses, claims,
counterclaims, charges or security interest with respect to the
promissory notes relating to the Financed Eligible Loans (other
than the security interest created in favor of the Indenture
Trustee) to be created.
(v) Transfer Not Subject to Bulk Transfer Act. Each
grant of the Financed Eligible Loans by the Issuer pursuant to
this Indenture is not subject to the bulk transfer act or any
similar statutory provisions in effect in any applicable
jurisdiction.
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(vi) No Transfer Taxes Due. Each grant of the Financed
Eligible Loans (including all payments due or to become due
thereunder) by the Issuer pursuant to this Indenture is not
subject to and will not result in any tax, fee or governmental
charge payable by the Issuer or the Seller to any federal, state
or local government.
(vii) Not an Investment Company. The Issuer is not an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended, or is exempt from all
provisions of such Act.
(viii) Binding Obligations. This Indenture, the Notes
and each Obligation constitutes the legal, valid and binding
obligation of the Issuer, enforceable against the Issuer in
accordance with its terms, except (A) as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect,
affecting the enforcement of creditors' rights in general; and
(B) as such enforceability may be limited by general principles
of equity (whether considered in a suit at law or in equity).
(ix) Valid Security Interest. This Indenture creates a
valid and continuing security interest (as defined in the
Uniform Commercial Code as in effect in the State of Nebraska)
in the Financed Eligible Loans in favor of the Indenture
Trustee, and is enforceable as such against any creditors of the
Issuer.
Section 4.14. Additional Covenants. So long as any of the Notes are
Outstanding:
(a) The Issuer shall not engage in any business or activity
other than in connection with the activities contemplated by its
Articles of Incorporation.
(b) The Issuer shall not consolidate or merge with or into any
other entity or convey or transfer its properties and assets
substantially as an entirety to any entity except as otherwise provided
herein.
(c) The funds and other assets of the Issuer shall not be
commingled with those of any other individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
(d) The Issuer shall not be, become or hold itself out as being
liable for the debts of any other party.
(e) The Issuer shall act solely in its own name and through its
duly Authorized Representative in the conduct of its business, and shall
conduct its business so as not to mislead others as to the identity of
the entity with which they are concerned.
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(f) The Issuer shall maintain its records and books of account
and shall not commingle its records and books of account with the
records and books of account of any other Person. The books of the
Issuer may be kept (subject to any provision contained in the statutes)
inside or outside the State at such place or places as may be designated
from time to time by the board of trustees or in the bylaws of the
Issuer.
(g) All actions of the Issuer shall be taken by a duly
Authorized Representative of the Issuer.
(h) The Issuer shall not amend, alter, change or repeal any
provision contained in this Section 4.14 without (i) the prior written
consent of the Indenture Trustee and (ii) a Rating Confirmation (a copy
of which shall be provided to the Indenture Trustee).
(i) The Issuer shall not amend its Articles of Incorporation
without first obtaining the prior written consent of each Rating Agency.
(j) All audited financial statements of the Issuer that are
consolidated with those of any affiliate thereof will contain detailed
notes clearly stating that (i) all of the Issuer's assets are owned by
the Issuer, and (ii) the Issuer is a separate entity with creditors who
have received ownership and/or security interests in the Issuer's
assets.
(k) The Issuer will strictly observe legal formalities in its
dealings with the Seller, the Issuer's parent or any affiliate thereof,
and funds or other assets of the Issuer will not be commingled with
those of the Seller, the Issuer's parent or any other affiliate thereof.
The Issuer shall not maintain joint bank accounts or other depository
accounts to which the Seller, the Issuer's parent or any other affiliate
has independent access. None of the Issuer's funds will at any time be
pooled with any funds of the Seller, the Issuer's parent or any other
affiliate.
(l) The Issuer will maintain an arm's length relationship with
the Seller (and any affiliate). Any Person that renders or otherwise
furnishes services to the Issuer will be compensated by the Issuer at
market rates for such services it renders or otherwise furnishes to the
Issuer except as otherwise provided in this Indenture. Except as
contemplated in this Indenture, the Student Loan Purchase Agreements,
the Administrative Services Agreement or the Servicing Agreement, the
Issuer will not hold itself out to be responsible for the debts of the
Seller, the parent or the decisions or actions respecting the daily
business and affairs of the Seller or parent.
Section 4.15. Providing of Notice. The Issuer, upon learning of any
failure on its part to observe or perform in any material respect any covenant,
representation or warranty of the Issuer set forth in this Indenture or the
Student Loan Purchase Agreements, or of any failure on the part of the Seller to
observe or perform in any material respect any covenant, representation or
warranty of the Seller set forth in the Student Loan Purchase Agreements, shall
promptly notify the Indenture Trustee, the Servicer and each Rating Agency of
such failure.
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Section 4.16. Reports by Issuer. The Issuer will:
(a) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe), if any, which the
Issuer may be required to file with the Commission pursuant to Section
13 or Section 15(d) of the Securities Exchange Act;
(b) file with the Indenture Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such additional information, documents and reports, if
any, with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time by such
rules and regulations;
(c) transmit by mail to the Registered Owners of Notes, within
30 days after the filing thereof with the Indenture Trustee, in the
manner and to the extent provided in TIA Section 313(c), such summaries
of any information, documents and reports required to be filed by the
Issuer, if any, pursuant to clauses (a) and (b) of this Section 4.16 as
may be required by rules and regulations prescribed from time to time by
the Commission; and
(d) the Indenture Trustee shall mail to each Registered Owner,
within 60 days after each December 31 beginning with the December 31
following the date of this Indenture, a brief report as of such December
31 that complies with TIA Section 313(a) if required by said section.
The Indenture Trustee shall also comply with TIA Section 313(b). A copy
of each such report, when and if required pursuant to TIA Section 313(a)
or (b), shall, at the time of such transaction to Registered Owners, be
filed by the Indenture Trustee with the Commission and with each
securities exchange, if any, upon which the Notes are listed, provided
that the Issuer has previously notified the Indenture Trustee of such
listing.
The Indenture Trustee may conclusively rely and accept such reports from
the Issuer as fulfilling the requirements of this Section 4.16, with no further
duty to know, determine or examine such reports or comply with the prescribed
timing, rules and regulations of the Commission.
Section 4.17. Statement as to Compliance. The Issuer will deliver to the
Indenture Trustee, within 75 days after the end of each fiscal year, a brief
certificate from an Authorized Officer including (i) a current list of the
officers and directors of the Issuer and a list of Authorized Representatives,
and (ii) a statement of the Issuer's compliance with all conditions and
covenants under this Indenture and, in the event of any noncompliance,
specifying such noncompliance and the nature and status thereof. For purposes of
this Section 4.17, such compliance shall be determined without regard to any
period of grace or requirement of notice under this Indenture.
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Section 4.18. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. The Issuer covenants that if:
(a) default is made in the payment of any installment of
interest, if any, on any Notes when such interest becomes due and
payable and such default continues for a period of 5 days; or
(b) default is made in the payment of the principal of (and
premium, if any, on) any Notes at their Maturity,
then the Issuer will, upon demand of the Indenture Trustee, pay to the Indenture
Trustee, for the benefit of the Registered Owners, the whole amount then due and
payable on such Notes for principal (and premium, if any) and interest, with
interest upon any overdue principal (and premium, if any) and, to the extent
that payment of such interest shall be legally enforceable, upon any overdue
installments of interest, if any, at the rate or rates borne by or provided for
in such Notes, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
If the Issuer fails to pay such amounts forthwith upon such demand, the
Indenture Trustee, in its own name and as Indenture Trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Issuer or any other obligor upon such Notes of such
series and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Issuer or any other obligor upon such
Notes, wherever situated.
If an Event of Default with respect to Notes occurs and is continuing,
the Indenture Trustee may, after being indemnified to its satisfaction and in
its discretion, proceed to protect and enforce its rights and the rights of the
Registered Owners of Notes by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
Section 4.19. Representations of the Issuer Regarding the Indenture
Trustee's Security Interest. The Issuer hereby represents and warrants for the
benefit of the Indenture Trustee and the Noteholders as follows:
(a) This Indenture creates a valid and continuing security
interest (as defined in the applicable Uniform Commercial Code in effect
in the State of Nebraska) in the Financed Eligible Loans in favor of the
Indenture Trustee, which security interest is prior to all other liens,
charges, security interests, mortgages or other encumbrances, and is
enforceable as such as against creditors of and purchasers from the
Issuer.
(b) The Act deems the Financed Eligible Loans to constitute
accounts within the meaning of the applicable UCC as in effect in the
State of Nebraska for the purposes of perfecting a security interest in
the Financed Eligible Loans.
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(c) The Issuer (or the Eligible Lender Trustee on behalf of the
Issuer) owns and has good and marketable title to the Financed Eligible
Loans free and clear of any lien, charge, security interest, mortgage or
other encumbrance, claim or encumbrance of any Person.
(d) The Issuer has caused or will have caused, within 10 days,
the filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law in order to
perfect the security interest in the Financed Eligible Loans granted to
the Indenture Trustee hereunder.
(e) All executed copies of each promissory note that constitute
or evidence the Financed Eligible Loans have been delivered to either
the Indenture Trustee or the Custodian.
(f) The Issuer has received a written acknowledgment from each
Custodian that such Custodian is holding the promissory notes that
constitute or evidence the Financed Eligible Loans solely on behalf and
for the benefit of the Indenture Trustee.
(g) Other than the security interest granted to the Indenture
Trustee pursuant to this Indenture, the Issuer has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed
any of the Financed Eligible Loans. The Issuer has not authorized the
filing of and is not aware of any financing statements against the
Issuer that include a description of collateral covering the Financed
Eligible Loans other than any financing statement relating to the
security interest granted to the Indenture Trustee hereunder or that has
been terminated. The Issuer is not aware of any judgment or tax lien
filings against the Issuer.
Section 4.20. Covenants of the Issuer Regarding the Indenture Trustee's
Security Interest. The Issuer hereby covenants for the benefit of the Indenture
Trustee and the Noteholders as follows:
(a) The representations and warranties set forth in Section 4.19
shall survive the termination of this Indenture.
(b) The Indenture Trustee shall not waive any of the
representations and warranties set forth in Section 4.19 above.
(c) The Issuer shall take all steps necessary, and shall cause
the Servicers to take all steps necessary and appropriate, to maintain
the perfection and priority of the Indenture Trustee's security interest
in the Financed Eligible Loans.
Section 4.21. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, business and franchise tax purposes, the Notes (other than the
Junior-Subordinate Notes) will qualify as indebtedness of the Issuer. The
Issuer, by entering into this Indenture, and each Noteholder, by its acceptance
of its Note, agree to treat the Notes (other than the Junior-Subordinate Notes)
for federal, state and local income, business and franchise tax purposes as
indebtedness of the Issuer.
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Section 4.22. Opinions as to Indenture Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the
Indenture Trustee an Opinion of Counsel either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording and filing of this Indenture, any Supplemental Indentures
hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the lien and
security interest of this Indenture and reciting the details of such
action, or stating that, in the opinion of such counsel, no such action
is necessary to make such lien and security interest effective.
(b) On or before March 31, in each calendar year, beginning on
March 31, 2004, the Issuer shall furnish to the Indenture Trustee an
Opinion of Counsel either stating that, in the opinion of such counsel,
such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any Supplemental Indentures
hereto and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation
statements as are necessary to maintain the lien and security interest
created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary
to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of
this Indenture, any Supplemental Indentures hereto and any other
requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the lien and security interest of this
Indenture until March 31, in the following calendar year.
ARTICLE V
FUNDS
Section 5.01. Creation and Continuation of Funds and Accounts.
(a) There are hereby created and established the following Funds
to be held and maintained by the Indenture Trustee for the benefit of
the Registered Owners:
(i) Acquisition/Redemption Fund;
(ii) Collection Fund; and
(iii) Reserve Fund.
(b) The Operating Fund has previously been established by the
Issuer, is hereby continued, does not constitute a Fund within the
meaning of this Indenture, and is held by a depository bank of the
Issuer for the benefit of the Issuer; and the Registered Owners shall
have no right, title or interest therein.
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The Indenture Trustee is hereby authorized for the purpose of
facilitating the administration of the Trust Estate and for the administration
of any Notes issued hereunder to create further Accounts or Subaccounts in any
of the various Funds and Accounts established hereunder or in a Supplemental
Indenture or as are otherwise deemed necessary or desirable.
Section 5.02. Acquisition/Redemption Fund. There shall be deposited into
the Acquisition/Redemption Fund amounts described in any Supplemental Indenture,
any deposit of funds from the Issuer, moneys from proceeds of any Notes and
moneys transferred thereto from the Collection Fund pursuant to Section 5.03
hereof. Financed Eligible Loans shall be held by the Indenture Trustee or its
agent or bailee (including the Servicer) and shall be pledged to the Trust
Estate and accounted for as a part of the Acquisition/Redemption Fund.
Moneys on deposit in the Acquisition/Redemption Fund shall be used, upon
Issuer Order, (i) solely to pay costs of issuance of the Notes, (ii) to redeem
Notes in accordance with the provisions of any Supplemental Indenture, (iii) to
make Principal Reduction Payments on any Principal Reduction Payment Date in
accordance with the provisions of any Supplemental Indenture, and (iv) upon
receipt by the Indenture Trustee of an Eligible Loan Acquisition Certificate in
the form of Exhibit A hereto, to acquire Eligible Loans (including serial loans
and Add-on Consolidation Loans) during any Acquisition Period at a price which
would permit the results of cash flow analyses provided to each Rating Agency on
any Closing Date to be sustained as certified to the Indenture Trustee on the
Acquisition Certificate; provided that such price may be increased if Rating
Confirmation is obtained, based on new cash flow analyses containing such
assumptions as the Issuer shall reasonably determine. Any such Issuer Order or
Eligible Loan Acquisition Certificate shall state that such proposed use of
moneys in the Acquisition/Redemption Fund is in compliance with the provisions
of this Indenture. If the Issuer determines that all or any portion of such
moneys cannot be so used, then an Authorized Representative of the Issuer may,
by Issuer Order, direct the Indenture Trustee to redeem Notes in accordance with
any Supplemental Indenture.
Notwithstanding the foregoing, if on any Note Payment Date there are not
sufficient moneys on deposit in the Collection Fund to make the transfers
required by Section 5.03(b)(i) through (vii) hereof, then, an amount equal to
any such deficiency shall be transferred directly from any Account within the
Acquisition/Redemption Fund.
While the Issuer will be the beneficial owner of the Financed Eligible
Loans and the Registered Owners will have a security interest therein, it is
understood and agreed that the Eligible Lender Trustee will be the legal owner
thereof and the Indenture Trustee will have a security interest in the Financed
Eligible Loans for and on behalf of the Registered Owners. The notes
representing the Financed Eligible Loans will be held in the name of the
Eligible Lender Trustee for the account of the Issuer, for the benefit of the
Noteholders.
Financed Eligible Loans shall be sold, transferred or otherwise disposed
of (other than for consolidation, serialization or transfer to a Guaranty
Agency) by the Indenture Trustee free from the lien of this Indenture at any
time pursuant to an Issuer Order (other than to the Seller from which the Issuer
originally acquired the Financed Eligible Loans) and if the Indenture Trustee is
provided with the following:
(a) an Issuer Order stating the sale price and directing that
Financed Eligible Loans be sold, transferred or otherwise disposed of
and delivered to:
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(i) if the Eligible Loan is originated under the Act and
the Act requires any such Eligible Loan to be held only by an
Eligible Lender, an Eligible Lender under the Act whose name
shall be specified; or
(ii) the trustee under another indenture securing notes
issued by the Issuer; and
(b) an Issuer Order stating to the effect:
(i) that the disposition price is equal to or in excess
of the purchase price paid by the Issuer for such Financed
Eligible Loan (less principal amounts received with respect to
such Financed Eligible Loan and amortized premiums plus a pro
rata share of such Financed Eligible Loan's cost of issuance);
or
(ii) if a Financed Eligible Loan is in default or
otherwise deemed by the Issuer to not be performing in
accordance with the expectations set forth in the closing
cashflows, that the disposition price is lower than the purchase
price paid by the Issuer for such Financed Eligible Loan (less
principal amounts received with respect to such Financed
Eligible Loan and amortized premiums plus a pro rata share of
such Financed Eligible Loan's cost of issuance), and (A) the
Issuer reasonably believes that the present value of the
Revenues expected to be received (after giving effect to such
disposition) would be at least equal to the Revenues expected to
be received assuming no such sale, transfer or other disposition
occurred, or (B) the Issuer shall remain able to pay debt
service on the Notes and make payment on any other Obligations
on a timely basis (after giving effect to such sale, transfer or
other disposition) whereas it would not have been able to do so
on a timely basis if it had not sold, transferred or disposed of
such Financed Eligible Loan at such discounted amount, or (C)
the Aggregate Market Value of the Trust Estate (after giving
effect to such sale, transfer or other disposition) will be at
least equal to 100% of the aggregate principal amount of the
Obligations plus accrued interest.
Further, Financed Eligible Loans shall also be sold, transferred or
otherwise disposed of by the Indenture Trustee pursuant to an Issuer Order
(other than to the Seller from which the Issuer originally acquired the Financed
Eligible Loans) in which the Issuer chooses to exercise any right to optional
purchase (as described in a Supplemental Indenture), or if the Issuer determines
that such disposition of Financed Eligible Loans from the Trust Estate is
necessary in order to avoid the occurrence of an Event of Default hereunder or
to avoid any default in the payment obligations of the Issuer under any
reimbursement agreement, in such amount and at such times and prices as may be
specified in such Issuer Order. The Indenture Trustee, following receipt of the
foregoing and of an Issuer Order indicating that such purchaser or transferee is
one of the entities described in clause (a) above, if applicable, shall deliver
such Financed Eligible Loans free from the lien of this Indenture upon the
receipt of the purchase price or consideration specified in the Issuer Order, in
compliance with the foregoing. The proceeds to be received upon any disposition
may consist of cash, Investment Securities and/or Eligible Loans.
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Section 5.03. Collection Fund.
(a) The Indenture Trustee shall deposit into the Collection Fund
amounts described in any Supplemental Indenture, all Revenues derived
from Financed Eligible Loans acquired by the Issuer, all other Revenue
derived from moneys or assets on deposit in the Acquisition/Redemption
Fund and the Reserve Fund, all Counterparty Payments and any other
amounts deposited thereto upon receipt of an Issuer Order. All
Recoveries of Principal constituting a portion of the Revenue deposited
in the Collection Fund and so identified to the Indenture Trustee by the
Issuer shall be transferred, on a monthly basis, to the
Acquisition/Redemption Fund. Upon receipt of an Issuer Order, money in
the Collection Fund shall be used, on any date, (i) to pay Program
Expenses directly or (ii) upon receipt of an Issuer Order substantially
in the form of Exhibit B hereto, directing the same, to make a transfer
to the Operating Fund to pay Program Expenses, subject to Section 5.05
hereof. Upon receipt of an Issuer Order directing the same, moneys in
the Collection Fund shall be used, on any date, to fund the acquisition
of (i) Add-on Consolidation Loans during the related Add-on Period and
(ii) Eligible Student Loans which constitute serial loans or Eligible
Student Loans which have been cured by a Servicer pursuant to the terms
of a Servicing Agreement, to the extent moneys are not otherwise
available therefor in the Acquisition/Redemption Fund. The Issuer shall
provide the Indenture Trustee with an Issuer Order with respect to all
Issuer Derivative Payments and carry-over interest amounts, which Issuer
Order the Indenture Trustee may conclusively rely on.
(b) On each Note Payment Date and Derivative Payment Date, money
remaining in the Collection Fund shall be used and transferred to other
funds or Persons in the following order of precedence (any money not so
transferred or paid to remain in the Collection Fund until subsequently
applied pursuant to this Section 5.03(b)):
(i) on a parity basis, to pay interest due on any Senior
Notes on such Note Payment Date and any Issuer Derivative
Payment secured on a parity with the Senior Notes due on such
Derivative Payment Date;
(ii) on a parity basis, to pay the principal of or
premium, if any, on any Senior Notes due on such Note Payment
Date (if such Note Payment Date is a Stated Maturity or
mandatory sinking fund redemption date with respect to such
Senior Notes);
(iii) on a parity basis, to pay interest due on any
Subordinate Notes on such Note Payment Date and any Issuer
Derivative Payment secured on a parity with the Subordinate
Notes due on such Derivative Payment Date;
(iv) on a parity basis, to pay the principal of or
premium, if any, on any Subordinate Notes due on such Note
Payment Date (if such Note Payment Date is a Stated Maturity or
mandatory sinking fund redemption date with respect to such
Subordinate Notes);
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(v) on a parity basis, to pay interest on
Junior-Subordinate Notes on such Note Payment Date and to make
any Issuer Derivative Payment secured on a parity with such
Junior-Subordinate Notes due on such Derivative Payment Date;
(vi) on a parity basis, to pay the principal of or
premium, if any, on any Junior-Subordinate Notes due on such
Note Payment Date (if such Note Payment Date is a Stated
Maturity or mandatory sinking fund redemption date with respect
to such Junior-Subordinate Notes);
(vii) to the Reserve Fund the amount, if any, required
by Section 5.04(d) hereof;
(viii) until such time as the Asset Release Test is met,
as certified to the Indenture Trustee in an Issuer Order, to the
Acquisition/Redemption Fund to be used for mandatory redemptions
(if so described in a Supplemental Indenture);
(ix) upon receipt of an Issuer Order, to pay interest
accrued on the interest carryover amounts of the Senior Notes,
the interest carryover amounts of the Senior Notes, to pay
interest accrued on the interest carryover amounts of the
Subordinate Notes, the interest carryover amounts of the
Subordinate Notes, to pay interest accrued on the interest
carryover amounts of the Junior-Subordinate Notes, the interest
carryover amounts of the Junior-Subordinate, in that order of
priority provided, however, on any Payment Date, any such amount
shall be allocated first to any Notes being redeemed on such
Payment Date;
(x) upon receipt of an Issuer Order, to pay unpaid
Termination Payments due on a Derivative Payment Date and any
other unpaid Issuer Derivative Payment in the following order of
priority: first, to a Counterparty who has provided a Derivative
Product secured on a parity with the Senior Notes; second, to a
Counterparty who has provided a Derivative Product secured on a
parity with the Subordinate Notes; third, to a Counterparty who
has provided a Derivative Product secured on a parity with the
Junior-Subordinate Notes;
(xi) subsequent to such time as the Asset Release Test
is met, at the option of the Issuer and upon Issuer Order, to
the Acquisition/Redemption Fund to be used for optional
redemptions (if so described in a Supplemental Indenture); and
(xii) to the extent the Indenture permits payments to
the Issuer free from the lien of the Indenture pursuant to
Section 5.06 hereof, at the option of the Issuer and upon Issuer
Order to exercise such option, the remaining money in the
Collection Fund on such payment date may be paid to the Issuer.
Section 5.04. Reserve Fund.
(a) The Indenture Trustee shall deposit to the Reserve Fund the
amount, if any, specified in each Supplemental Indenture. On each Note
Payment Date, to the extent there are insufficient moneys in the
39
Collection Fund to make the transfers required by Sections 5.03(b)(i)
through (vi) hereof (subject to the provisions of Sections 5.04(b) and
(e) below), then, the amount of such deficiency shall be paid directly
from the Reserve Fund if such deficiency has not been paid from the
Acquisition/Redemption Fund.
(b) Money in the Reserve Fund may be used to pay principal on
the Notes only on the date of their Stated Maturity or mandatory sinking
fund redemption date.
(c) An amount specified in a Supplemental Indenture may be
withdrawn from the Reserve Fund, free from the lien of the Indenture on
the dates described therein.
(d) If the Reserve Fund is used for the purposes described in
Section 5.04(a)-(c) hereof, the Indenture Trustee shall restore the
Reserve Fund to the Reserve Fund Requirement with respect thereto by
transfers from the Collection Fund on the next Note Payment Date
pursuant to Section 5.03(b)(vii) hereof or from the
Acquisition/Redemption Fund pursuant to Section 5.02 hereof. If the full
amount required to restore the Reserve Fund to the applicable Reserve
Fund Requirement is not available in the Collection Fund on such next
succeeding Note Payment Date, the Indenture Trustee shall continue to
transfer funds from the Collection Fund as they become available and in
accordance with Section 5.03(b)(vii) hereof until the deficiency in the
Reserve Fund has been eliminated.
(e) On any day that the amount in the Reserve Fund exceeds the
Reserve Fund Requirement with respect thereto, the Indenture Trustee, at
the direction of the Issuer and subject to meeting the Asset Release
Test, shall transfer the excess to the Issuer. Moneys in the Reserve
Fund shall not be used to pay principal on the Notes, other than on a
Stated Maturity, mandatory sinking fund redemption date or in connection
with the defeasance of this Indenture in accordance with Article X
hereof.
(f) On the date of redemption of all of the Notes, the Indenture
Trustee shall transfer all amounts in the Reserve Fund to the Collection
Fund.
(g) The Issuer may substitute for some or all of the cash
deposit required to be maintained in the Reserve Fund for a Reserve Fund
Surety Bond upon receipt of a Rating Confirmation with respect to such
substitution. Any such Reserve Fund Surety Bond shall be delivered to
the Indenture Trustee who shall draw upon the Reserve Fund Surety Bond
in accordance with its terms and in the manner provided in a
Supplemental Indenture. Notwithstanding any of the foregoing, amounts
available under any Reserve Fund Surety Bond shall not be used to make
any payments with respect to any Derivative Product.
Section 5.05. Operating Fund. The Indenture Trustee shall deposit to the
Operating Fund the amount, if any, specified in each Supplemental Indenture. The
Operating Fund is a special fund created with a depository bank of the Issuer
and shall be used to pay Program Expenses. The Operating Fund shall be held by
such depository bank of the Issuer, and no Registered Owner shall have any
right, title or interest in the Operating Fund. Amounts deposited in the
Operating Fund shall be used to pay Program Expenses.
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The amount deposited in the Operating Fund by transfer from the
Collection Fund and, if necessary, from the Acquisition/Redemption Fund, and the
schedule of deposits shall be determined by the Issuer. Such Issuer Order shall
certify that the amount so transferred in any one Fiscal Year shall not exceed
the amount budgeted by the Issuer as Program Expenses for such Fiscal Year with
respect to the Notes and as may be limited by a Supplemental Indenture, and does
not exceed the amount designated therefor in the cash flows provided to each
Rating Agency on each Closing Date, unless the Issuer, after furnishing each
Rating Agency with revised cash flows, shall have received a Rating
Confirmation. The Issuer shall provide the Indenture Trustee with an Issuer
Order and a copy of any Rating Confirmation at least two Business Days prior to
the day on which the amount is to be transferred.
At any time in order to meet expenses which have been incorporated in an
amended budget, the Issuer may requisition from the Indenture Trustee the amount
which it is anticipated will be required to pay the Program Expenses not in
excess of the amount budgeted with respect to the Notes for the period to the
next deposit into the Operating Fund. The requisition, in the form of an Issuer
Order, shall include a statement that the amount requisitioned, when combined
with the amount requisitioned previously in the Fiscal Year, does not exceed the
amount currently budgeted for that year as Program Expenses or as may be further
limited by a Supplemental Indenture.
Upon the receipt of such requisition, the Indenture Trustee shall
withdraw the amount requisitioned from the Collection Fund, and if necessary,
from the Acquisition/Redemption Fund (or so much thereof as is then on deposit
in such Funds) and transfer the same into the Operating Fund. The Issuer may
request that the Indenture Trustee pay the requisitioned amount in installments
as specified by the Issuer. In the event there is not sufficient money on hand
in the Collection Fund and the Acquisition/Redemption Fund to transfer the full
amount requisitioned, the Indenture Trustee shall notify the Issuer and the
Issuer shall then determine the amount to be transferred.
Section 5.06. Transfers to Issuer. Transfers from the Collection Fund to
the Issuer may be made in accordance with Section 5.03(b)(xi); provided,
however, that no transfer of assets to the Issuer (other than pursuant to the
Operating Fund as otherwise permitted in Section 5.05 hereof) shall be made if
there is not on deposit in the Reserve Fund an amount equal to at least the
Reserve Fund Requirement; and further provided, that no transfer shall be made
to the Issuer unless the Issuer certifies that immediately after taking into
account any such transfer, the Aggregate Market Value of the assets in the Trust
Estate will be equal to or greater than 103% of the unpaid principal amount of
the Senior Notes Outstanding and Subordinate Notes Outstanding (the "Asset
Release Test"). The Asset Release Test may be modified at any time upon receipt
by the Trustee of a Rating Confirmation.
Section 5.07. Investment of Funds Held by Indenture Trustee. The
Indenture Trustee shall invest money held for the credit of any Fund or Account
or Subaccount held by the Indenture Trustee hereunder as directed in writing (or
orally, confirmed in writing) by an Authorized Representative of the Issuer, to
the fullest extent practicable and reasonable, in Investment Securities which
shall mature or be redeemed at the option of the holder prior to the respective
dates when the money held for the credit of such Fund or Account will be
required for the purposes intended. In the absence of any such direction and to
the extent practicable, the Indenture Trustee shall invest amounts held
hereunder in those Investment Securities described in clause (d) of the
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definition of the Investment Securities. Subject to the provisions of Section
5.04(e), all income and earning on such investments shall be transferred monthly
to the Collection Fund. The Indenture Trustee and the Issuer hereby agree that
unless an Event of Default shall have occurred hereunder, the Issuer acting by
and through an Authorized Representative shall be entitled to, and shall,
provide written direction or oral direction confirmed in writing to the
Indenture Trustee with respect to any discretionary acts required or permitted
of the Indenture Trustee under any Investment Securities and the Indenture
Trustee shall not take such discretionary acts without such written direction.
The Investment Securities purchased shall be held by the Indenture
Trustee and shall be deemed at all times to be part of such Fund or Account or
Subaccounts or combination thereof, and the Indenture Trustee shall inform the
Issuer of the details of all such investments. Upon direction in writing from an
Authorized Representative of the Issuer, the Indenture Trustee shall use its
best efforts to sell at the best price obtainable, or present for redemption,
any Investment Securities purchased by it as an investment whenever it shall be
necessary to provide money to meet any payment from the applicable Fund. The
Indenture Trustee shall advise the Issuer in writing, on or before the fifteenth
day of each calendar month (or such later date as reasonably consented to by the
Issuer), of all investments held for the credit of each Fund in its custody
under the provisions of this Indenture as of the end of the preceding month and
the value thereof, and shall list any investments which were sold.
Money in any Fund constituting a part of the Trust Estate may be pooled
for the purpose of making investments and may be used to pay accrued interest on
Investment Securities purchased. The Indenture Trustee and its affiliates may
act as principal or agent in the acquisition or disposition of any Investment
Securities.
Notwithstanding the foregoing, the Indenture Trustee shall not be
responsible or liable for any losses on investments made by it hereunder or for
keeping all Funds held by it, fully invested at all times, its only
responsibility being to comply with the investment instructions of the Issuer or
its designee in a non-negligent manner.
The Issuer acknowledges that to the extent the regulations of the
Comptroller of the Currency or other applicable regulatory agency grant the
Issuer the right to receive brokerage confirmations of security transactions,
the Issuer waives receipt of such confirmations.
Section 5.08. Investment Securities. Any investment of funds in
Investment Securities shall be held by a financial institution in accordance
with the following requirements:
(a) all Investment Securities shall be held in an account with
such financial institution in the name of the Indenture Trustee;
(b) all Investment Securities held in such account shall be
delivered to the Indenture Trustee in the following manner:
(i) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other obligations
that constitute "instruments" within the meaning of Section
9-102(a)(47) of the UCC (other than certificated securities) and
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are susceptible of physical delivery, transferred to the
Indenture Trustee by physical delivery to the Indenture Trustee,
endorsed to, or registered in the name of, the Indenture Trustee
or its nominee or endorsed in blank; or such additional or
alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such Investment
Securities to the Indenture Trustee free of any adverse claims,
consistent with changes in applicable law or regulations or the
interpretation thereof;
(ii) with respect to a "certificated security" (as
defined in Section 8-102(a)(4) of the UCC), transferred:
(A) by physical delivery of such certificated
security to the Indenture Trustee, provided that if the
certificated security is in registered form, it shall be
endorsed to, or registered in the name of, the Indenture
Trustee or endorsed in blank;
(B) by physical delivery of such certificated
security in registered form to a "securities
intermediary" (as defined in Section 8-102(a)(14) of the
UCC) acting on behalf of the Indenture Trustee if the
certificated security has been specially endorsed to the
Indenture Trustee by an effective endorsement;
(iii) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage Association that is a book entry
security held through the Federal Reserve System pursuant to
Federal book entry regulations, the following procedures, all in
accordance with applicable law, including applicable federal
regulations and Articles 8 and 9 of the UCC: book entry
registration of such property to an appropriate book entry
account maintained with a Federal Reserve Bank by a securities
intermediary which is also a "depositary" pursuant to applicable
federal regulations and issuance by such securities intermediary
of a deposit advice or other written confirmation of such book
entry registration to the Indenture Trustee of the purchase by
the securities intermediary on behalf of the Indenture Trustee
of such book entry security; the making by such securities
intermediary of entries in its books and records identifying
such book entry security held through the Federal Reserve System
pursuant to Federal book entry regulations as belonging to the
Indenture Trustee and indicating that such securities
intermediary holds such book entry security solely as agent for
the Indenture Trustee; or such additional or alternative
procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Investment Securities
to the Indenture Trustee free of any adverse claims, consistent
with changes in applicable law or regulations or the
interpretation thereof;
(iv) with respect to any "uncertificated security" (as
defined in Section 8-102(a)(18) of the UCC) that is not governed
by clause (iii) above, transferred:
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(A) (1) by registration to the Indenture Trustee
as the registered owner thereof, on the books and
records of the issuer thereof; or
(2) by registration to another Person
(not a securities intermediary) that either
becomes the registered owner of the
uncertificated security on behalf of the
Indenture Trustee or, having become the
registered owner, acknowledges that it holds for
the Indenture Trustee; or
(B) by the issuer thereof having agreed that it
will comply with instructions originated by the
Indenture Trustee without further consent of the
registered owner thereof;
(v) with respect to any "security entitlement" (as
defined in Section 8-102(a)(17) of the UCC):
(A) if a securities intermediary
(1) indicates by book entry that a
"financial asset" (as defined in Section
8-102(a)(9) of the UCC) has been credited to the
Indenture Trustee's "securities account" (as
defined in Section 8-501(a) of the UCC);
(2) receives a financial asset (as so
defined) from the Indenture Trustee or acquires
a financial asset for the Indenture Trustee,
and, in either case, accepts it for credit to
the Indenture Trustee's securities account (as
so defined);
(3) becomes obligated under other law,
regulation or rule to credit a financial asset
to the Indenture Trustee's securities account;
or
(4) has agreed that it will comply with
"entitlement orders" (as defined in Section
8-102(a)(8) of the UCC) originated by the
Indenture Trustee, without further consent by
the "entitlement holder" (as defined in Section
8-102(a)(7) of the UCC); and
(B) such financial asset either is such
Investment Security or a security entitlement evidencing
a claim thereto; and
(vi) in each case of delivery contemplated pursuant to
clauses (i) through (v) above, the Indenture Trustee shall make
appropriate notations on its records, and shall cause the same
to be made on the records of its nominees, indicating that such
Investment Security is held in trust pursuant to and as provided
in this Indenture.
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Any cash held by the Indenture Trustee shall be considered a "financial
asset" for purposes of this paragraph. Subject to the other provisions hereof,
the Indenture Trustee shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Indenture Trustee or its
agent, together with each document of transfer, if any, necessary to transfer
title to such investment to the Indenture Trustee in a manner which complies
with this paragraph.
The Indenture Trustee agrees that it has no security interest or other
adverse claim to the Funds and Accounts or the Investment Securities therein
that are part of the Trust Estate other than pursuant to this Indenture and that
it will not enter into any agreement that would give any Person or entity other
than the Indenture Trustee the right to give entitlement orders with respect to
such Investment Securities or the Funds and Accounts.
Section 5.09. Release; Sale of Financed Eligible Loans.
(a) The Indenture Trustee shall, upon Issuer Order and subject
to the provisions of this Indenture, take all actions reasonably
necessary to effect the release of any Financed Eligible Loans from the
lien of this Indenture to the extent required by the Act or other
applicable laws.
(b) Subject to the payment of its fees and expenses pursuant to
Sections 7.05 and 7.07, the Indenture Trustee may, and when required by
the provisions of this Indenture shall, execute instruments to release
property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that
are not inconsistent with the provisions of this Indenture. No party
relying upon an instrument executed by the Indenture Trustee as provided
in this Article V shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent or
see to the application of any moneys.
(c) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to
Sections 7.05 and 7.07 and all amounts payable to any Servicer, the
Administrator, the Auction Agents, the Broker-Dealers, and the
Counterparties have been paid, release any remaining portion of the
Trust Estate that secured the Notes from the lien of this Indenture and
release to the Issuer or any other Person entitled thereto any funds
then on deposit in the Funds and Accounts. The Indenture Trustee shall
release property from the lien of this Indenture pursuant to this
Section 5.06(c) only upon receipt of an Issuer Order and (if required by
the TIA) Independent Certificates in accordance with TIA Sections 314(c)
and 314(d)(1).
(d) Subject to the provisions of this Indenture, the Indenture
Trustee shall release property from the lien of this Indenture only upon
receipt of an Issuer Order, an Opinion of Counsel and Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or an
Opinion of Counsel in lieu of such Independent Certificates to the
effect that the TIA does not require any such Independent Certificates.
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ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default Defined. For the purpose of this
Indenture, the following events are hereby defined as, and are declared to be,
"Events of Default":
(a) default in the due and punctual payment of the interest on
any of the Senior Notes when due and payable, and such default shall
continue for a period of five (5) days;
(b) default in the due and punctual payment of the principal on
any of the Senior Notes when due and payable or failure to make any
payment due under any other Senior Obligations hereunder when due (other
than the failure to make Principal Reduction Payments);
(c) if no Senior Obligations are Outstanding hereunder, default
in the due and punctual payment of the interest on any of the
Subordinate Notes when due and payable, and such default shall continue
for a period of five (5) days;
(d) if no Senior Obligations are Outstanding hereunder, default
in the due and punctual payment of the principal on any of the
Subordinate Notes when due and payable or failure to make any payment
due under any other Subordinate Obligations when due (other than the
failure to make Principal Reduction Payments);
(e) if no Senior Obligations or Subordinate Obligations are
Outstanding hereunder, default in the due and punctual payment of the
interest on any of the Junior-Subordinate Notes when due and payable,
and such default shall continue for a period of five (5) days;
(f) if no Senior Obligations or Subordinate Obligations are
Outstanding hereunder, default in the due and punctual payment of the
principal on any of the Junior Subordinate Notes when due and payable or
failure to make any payment due under any other Junior-Subordinate
Obligations when due (other than the failure to make Principal Reduction
Payments);
(g) default in the performance or observance of any other of the
covenants, agreements, or conditions on the part of the Issuer to be
kept, observed, and performed contained in this Indenture or in the
Notes, and continuation of such default for a period of 90 days after
written notice thereof by the Indenture Trustee to the Issuer; and
(h) the occurrence of an Event of Bankruptcy with respect to the
Issuer.
Failure to pay interest carryover amounts or interest on interest carryover
amounts shall not constitute an Event of Default.
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Any notice herein provided to be given to the Issuer with respect to any
default shall be deemed sufficiently given if sent by certified mail with
postage prepaid to the Person to be notified, addressed to such Person at the
post office address as shown in Section 9.01 of this Indenture or such other
address as may hereafter be given as the principal office of the Issuer in
writing to the Indenture Trustee by an Authorized Representative of the Issuer.
The Indenture Trustee shall give such notice if requested to do so in writing by
the Registered Owners of at least a majority of the principal amount of the
Highest Priority Obligations at the time Outstanding ("Registered Owner
Approval").
Section 6.02. Remedy on Default; Possession of Trust Estate. Subject to
Section 6.09 hereof, upon the happening and continuance of any Event of Default,
the Indenture Trustee personally or by its attorneys or agents may enter into
and upon and take possession of such portion of the Trust Estate as shall be in
the custody of others, and all property comprising the Trust Estate, and each
and every part thereof, and exclude the Issuer and its agents, servants, and
employees wholly therefrom, and have, hold, use, operate, manage and control the
same and each and every part thereof, and in the name of the Issuer or
otherwise, as they shall deem best, conduct the business thereof and exercise
the privileges pertaining thereto and all the rights and powers of the Issuer
and use all of the then existing Trust Estate for that purpose, and collect and
receive all charges, income and Revenue of the same and of every part thereof,
and after deducting therefrom all fees and expenses incurred hereunder and all
other proper outlays herein authorized, and all payments which may be made as
just and reasonable compensation for its own services, and for the services of
its attorneys, agents, and assistants, the Indenture Trustee shall apply the
rest of the money received by the Indenture Trustee as follows: first, to the
payment of the interest in default on the Senior Notes and all Issuer Derivative
Payments (excluding all Termination Payments other than Priority Termination
Payments) secured on a parity with the Senior Notes then due, in the order of
the maturity of the installments thereof, with interest on overdue installments
thereof at the same rates, respectively, as were borne by the Senior Notes on
which such interest shall be in default and such Issuer Derivative Payments
(excluding all Termination Payments other than Priority Termination Payments) as
provided in the ISDA Master Agreement then due, as the case may be, second, to
the payment of the principal of all Senior Notes then due, such payments to be
made ratably to the parties entitled thereto without discrimination or
preference, third, to the payment of the interest in default on the Subordinate
Notes and all Issuer Derivative Payments (excluding all Termination Payments
other than Priority Termination Payments) secured on a parity with the
Subordinate Notes then due, in the order of the maturity of the installments
thereof with interest on overdue installments thereof at the same rates,
respectively, as were borne by the Subordinate Notes on which such interest
shall be in default and such Issuer Derivative Payments (excluding all
Termination Payments other than Priority Termination Payments) as provided in
the ISDA Master Agreement then due, as the case may be, fourth, to the payment
of the principal of all Subordinate Notes then due, such payments to be made
ratably to the parties entitled thereto without discrimination or preference,
fifth, to the payment of the interest in default on the Junior-Subordinate Notes
and all Issuer Derivative Payments (excluding all Termination Payments other
than Priority Termination Payments) secured on a parity with such
Junior-Subordinate Notes then due, in the order of the maturity of the
installments thereof, with interest on overdue installments thereof at the same
rates, respectively, as were borne by the Junior-Subordinate Notes on which such
interest shall be in default and such Issuer Derivative Payments (excluding all
Termination Payments other than Priority Termination Payments) as provided in
the ISDA Master Agreement then due, as the case may be, sixth, to the payment of
the principal of all Junior-Subordinate Notes then due, such payments to be made
ratably to the parties entitled thereto without discrimination or preference,
seventh, to pay interest accrued on the carryover amounts of the Senior notes,
the carryover amounts of the Senior Notes, to pay interest accrued on the
47
carryover amounts of the Subordinate Notes, the carryover amounts of the
Subordinate Notes, to pay interest accrued on the carryover amounts of the
Junior-Subordinate Notes, the carryover amounts of the Junior-Subordinate Notes,
in that order of priority, eighth, to pay unpaid Termination Payments due as a
result of a Counterparty default under a Derivative Product secured on a parity
with the Senior Notes, ninth, to pay unpaid Termination Payments due as a result
of a Counterparty default under a Derivative Product secured on a parity with
the Subordinate Notes, and tenth to pay unpaid Termination Payments due as a
result of a Counterparty default under a Derivative Product secured on a parity
with the Junior-Subordinate Notes.
Section 6.03. Remedies on Default; Advice of Counsel. Upon the happening
of any Event of Default, the Indenture Trustee may proceed to protect and
enforce the rights of the Indenture Trustee and the Registered Owners in such
manner as counsel for the Indenture Trustee may advise, whether for the specific
performance of any covenant, condition, agreement or undertaking herein
contained, or in aid of the execution of any power herein granted, or for the
enforcement of such other appropriate legal or equitable remedies as, in the
opinion of such counsel, may be more effectual to protect and enforce the rights
aforesaid.
Section 6.04. Remedies on Default; Sale of Trust Estate. Upon the
happening of any Event of Default and if the principal of all of the Outstanding
Obligations shall have been declared due and payable, then and in every such
case, and irrespective of whether other remedies authorized shall have been
pursued in whole or in part, the Indenture Trustee may sell, with or without
entry, to the highest bidder the Trust Estate, and all right, title, interest,
claim and demand thereto and the right of redemption thereof, at any such place
or places, and at such time or times and upon such notice and terms as may be
required by law. Upon such sale the Indenture Trustee may make and deliver to
the purchaser or purchasers a good and sufficient assignment or conveyance for
the same, which sale shall be a perpetual bar both at law and in equity against
the Issuer and all Persons claiming such properties. No purchaser at any sale
shall be bound to see to the application of the purchase money or to inquire as
to the authorization, necessity, expediency or regularity of any such sale. The
Indenture Trustee is hereby irrevocably appointed the true and lawful
attorney-in-fact of the Issuer, in its name and stead, to make and execute all
bills of sale, instruments of assignment and transfer and such other documents
of transfer as may be necessary or advisable in connection with a sale of all or
part of the Trust Estate, but the Issuer, if so requested by the Indenture
Trustee, shall ratify and confirm any sale or sales by executing and delivering
to the Indenture Trustee or to such purchaser or purchasers all such instruments
as may be necessary, or in the judgment of the Indenture Trustee, proper for the
purpose which may be designated in such request. In addition, the Indenture
Trustee may proceed to protect and enforce the rights of the Indenture Trustee
and the Registered Owners of the Obligations in such manner as counsel for the
Indenture Trustee may advise, whether for the specific performance of any
covenant, condition, agreement or undertaking herein contained, or in aid of the
execution of any power herein granted, or for the enforcement of such other
appropriate legal or equitable remedies as may in the opinion of such counsel,
be more effectual to protect and enforce the rights aforesaid. The Indenture
Trustee shall take any such action or actions if requested to do so in writing
by the Registered Owners of at least a majority of the principal amount of the
Highest Priority Obligations at the time Outstanding.
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Section 6.05. Appointment of Receiver. In case an Event of Default
occurs, and if all of the Outstanding Obligations shall have been declared due
and payable and in case any judicial proceedings are commenced to enforce any
right of the Indenture Trustee or of the Registered Owners under this Indenture
or otherwise, then as a matter of right, the Indenture Trustee shall be entitled
to the appointment of a receiver of the Trust Estate and of the earnings, income
or Revenue, rents, issues and profits thereof with such powers as the court
making such appointments may confer.
Section 6.06. Restoration of Position. In case the Indenture Trustee
shall have proceeded to enforce any rights under this Indenture by sale or
otherwise, and such proceedings shall have been discontinued, or shall have been
determined adversely to the Indenture Trustee, then and in every such case to
the extent not inconsistent with such adverse decree, the Issuer, the Indenture
Trustee and the Registered Owners shall be restored to their former respective
positions and the rights hereunder in respect to the Trust Estate, and all
rights, remedies, and powers of the Indenture Trustee and of the Registered
Owners shall continue as though no such proceeding had been taken.
Section 6.07. Purchase of Properties by Indenture Trustee or Registered
Owners. In case of any such sale of the Trust Estate, any Registered Owner or
Registered Owners or committee of Registered Owners or the Indenture Trustee,
may bid for and purchase such property and upon compliance with the terms of
sale may hold, retain possession, and dispose of such property as the absolute
right of the purchaser or purchasers without further accountability and shall be
entitled, for the purpose of making any settlement or payment for the property
purchased, to use and apply any Obligations hereby secured and any interest
thereon due and unpaid, by presenting such Obligations in order that there may
be credited thereon the sum apportionable and applicable thereto out of the net
proceeds of such sale, and thereupon such purchaser or purchasers shall be
credited on account of such purchase price payable to him or them with the sum
apportionable and applicable out of such net proceeds to the payment of or as a
credit on the Obligations so presented.
Section 6.08. Application of Sale Proceeds. The proceeds of any sale of
the Trust Estate, together with any funds at the time held by the Indenture
Trustee and not otherwise appropriated, shall be applied by the Indenture
Trustee as set forth in Section 6.02 hereof, and then to the Issuer or
whomsoever shall be lawfully entitled thereto.
Section 6.09. Accelerated Maturity. If an Event of Default shall have
occurred and be continuing, the Indenture Trustee may declare, or upon the
written direction by the Registered Owners of at least 66% of the principal
amount of the Highest Priority Obligations then Outstanding, shall declare, the
principal of all Obligations then Outstanding, and the interest thereon, if not
previously due, immediately due and payable, anything in the Obligations or this
Indenture to the contrary notwithstanding; provided, however, that for a
declaration of acceleration upon a default pursuant to Section 6.01(g) hereof
shall require the consent of a majority of the Registered Owners of the
principal amount of the Highest Priority Obligations then Outstanding.
Section 6.10. Remedies Not Exclusive. The remedies herein conferred upon
or reserved to the Indenture Trustee or the Registered Owners of Obligations are
not intended to be exclusive of any other remedy, but each remedy herein
49
provided shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing, and every power and remedy hereby
given to the Indenture Trustee or to the Registered Owners of Obligations, or
any supplement hereto, may be exercised from time to time as often as may be
deemed expedient. No delay or omission of the Indenture Trustee or of any
Registered Owner of Obligations to exercise any power or right arising from any
default hereunder shall impair any such right or power or shall be construed to
be a waiver of any such default or to be acquiescence therein.
Section 6.11. Direction of Indenture Trustee. Upon the happening of any
Event of Default, the Registered Owners of at least a majority of the principal
amount of the Highest Priority Obligations then Outstanding, shall have the
right by an instrument or instruments in writing delivered to the Indenture
Trustee to direct and control the Indenture Trustee as to the method of taking
any and all proceedings for any sale of any or all of the Trust Estate, or for
the appointment of a receiver, if permitted by law, and may at any time cause
any proceedings authorized by the terms hereof to be so taken or to be
discontinued or delayed; provided, however, that such Registered Owners shall
not be entitled to cause the Indenture Trustee to take any proceedings which in
the Indenture Trustee's opinion would be unjustly prejudicial to non-assenting
Registered Owners of Obligations, but the Indenture Trustee shall be entitled to
assume that the action requested by the Registered Owners of at least a majority
of the principal amount of the Highest Priority Obligations then Outstanding
will not be prejudicial to any non-assenting Registered Owners unless the
Registered Owners of at least a majority of the principal amount of the
non-assenting Registered Owners of such Obligations, in writing, show the
Indenture Trustee how they will be prejudiced. Anything in this Indenture to the
contrary notwithstanding, the Registered Owners of at least a majority of the
principal amount of the Highest Priority Obligations then Outstanding together
with the Registered Owners of a majority of the collective aggregate principal
amount of all other Obligations then Outstanding shall have the right, at any
time, by an instrument or instruments in writing executed and delivered to the
Indenture Trustee, to direct the method and place of conducting all proceedings
to be taken in connection with the enforcement of the terms and conditions of
this Indenture, or for the appointment of a receiver or any other proceedings
hereunder, provided that such direction shall not be otherwise than in
accordance with the provisions of law and of this Indenture. The provisions of
this Section 6.11 shall be expressly subject to the provisions of Sections
7.01(c) and 7.05 hereof.
Section 6.12. Right to Enforce in Indenture Trustee. No Registered Owner
of any Obligation shall have any right as such Registered Owner to institute any
suit, action, or proceedings for the enforcement of the provisions of this
Indenture or for the execution of any trust hereunder or for the appointment of
a receiver or for any other remedy hereunder, all rights of action hereunder
being vested exclusively in the Indenture Trustee, unless and until the
Indenture Trustee fails to institute an action or suit after (a) the Registered
Owners of at least 25% of the Notes shall have previously given to the Indenture
Trustee written notice of a default hereunder, and of the continuance thereof;
(b) the Registered Owners of at least 25% of the Notes shall have made written
request upon the Indenture Trustee and the Indenture Trustee shall have been
afforded reasonable opportunity to institute such action, suit or proceeding in
50
its own name; and (c) the Indenture Trustee shall have been offered indemnity
and security satisfactory to it against the costs, expenses, and liabilities to
be incurred therein or thereby, which offer of indemnity shall be an express
condition precedent hereunder to any obligation of the Indenture Trustee to take
any such action hereunder, and the Indenture Trustee for 30 days after receipt
of such notification, request, and offer of indemnity, shall have failed to
institute any such action, suit or proceeding. It is understood and intended
that no one or more Registered Owners of the Obligations shall have the right in
any manner whatever by his or their action to affect, disturb, or prejudice the
lien of this Indenture or to enforce any right hereunder except in the manner
herein provided and for the equal benefit of the Registered Owners of not less
than a majority of the collective aggregate principal amount of the Obligations
then Outstanding.
The Indenture Trustee, solely in its capacity as trustee hereunder, and
the Registered Owners covenant that they will not at any time institute against
the Issuer any bankruptcy, reorganization or other proceeding under any federal
or state bankruptcy or similar law.
Section 6.13. Physical Possession of Obligations not Required. In any
suit or action by the Indenture Trustee arising under this Indenture or on all
or any of the Obligations issued hereunder, or any supplement hereto, the
Indenture Trustee shall not be required to produce such Obligations, but shall
be entitled in all things to maintain such suit or action without their
production.
Section 6.14. Waivers of Events of Default. The Indenture Trustee may in
its discretion waive any Event of Default hereunder and its consequences and
rescind any declaration of acceleration of Obligations, and shall do so upon the
written request of the Registered Owners of at least a majority of the principal
amount of the Highest Priority Obligations then Outstanding; provided, however,
that there shall not be waived (a) any Event of Default in the payment of the
principal of or premium on any Outstanding Obligations at the date of maturity
or redemption thereof, or any default in the payment when due of the interest on
any such Obligations, unless prior to such waiver or rescission, all arrears of
interest or all arrears of payments of principal and premium, if any, and all
fees, expenses of the Indenture Trustee, in connection with such default shall
have been paid or provided for or (b) any default in the payment of amounts set
forth in Section 7.05 hereof. In case of any such waiver or rescission, or in
case any proceedings taken by the Indenture Trustee on account of any such
default shall have been discontinued or abandoned or determined adversely to the
Indenture Trustee, then and in every such case the Issuer, the Indenture Trustee
and the Registered Owners of Obligations shall be restored to their former
positions and rights hereunder respectively, but no such waiver or rescission
shall extend to or affect any subsequent or other default, or impair any rights
or remedies consequent thereon.
ARTICLE VII
THE TRUSTEE
Section 7.01. Acceptance of Trust. The Indenture Trustee hereby accepts
the trusts imposed upon it by this Indenture, and agrees to perform said trusts,
but only upon and subject to the following terms and conditions:
(a) Except during the continuance of an Event of Default,
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(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions
which by any provisions hereof are specifically required to be
furnished to the Indenture Trustee, the Indenture Trustee shall
be under a duty to examine the same to determine whether or not
they conform as to form with the requirements of this Indenture
and whether or not they contain the statements required under
this Indenture.
(b) In case an Event of Default has occurred and is continuing,
the Indenture Trustee, in exercising the rights and powers vested in it
by this Indenture, shall use the same degree of care and skill in their
exercise as a prudent corporate indenture trustee would exercise or use
under the circumstances.
(c) Before taking any action hereunder requested by Registered
Owners, the Indenture Trustee may require that it be furnished an
indemnity bond or other indemnity and security satisfactory to it by the
Registered Owners, as applicable, for the reimbursement of all expenses
to which it may be put and to protect it against all liability.
Section 7.02. Recitals of Others. The recitals, statements, and
representations set forth herein and in the Notes shall be taken as the
statements of the Issuer, and the Indenture Trustee assumes no responsibility
for the correctness of the same. The Indenture Trustee makes no representations
as to the title of the Issuer in the Trust Estate or as to the security afforded
thereby and hereby, or as to the validity or sufficiency of this Indenture or of
the Notes issued hereunder, and the Indenture Trustee shall incur no
responsibility in respect of such matters.
Section 7.03. As to Filing of Indenture. The Indenture Trustee shall be
under no duty (a) to file or record, or cause to be filed or recorded, this
Indenture or any instrument supplemental hereto, (b) or to procure any further
order or additional instruments of further assurance, (c) to see to the delivery
to it of any personal property intended to be mortgaged or pledged hereunder or
thereunder, (d) or to do any act which may be suitable to be done for the better
maintenance of the lien or security hereof, or (e) for giving notice of the
existence of such lien, or for extending or supplementing the same or to see
that any rights to Revenue and Funds intended now or hereafter to be transferred
in trust hereunder are subject to the lien hereof. The Indenture Trustee shall
not be liable for failure of the Issuer to pay any tax or taxes in respect of
such property, or any part thereof, or the income therefrom or otherwise, nor
shall the Indenture Trustee be under any duty in respect of any tax which may be
assessed against it or the Registered Owners in respect of such property or
pledged Revenue and Funds.
Section 7.04. Indenture Trustee May Act Through Agents. The Indenture
Trustee may execute any of the trusts or powers hereof and perform any duty
hereunder, either itself or by or through its attorneys, agents, or employees,
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and it shall not be answerable or accountable for any default, neglect, or
misconduct of any such attorneys, agents, or employees, if reasonable care has
been exercised in the appointment, supervision, and monitoring of the work
performed. All reasonable costs incurred by the Indenture Trustee and all
reasonable compensation to all such persons as may reasonably be employed in
connection with the trusts hereof shall be paid by the Issuer.
Section 7.05. Indemnification of Indenture Trustee. Other than with
respect to its duties to make payment on the Obligations when due, and its duty
to pursue the remedy of acceleration as provided in Section 6.02 hereof, for
each of which no additional security or indemnity may be required, the Indenture
Trustee shall be under no obligation or duty to perform any act at the request
of Registered Owners or to institute or defend any suit in respect thereof
unless properly indemnified and provided with security to its satisfaction as
provided in Section 7.01(c) hereof. The Indenture Trustee shall not be required
to take notice, or be deemed to have knowledge, of any default or Event of
Default of the Issuer or the Board hereunder and may conclusively assume that
there has been no such default or Event of Default (other than an Event of
Default described in Sections 6.01(a)-(g) hereof) unless and until it shall have
been specifically notified in writing at the address in Section 9.01 hereof of
such default or Event of Default by (a) the Registered Owners of the required
percentages in principal amount of the Obligations then Outstanding hereinabove
specified or (b) an Authorized Representative of the Issuer. However, the
Indenture Trustee may begin suit, or appear in and defend suit, execute any of
the trusts hereby created, enforce any of its rights or powers hereunder, or do
anything else in its judgment proper to be done by it as Indenture Trustee,
without assurance of reimbursement or indemnity, and in such case the Indenture
Trustee shall be reimbursed or indemnified by the Registered Owners requesting
such action, if any, or the Issuer in all other cases, for all fees, costs and
expenses, liabilities, outlays and counsel fees and other reasonable
disbursements properly incurred in connection therewith, unless such costs and
expenses, liabilities, outlays and attorneys' fees and other reasonable
disbursements properly incurred in connection therewith are adjudicated to have
resulted from the negligence or willful misconduct of the Indenture Trustee. In
furtherance and not in limitation of this Section 7.05, the Indenture Trustee
shall not be liable for, and shall be held harmless by the Issuer from,
following any Orders, instructions or other directions upon which the Indenture
Trustee is authorized to rely pursuant to this Indenture or any other agreement
to which it is a party. If the Issuer or the Registered Owners, as appropriate,
shall fail to make such reimbursement or indemnification, the Indenture Trustee
may reimburse itself from any money in its possession under the provisions of
this Indenture, subject only to the prior lien of the Notes for the payment of
the principal thereof, premium, if any, and interest thereon from the Collection
Fund. None of the provisions contained in this Indenture or any other Agreement
to which it is a party shall require the Indenture Trustee to act or to expend
or risk its own funds or otherwise incur individual financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers if the Registered Owners shall not have offered security and indemnity
acceptable to it or if it shall have reasonable grounds for believing that
prompt repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
The Issuer agrees to indemnify the Indenture Trustee for, and to hold it
harmless against, any loss, liability or expenses incurred by the Indenture
Trustee on, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder arising
53
from the Trust Estate, unless such losses, liabilities and expenses are
adjudicated to have resulted from the negligence or willful misconduct of the
Indenture Trustee. The Issuer agrees to indemnify and hold harmless the
Indenture Trustee against any and all claims, demands, suits, actions or other
proceedings and all liabilities, costs and expenses whatsoever caused by any
untrue statement or misleading statement or alleged untrue statement or alleged
misleading statement of a material fact contained in any offering document
distributed in connection with the issuance of the Notes or caused by any
omission or alleged omission from such offering document of any material fact
required to be stated therein or necessary in order to make the statements made
therein in the light of the circumstances under which they were made, not
misleading.
Section 7.06. Indenture Trustee's Right to Reliance. The Indenture
Trustee shall be protected in acting upon any notice, resolution, request,
consent, order, certificate, report, appraisal, opinion, report or document of
the Issuer or the Servicer or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties. The
Indenture Trustee may consult with experts and with counsel (who may but need
not be counsel for the Issuer, the Indenture Trustee, or for a Registered Owner
or who may be Note Counsel), and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered, and in respect of any determination made by it hereunder in good faith
and in accordance with the opinion of such counsel.
Whenever in the administration hereof the Indenture Trustee shall
reasonably deem it desirable that a matter be proved or established prior to
taking, suffering, or omitting any action hereunder, the Indenture Trustee
(unless other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon a certificate signed by an Authorized
Representative of the Issuer or an authorized officer of the Servicer.
The Indenture Trustee shall not be liable for any action taken,
suffered, or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it hereby; provided,
however, that the Indenture Trustee shall be liable for its negligence or
willful misconduct in taking such action.
The Indenture Trustee is authorized, under this Indenture, subject to
Section 5.02 hereof, to sell, assign, transfer or convey Financed Eligible Loans
in accordance with an Issuer Order. If such Financed Eligible Loan was
originated under the Act, such Issuer Order shall certify that the Person to
whom such Financed Eligible Loan is sold, assigned, transferred, or conveyed is
an Eligible Lender unless not required by the Act. The Indenture Trustee is
further authorized to enter into agreements with other Persons, in its capacity
as Indenture Trustee, in order to carry out or implement the terms and
provisions of this Indenture.
The Indenture Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken in good faith in accordance with this
Indenture or any other transaction document or at the direction of the
Registered Owners evidencing the appropriate percentage of the aggregate
principal amount of the Outstanding Notes relating to the time, method and place
of conducting any proceeding for any remedy available to the Indenture Trustee,
or exercising any trust or power conferred upon the Indenture Trustee, under
this Indenture or any other transaction document.
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Section 7.07. Compensation of Indenture Trustee. Except as otherwise
expressly provided herein, all advances, counsel fees (including without
limitation allocated fees of in-house counsel) and other expenses reasonably
made or incurred by the Indenture Trustee in and about the execution and
administration of the trust hereby created and reasonable compensation to the
Indenture Trustee for its services in the premises shall be paid by the Issuer.
The compensation of the Indenture Trustee shall not be limited to or by any
provision of law in regard to the compensation of trustees of an express trust.
If not paid by the Issuer, the Indenture Trustee shall have a lien against all
money held pursuant to this Indenture, subject only to the prior lien of the
Obligations against the money and investments in the Collection Fund for the
payment of the principal thereof, premium, if any, and interest thereon, for
such reasonable compensation, expenses, advances and counsel fees incurred in
and about the execution of the trusts hereby created and the exercise and
performance of the powers and duties of the Indenture Trustee hereunder and the
cost and expense incurred in defending against any liability in the premises of
any character whatsoever (unless such liability is adjudicated to have resulted
from the negligence or willful misconduct of the Indenture Trustee).
Section 7.08. Indenture Trustee May Own Notes. The Indenture Trustee
shall comply with TIA Section 311(a), excluding any creditor relationship listed
in TIA Section 311(b). A Indenture Trustee who has resigned or been removed
shall be subject to TIA Section 311(a) to the extent indicated therein. The
Indenture Trustee hereunder, or any successor Indenture Trustee, in its
individual or other capacity, may become the owner or pledgee of Notes and may
otherwise deal with the Issuer, with the same rights it would have if it were
not the Indenture Trustee. The Indenture Trustee may act as depository for, and
permit any of its officers or directors to act as a member of, or act in any
other capacity in respect to, any committee formed to protect the rights of the
Registered Owners or to effect or aid in any reorganization growing out of the
enforcement of the Notes or of this Indenture, whether or not any such committee
shall represent the Registered Owners of more than 60% of the collective
aggregate principal amount of the Outstanding Obligations.
Section 7.09. Resignation of Indenture Trustee. The Indenture Trustee
and any successor to the Indenture Trustee may resign and be discharged from the
trust created by this Indenture by giving to the Issuer notice in writing which
notice shall specify the date on which such resignation is to take effect;
provided, however, that such resignation shall only take effect on the day
specified in such notice if a successor Indenture Trustee shall have been
appointed pursuant to Section 7.11 hereof (and is qualified to be the Indenture
Trustee under the requirements of Section 7.11 hereof). If no successor
Indenture Trustee has been appointed by the date specified or within a period of
90 days from the receipt of the notice by the Issuer, whichever period is the
longer, the Indenture Trustee may (a) appoint a temporary successor Indenture
Trustee having the qualifications provided in Section 7.11 hereof or (b) request
a court of competent jurisdiction to (i) require the Issuer to appoint a
successor, as provided in Section 7.11 hereof, within three days of the receipt
of citation or notice by the court, or (ii) appoint a Indenture Trustee having
the qualifications provided in Section 7.11 hereof. In no event may the
resignation of the Indenture Trustee be effective until a qualified successor
Indenture Trustee shall have been selected and appointed. In the event a
temporary successor Indenture Trustee is appointed pursuant to (a) above, the
Board may remove such temporary successor Indenture Trustee and appoint a
successor thereto pursuant to Section 7.11 hereof.
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Section 7.10. Removal of Indenture Trustee. The Indenture Trustee or any
successor Indenture Trustee may be removed (a) at any time by the Registered
Owners of a majority of the collective aggregate principal amount of the Highest
Priority Obligations then Outstanding, (b) by the Issuer for cause or upon the
sale or other disposition of the Indenture Trustee or its corporate trust
functions or (c) by the Issuer without cause so long as no Event of Default as
described in Sections 6.01(a), (b), (c), (d), (e), (f) or (h) exists or has
existed within the last 30 days, upon payment to the Indenture Trustee so
removed of all money then due to it hereunder and appointment of a successor
thereto by the Issuer and acceptance thereof by said successor. One copy of any
such order of removal shall be filed with the President of the Issuer and the
other with the Indenture Trustee so removed.
In the event a Indenture Trustee (or successor Indenture Trustee) is
removed, by any person or for any reason permitted hereunder, such removal shall
not become effective until (a) in the case of removal by the Registered Owners,
such Registered Owners by instrument or concurrent instruments in writing
(signed and acknowledged by such Registered Owners or their attorneys-in-fact)
filed with the Indenture Trustee removed have appointed a successor Indenture
Trustee or otherwise the Issuer shall have appointed a successor, and (b) the
successor Indenture Trustee has accepted appointment as such.
Section 7.11. Successor Indenture Trustee. In case at any time the
Indenture Trustee or any successor Indenture Trustee shall resign, be dissolved,
or otherwise shall be disqualified to act or be incapable of acting, or in case
control of the Indenture Trustee or of any successor Indenture Trustee or of its
officers shall be taken over by any public officer or officers, a successor
Indenture Trustee may be appointed by the Board by an instrument in writing duly
authorized by resolution. In the case of any such appointment by the Board of a
successor to the Indenture Trustee, the Board shall forthwith cause notice
thereof to be mailed to the Registered Owners of the Notes at the address of
each Registered Owner appearing on the note registration books maintained by the
Indenture Trustee.
Every successor Indenture Trustee appointed by the Registered Owners, by
a court of competent jurisdiction, or by the Board shall be a bank or trust
company in good standing, organized and doing business under the laws of the
United States or of a state therein, which has a reported capital and surplus of
not less than $50,000,000, be authorized under the law to exercise corporate
trust powers, be subject to supervision or examination by a federal or state
authority, and be an Eligible Lender so long as such designation is necessary to
maintain guarantees and federal benefits under the Act with respect to the
Financed Eligible Loans originated under the Act.
Section 7.12. Manner of Vesting Title in Indenture Trustee. Any
successor Indenture Trustee appointed hereunder shall execute, acknowledge, and
deliver to its predecessor Indenture Trustee, and also to the Issuer, an
instrument accepting such appointment hereunder, and thereupon such successor
Indenture Trustee, without any further act, deed, or conveyance shall become
fully vested with all the estate, properties, rights, powers, trusts, duties,
and obligations of its predecessors in trust hereunder (except that the
predecessor Indenture Trustee shall continue to have the benefits to
indemnification hereunder together with the successor Indenture Trustee), with
like effect as if originally named as Indenture Trustee herein; but the
Indenture Trustee ceasing to act shall nevertheless, on the written request of
an Authorized Representative of the Issuer, or an authorized officer of the
successor Indenture Trustee, execute, acknowledge, and deliver such instruments
of conveyance and further assurance and do such other things as may reasonably
56
be required for more fully and certainly vesting and confirming in such
successor Indenture Trustee all the right, title, and interest of the Indenture
Trustee which it succeeds, in and to pledged Revenue and Funds and such rights,
powers, trusts, duties, and obligations, and the Indenture Trustee ceasing to
act also, upon like request, pay over, assign, and deliver to the successor
Indenture Trustee any money or other property or rights subject to the lien of
this Indenture, including any pledged securities which may then be in its
possession. Should any deed or instrument in writing from the Issuer be required
by the successor Indenture Trustee for more fully and certainly vesting in and
confirming to such new Indenture Trustee such estate, properties, rights,
powers, and duties, any and all such deeds and instruments in writing shall on
request be executed, acknowledged and delivered by the Issuer.
In case any of the Notes to be issued hereunder shall have been
authenticated but not delivered, any successor Indenture Trustee may adopt the
certificate of authentication of the Indenture Trustee or of any successor to
the Indenture Trustee; and in case any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes in its own name; and in all such cases such certificate shall have the
full force which it has anywhere in the Notes or in this Indenture.
Section 7.13. Additional Covenants by the Indenture Trustee to Conform
to the Act. The Indenture Trustee covenants that it will at all times be an
Eligible Lender under the Act so long as such designation is necessary, as
determined by the Issuer, to maintain the guarantees and federal benefits under
the Act with respect to the Financed Eligible Loans, that it will acquire
Eligible Loans originated under the Act in its capacity as an Eligible Lender
and that it will not dispose of or deliver any Financed Eligible Loans
originated under the Act or any security interest in any such Financed Eligible
Loans to any party who is not an Eligible Lender so long as the Act or
Regulations adopted thereunder require an Eligible Lender to be the owner or
holder of such Financed Eligible Loans; provided, however, that nothing above
shall prevent the Indenture Trustee from delivering the Eligible Loans to the
Servicer or the Guaranty Agency.
Section 7.14. Right of Inspection. A Registered Owner shall be permitted
at reasonable times during regular business hours and in accordance with
reasonable regulations prescribed by the Indenture Trustee to examine at the
designated corporate trust office of the Indenture Trustee a copy of any report
or instrument theretofore filed with the Indenture Trustee relating to the
condition of the Trust Estate.
Section 7.15. Limitation with Respect to Examination of Reports. Except
as provided in this Indenture, the Indenture Trustee shall be under no duty to
examine any report or statement or other document required or permitted to be
filed with it by the Issuer.
Section 7.16. Servicing Agreement. The Indenture Trustee acknowledges
the receipt of a copy of the Servicing Agreement described in Section 4.05
hereof.
Section 7.17. Additional Covenants of Indenture Trustee. The Indenture
Trustee, by the execution hereof, covenants, represents and agrees that:
57
(a) it will not exercise any of the rights, duties, or
privileges under this Indenture in such manner as would cause the
Eligible Loans held or acquired under the terms hereof to be
transferred, assigned, or pledged as security to any person or entity
other than as permitted by this Indenture; and
(b) it will comply with the Act and the Regulations and will,
upon written notice from an Authorized Representative of the Issuer, the
Secretary, or the Guaranty Agency, use its reasonable efforts to cause
this Indenture to be amended (in accordance with Section 8.01 hereof) if
the Act or Regulations are hereafter amended so as to be contrary to the
terms of this Indenture.
Section 7.18. Duty of Indenture Trustee with Respect to Rating Agencies.
It shall be the duty of the Indenture Trustee to notify each Rating Agency then
rating any of the Notes (but the Indenture Trustee shall incur no liability for
any failure to do so) of (a) any change, expiration, extension, or renewal of
this Indenture, (b) redemption or defeasance of any or all the Notes, (c) any
change in the Indenture Trustee or (d) any other information reasonably required
to be reported to each Rating Agency under any Supplemental Indenture; provided,
however, the provisions of this Section do not apply when such documents have
been previously supplied to such Rating Agency and the Indenture Trustee has
received written evidence to such effect, all as may be required by this
Indenture. All notices required to be forwarded to the Rating Agencies under
this Section shall be sent in writing at the following addresses:
Standard & Poor's Ratings Group
55 Water Street
New York, New York 10041
Attention: Asset-Backed Surveillance Group
Fitch, Inc.
One State Street Plaza
New York, New York 10004
Attention: Structured Finance
Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Group
The Indenture Trustee also acknowledges that each Rating Agency's
periodic review for maintenance of a Rating on any series of the Notes may
involve discussions and/or meetings with representatives of the Indenture
Trustee at mutually agreeable times and places.
Section 7.19. Merger of the Indenture Trustee. Any corporation into
which the Indenture Trustee may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Indenture Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Indenture Trustee,
58
shall be the successor of the Indenture Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Indenture,
without the execution or filing of any paper of any further act on the part of
any other parties hereto.
Section 7.20. Receipt of Funds from Servicer. The Indenture Trustee
shall not be accountable or responsible in any manner whatsoever for any action
of the Issuer, the depository bank of any funds of the Issuer, or the Servicer
while the Servicer is acting as bailee or agent of the Indenture Trustee with
respect to the Eligible Loans except, to the extent provided in any Servicing
Agreement or custodian agreement, for actions taken in compliance with any
instruction or direction given to the Indenture Trustee, or for the application
of funds or moneys by the Servicer until such time as funds are received by the
Indenture Trustee.
Section 7.21. Special Circumstances Leading to Resignation of Indenture
Trustee. Because the Indenture Trustee serves as trustee hereunder for
Obligations of different priorities, it is possible that circumstances may arise
which will cause the Indenture Trustee to resign from its position as trustee
for one or more of the Obligations. In the event that the Indenture Trustee
makes a determination that it should so resign, due to the occurrence of an
Event of Default or potential default hereunder, or otherwise, the Issuer may
permit such resignation as to one or more of the Obligations or request the
Indenture Trustee's resignation as to all Obligations, as the Issuer may elect.
If the Issuer should determine that a conflict of interest has arisen as to the
trusteeship of any of the Obligations, it may authorize and execute a
Supplemental Indenture with one or more successor Indenture Trustees, under
which the administration of certain of the Obligations would be separated from
the administration of the other Obligations.
Section 7.22. Survival of Indenture Trustee's Rights to Receive
Compensation, Reimbursement and Indemnification. The Indenture Trustee's rights
to indemnity and to receive compensation and reimbursement of money due and
owing to the Indenture Trustee hereunder shall survive the Indenture Trustee's
resignation or removal, and the termination and discharge of the trust created
by this Indenture.
Section 7.23. Corporate Indenture Trustee Required; Eligibility;
Conflicting Interests. There shall at all times be an Indenture Trustee
hereunder which shall be eligible to act as Indenture Trustee under TIA Section
310(a)(1) and shall have a combined capital and surplus of at least $50,000,000.
If such corporation publishes reports of condition at least annually, pursuant
to law or the requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section 7.23, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section 7.23, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article VII. Neither the Issuer nor any Person directly or indirectly
controlling or controlled by, or under common control with, the Issuer shall
serve as Indenture Trustee.
Section 7.24. Indenture Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Issuer or any other obligor upon the Notes or the
property of the Issuer or of such other obligor or their creditors, the
Indenture Trustee (irrespective of whether the principal of the Notes of any
59
series shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall have made any
demand on the Issuer for the payment of overdue principal, premium, if any, or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(a) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Notes, of principal (and
premium, if any) and interest, if any, owing and unpaid in respect of
the Notes and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Indenture Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and
counsel) and of the Registered Owners allowed in such judicial
proceeding; and
(b) to collect and receive any money or other property payable
or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby
authorized by each Registered Owner of Notes to make such payments to
the Indenture Trustee, and if the Indenture Trustee shall consent to the
making of such payments directly to the Registered Owners, to pay to the
Indenture Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee and any
predecessor Indenture Trustee, their agents and counsel, and any other
amounts due the Indenture Trustee or any predecessor Indenture Trustee.
Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Registered Owner of a Note any plan of reorganization, arrangement, adjustment
or composition affecting the Notes or the rights of any Registered Owner
thereof, or to authorize the Indenture Trustee to vote in respect of the claim
of any Registered Owner of a Note in any such proceeding.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Registered Owners of the Notes, and it shall not be
necessary to make any Registered Owners of the Notes parties to any such
proceedings.
Section 7.25. Payment of Taxes and Other Governmental Charges. The
Indenture Trustee shall request, and Noteholders shall provide, all appropriate
tax certifications and forms necessary to enable the Issuer or its agents, to
determine their duties and liabilities with respect to any taxes or other
charges that they may be required to pay, deduct or withhold in respect of the
Notes under any present or future law or regulation of the United States or any
present or future law or regulation of any political subdivision thereof or
taxing authority therein or to comply with any reporting or other requirements
under any law or regulation, and to pay, deduct or withhold any such taxes or
charges and remit them to the relevant taxing authorities as required under law.
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ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.01. Supplemental Indentures Not Requiring Consent of
Registered Owners. The Issuer and the Indenture Trustee may, without the consent
of or notice to any of the Registered Owners of any Obligations enter into any
indenture or indentures supplemental to this Indenture for any one or more of
the following purposes:
(a) to cure any ambiguity or defect or omission in this
Indenture;
(b) to grant to or confer upon the Indenture Trustee for the
benefit of the Registered Owners any additional benefits, rights,
remedies, powers or authorities that may lawfully be granted to or
conferred upon the Registered Owners or the Indenture Trustee;
(c) to subject to this Indenture additional revenues, properties
or collateral;
(d) to modify, amend or supplement this Indenture or any
Supplemental Indenture hereto in such manner as to permit the
qualification hereof and thereof under the Trust Indenture Act of 1939
or any similar federal statute hereafter in effect or to permit the
qualification of the Notes for sale under the securities laws of the
United States of America or of any of the states of the United States of
America, and, if they so determine, to add to this Indenture or any
Supplemental Indenture hereto such other terms, conditions and
provisions as may be permitted by said Trust Indenture Act of 1939 or
similar federal statute;
(e) to evidence the appointment of a separate or co-Indenture
Trustee or a co-registrar or transfer agent or the succession of a new
Indenture Trustee hereunder, or any additional or substitute Guaranty
Agency or Servicer;
(f) to add such provisions to or to amend such provisions of
this Indenture as may be necessary or desirable to assure implementation
of the Program in conformance with the Act if along with such
Supplemental Indenture there is filed a Note Counsel's opinion to the
effect that the addition or amendment of such provisions will in no way
impair the existing security of the Registered Owners of any Outstanding
Obligations;
(g) to make any change as shall be necessary in order to obtain
and maintain for any of the Notes an investment grade Rating from a
nationally recognized rating service, which changes, in the opinion of
the Indenture Trustee are not to the prejudice of the Registered Owner
of any of the Obligations;
(h) to make any changes necessary to comply with the Act, the
Regulations or the Code and the regulations promulgated thereunder;
(i) to provide for the issuance of Notes pursuant to the
provisions of Section 2.08 of this Indenture, including the creation of
appropriate Funds, Accounts and Subaccounts with respect to such Notes;
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(j) to make the terms and provisions of this Indenture,
including the lien and security interest granted herein, applicable to a
Derivative Product, and to modify Section 3.03 hereof with respect to
any particular Derivative Product;
(k) to create any additional Funds or Accounts or Subaccounts
under this Indenture deemed by the Indenture Trustee to be necessary or
desirable;
(l) to amend the Indenture to allow for any Notes to be
supported by a letter of credit or insurance policy or a liquidity
agreement, including amendments with respect to repayment to such a
provider on a parity with any Notes or Derivative Product and providing
rights to such provider under this Indenture, including with respect to
defaults and remedies;
(m) to amend the Indenture to provide for use of a surety bond
or other financial guaranty instrument in lieu of cash and/or Investment
Securities in all or any portion of the Reserve Fund, so long as such
action shall not adversely affect the Ratings on any of the Notes;
(n) to make any other change with a Rating Confirmation; or
(o) to make any other change which, in the judgment of the
Indenture Trustee is not to the material prejudice of the Registered
Owners of any Obligations;
provided, however, that nothing in this Section shall permit, or be construed as
permitting, any modification of the trusts, powers, rights, duties, remedies,
immunities and privileges of the Indenture Trustee without the prior written
approval of the Indenture Trustee, which approval shall be evidenced by
execution of a Supplemental Indenture.
Section 8.02. Supplemental Indentures Requiring Consent of Registered
Owners. Exclusive of Supplemental Indentures covered by Section 8.01 hereof and
subject to the terms and provisions contained in this Section, and not
otherwise, the Registered Owners of not less than a majority of the principal
amount of each class of affected Notes and each affected Derivative Product then
Outstanding shall have the right, from time to time, to consent to and approve
the execution by the Issuer and the Indenture Trustee of such other indenture or
indentures supplemental hereto as shall be deemed necessary and desirable by the
Issuer and/or Indenture Trustee for the purpose of modifying, altering,
amending, adding to or rescinding, in any particular, any of the terms or
provisions contained in this Indenture or in any Supplemental Indenture;
provided, however, that nothing in this Section shall permit, or be construed as
permitting (a) without the consent of the Registered Owners of each affected
Note and additionally each Derivative Product then Outstanding, (i) an extension
of the maturity date of the principal of or the interest on any Obligation, (ii)
a reduction in the principal amount of any Obligation or the rate of interest
thereon, (iii) a privilege or priority of any Obligation or Obligations over any
other Obligation or Obligations except as otherwise provided herein, or (iv) a
reduction in the aggregate principal amount of the Obligations required for
consent to a Supplemental Indenture, (v) the creation of any lien other than a
lien ratably securing all of the Obligations at any time Outstanding hereunder
except as otherwise provided herein or (b) any modification of the trusts,
powers, rights, obligations, duties, remedies, immunities and privileges of the
Indenture Trustee without the prior written approval of the Indenture Trustee.
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If at any time the Issuer shall request that the Indenture Trustee enter
into any such Supplemental Indenture for any of the purposes of this Section,
the Indenture Trustee shall, upon being satisfactorily indemnified with respect
to expenses, cause notice of the proposed execution of such Supplemental
Indenture to be mailed by registered or certified mail to each Registered Owner
of an Obligation at the address shown on the registration books or listed in any
Derivative Product. Such notice (which shall be prepared by the Issuer) shall
briefly set forth the nature of the proposed Supplemental Indenture and shall
state that copies thereof are on file at the designated corporate trust office
of the Indenture Trustee for inspection by all Registered Owners. If, within 60
days, or such longer period as shall be prescribed by the Issuer, following the
mailing of such notice, the Registered Owners of not less than a majority of the
principal amount of each class of affected Notes and each affected Derivative
Product then Outstanding at the time of the execution of any such Supplemental
Indenture shall have consented in writing to and approved the execution thereof
as herein provided, no Registered Owner of any Obligation shall have any right
to object to any of the terms and provisions contained therein, or the operation
thereof, or in any manner to question the propriety of the execution thereof, or
to enjoin or restrain the Indenture Trustee or the Issuer from executing the
same or from taking any action pursuant to the provisions thereof. Upon the
execution of any such Supplemental Indenture as in this Section 8.02 permitted
and provided, this Indenture shall be and be deemed to be modified and amended
in accordance therewith.
Section 8.03. Additional Limitation on Modification of Indenture. None
of the provisions of this Indenture (including Sections 8.01 and 8.02 hereof)
shall permit an amendment to the provisions of the Indenture which permits the
transfer of all or part of the Financed Eligible Loans originated under the Act
or granting of a security interest therein to any Person other than an Eligible
Lender or the Servicer, unless the Act or Regulations are hereafter modified so
as to permit the same.
Section 8.04. Notice of Defaults. Within 90 days after the occurrence of
any default hereunder with respect to the Notes, the Indenture Trustee shall
transmit in the manner and to the extent provided in TIA Section 313(c), notice
of such default hereunder to which an authorized officer of the Indenture
Trustee has actual knowledge or is in receipt of a written notice thereof in
accordance with the terms of this Indenture, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest with respect to any
Note, or in the payment of any sinking fund installment with respect to the
Notes, the Indenture Trustee shall be protected in withholding such notice if
and so long as an authorized officer of the Indenture Trustee in good faith
determines that the withholding of such notice is in the interest of the
Registered Owners of the Notes. For the purpose of this Section 8.04, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to the Notes.
Section 8.05. Conformity With the Trust Indenture Act. Every
Supplemental Indenture executed pursuant to this Article VIII shall conform to
the requirements of the TIA as then in effect.
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ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Notices. Any notice, request or other instrument required
by this Indenture to be signed or executed by the Registered Owners of
Obligations may be executed by the execution of any number of concurrent
instruments of similar tenor, and may be signed or executed by such Registered
Owners of Obligations in person or by agent appointed in writing. As a condition
for acting thereunder the Indenture Trustee may demand proof of the execution of
any such instrument and of the fact that any person claiming to be the owner of
any of said Obligations is such owner and may further require the actual deposit
of such Obligation or Obligations with the Indenture Trustee. The fact and date
of the execution of such instrument may be proved by the certificate of any
officer in any jurisdiction who by the laws thereof is authorized to take
acknowledgments of deeds within such jurisdiction, that the person signing such
instrument acknowledged before him the execution thereof, or may be proved by
any affidavit of a witness to such execution sworn to before such officer.
The amount of Notes held by any person executing such instrument as a
Registered Owner of Notes and the fact, amount, and numbers of the Notes held by
such person and the date of his holding the same may be proved by a certificate
executed by any responsible trust company, bank, banker, or other depository in
a form approved by the Indenture Trustee, showing that at the date therein
mentioned such person had on deposit with such depository the Notes described in
such certificate; provided, however, that at all times the Indenture Trustee may
require the actual deposit of such Note or Notes with the Indenture Trustee.
All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, telex, telecopy or facsimile or
similar writing) at the following addresses, and each address shall constitute
each party's respective "Principal Office" for purposes of the Indenture:
If intended for the Issuer:
Nelnet Student Loan Funding, Inc.
Suite 201
121 South 13 Street
Lincoln, Nebraska 68508
Attention: Terry Heimes
Telephone: (402) 458-2303
Telecopier: (402) 458-2399
If intended for the Indenture Trustee:
Wells Fargo Bank Minnesota, National Association
6th and Marquette, N9303-110
Minneapolis, Minnesota 55479
Attn: Corporate Trust Department
Telephone: (612) 667-4802
Facsimile: (612) 667-2149
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Any party may change the address to which subsequent notices to such party are
to be sent, or of its principal office, by notice to the others, delivered by
hand or received by telex or facsimile or registered first-class mail, postage
prepaid. Each such notice, request or other communication shall be effective
when delivered by hand or received by telex or facsimile or registered
first-class mail, postage prepaid.
Section 9.02. Covenants Bind Issuer. The covenants, agreements,
conditions, promises, and undertakings in this Indenture shall extend to and be
binding upon the successors and assigns of the Issuer, and all of the covenants
hereof shall bind such successors and assigns, and each of them, jointly and
severally. All the covenants, conditions, and provisions hereof shall be held to
be for the sole and exclusive benefit of the parties hereto and their successors
and assigns and of the Registered Owners from time to time of the Obligations.
No extension of time of payment of any of the Obligations shall operate
to release or discharge the Issuer, it being agreed that the liability of the
Issuer, to the extent permitted by law, shall continue until all of the
Obligations are paid in full, notwithstanding any transfer of Financed Eligible
Loans or extension of time for payment.
Section 9.03. Lien Created. This Indenture shall operate effectually as
(a) a grant of lien on and security interest in, and (b) an assignment of, the
Trust Estate.
Section 9.04. Severability of Lien. If the lien of this Indenture shall
be or shall ever become ineffectual, invalid, or unenforceable against any part
of the Trust Estate, which is not subject to the lien, because of want of power
or title in the Issuer, the inclusion of any such part shall not in any way
affect or invalidate the pledge and lien hereof against such part of the Trust
Estate as to which the Issuer in fact had the right to pledge.
Section 9.05. Consent of Registered Owners Binds Successors. Any request
or consent of the Registered Owner of any Obligations given for any of the
purposes of this Indenture shall bind all future Registered Owners of the same
Obligation or any Obligations issued in exchange therefor or in substitution
thereof in respect of anything done or suffered by the Issuer or the Indenture
Trustee in pursuance of such request or consent.
Section 9.06. Nonliability of Directors; No General Obligation. It is
hereby expressly made a condition of this Indenture that any agreements,
covenants, or representations herein contained or contained in the Notes do not
and shall never constitute or give rise to a personal or pecuniary liability or
charge against the incorporators, officers, employees, agents, or directors of
the Issuer, or against the general credit of the Issuer, and in the event of a
breach of any such agreement, covenant, or representation, no personal or
pecuniary liability or charge payable directly or indirectly from the general
revenues of the Issuer shall arise therefrom. Nothing contained in this Section,
however, shall relieve the Issuer from the observance and performance of the
several covenants and agreements on its part herein contained.
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Section 9.07. Nonpresentment of Notes or Interest Checks. Should any of
the Notes or interest checks not be presented for payment when due, the
Indenture Trustee shall retain from any money transferred to it for the purpose
of paying the Notes or interest checks so due, for the benefit of the Registered
Owners thereof, a sum of money sufficient to pay such Notes or interest checks
when the same are presented by the Registered Owners thereof for payment. Such
money shall not be required to be invested. All liability of the Issuer to the
Registered Owners of such Notes or interest checks and all rights of such
Registered Owners against the Issuer under the Notes or interest checks or under
this Indenture shall thereupon cease and determine, and the sole right of such
Registered Owners shall thereafter be against such deposit. If any Note or
interest check shall not be presented for payment within the period of two years
following its payment or redemption date, the Indenture Trustee shall return to
the Issuer the money theretofore held by it for payment of such Note or interest
check, and such Note or interest check shall (subject to the defense of any
applicable statute of limitation) thereafter be an unsecured obligation of the
Issuer. The Indenture Trustee's responsibility for any such money shall cease
upon remittance thereof to the Issuer.
Section 9.08. Security Agreement. This Indenture constitutes a Financing
Statement and a Security Agreement under the Nebraska Uniform Commercial Code.
Section 9.09. Laws Governing. It is the intent of the parties hereto
that this Indenture shall be construed in accordance with the laws of the State
of Nebraska without reference to its conflict of law provisions. This Indenture
is subject to the provisions of the TIA that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
Section 9.10. Severability. If any covenant, agreement, waiver, or part
thereof in this Indenture contained be forbidden by any pertinent law or under
any pertinent law be effective to render this Indenture invalid or unenforceable
or to impair the lien hereof, then each such covenant, agreement, waiver, or
part thereof shall itself be and is hereby declared to be wholly ineffective,
and this Indenture shall be construed as if the same were not included herein.
Section 9.11. Exhibits. The terms of the Exhibits, if any, attached to
this Indenture are incorporated herein in all particulars.
Section 9.12. Non-Business Days. Except as may otherwise be provided
herein, if the date for making payment of any amount hereunder or on any Note,
or if the date for taking any action hereunder, is not a Business Day, then such
payment can be made without accruing further interest or action can be taken on
the next succeeding Business Day, with the same force and effect as if such
payment were made when due or action taken on such required date.
Section 9.13. Parties Interested Herein. Nothing in this Indenture
expressed or implied is intended or shall be construed to confer upon, or to
give to, any person or entity, other than the Indenture Trustee, the paying
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agent, if any, and the Registered Owners of the Obligations, any right, remedy
or claim under or by reason of this Indenture or any covenant, condition or
stipulation hereof, and all covenants, stipulations, promises and agreements in
this Indenture contained by and on behalf of the Issuer shall be for the sole
and exclusive benefit of the Indenture Trustee, the paying agent, if any, and
the Registered Owners of the Obligations.
Section 9.14. Obligations Are Limited Obligations. The Notes and the
obligations of the Issuer contained in this Indenture are special, limited
obligations of the Issuer, secured by and payable solely from the Trust Estate
herein provided. The Issuer shall not be obligated to pay the Notes, the
interest thereon, or any other obligation created by or arising from this
Indenture from any other source.
Section 9.15. Counterparty Rights. Notwithstanding any provision of this
Indenture, no Counterparty which shall be in default under any Derivative
Product with the Issuer shall have any of the rights granted to a Counterparty
or as the Registered Owner of an Obligation hereunder.
Section 9.16. Disclosure of Names and Addresses of Registered Owners.
Registered Owners of Notes, by receiving and holding the same, agree with the
Issuer and the Indenture Trustee that neither the Issuer nor the Indenture
Trustee nor any Securities Depository shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the Registered
Owners of Notes in accordance with TIA Section 312, regardless of the source
from which such information was derived, and that the Indenture Trustee shall
not be held accountable by reason of mailing any material pursuant to a request
made under TIA Section 312(b).
Section 9.17. Aggregate Principal Amount of Obligations. Whenever in
this Indenture reference is made to the aggregate principal amount of any
Obligations, such phrase shall mean, at any time, the principal amount of any
Notes and the Derivative Value of any Derivative Product.
Section 9.18. Financed Eligible Loans. The Issuer expects to acquire
Eligible Loans and to transfer Eligible Loans to the Indenture Trustee, in
accordance with this Indenture, which Eligible Loans, upon becoming subject to
the lien of this Indenture, constitute Financed Eligible Loans, as defined
herein. If for any reason a Financed Eligible Loan does not constitute an
Eligible Loan, or ceases to constitute an Eligible Loan, such loan shall
continue to be subject to the lien of this Indenture as a Financed Eligible
Loan.
Section 9.19. No Petition; Subordination. Each of the Indenture Trustee
(solely in its capacity as trustee hereunder) and the Registered Owners hereby
covenants and agrees that prior to the date which is one year and one day after
the payment in full of all outstanding Obligations, it will not institute
against or join any other person or entity in instituting against the Issuer any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States. Each of the Indenture Trustee and the Registered Owners
hereby covenants and agrees that to the extent the Issuer enters into other
financing transactions pursuant to which it pledges or otherwise conveys any of
its assets (or interests therein) (other than Pledged Collateral) to another
person or Persons in connection therewith ("Other Assets"), then any interest,
claim or benefit in such Other Assets is and shall be expressly subordinated to
the indefeasible payments in full of all obligations and liabilities of the
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Issuer which, under the terms of the relevant documents relating to the
financing of such Other Assets, are entitled to be paid from, entitled to the
benefits of, or otherwise secured by such Other Assets, including the payment of
post-petition interest on such other obligations and liabilities. This Indenture
shall be deemed a subordination agreement within the meaning of Section 510(a)
of the Bankruptcy Code.
ARTICLE X
PAYMENT AND CANCELLATION OF NOTES
AND SATISFACTION OF INDENTURE
Section 10.01. Trust Irrevocable. The trust created by the terms and
provisions of this Indenture is irrevocable until the indebtedness secured
hereby (the Notes and interest thereon) and all Issuer Derivative Payments are
fully paid or provision made for its payment as provided in this Article X.
Section 10.02. Satisfaction of Indenture.
(a) If the Issuer shall pay, or cause to be paid, or there shall
otherwise be paid (i) to the Registered Owners of the Notes, the
principal of and interest on the Notes, at the times and in the manner
stipulated in this Indenture and (ii) to each Counterparty, all Issuer
Derivative Payments then due, then the pledge of the Trust Estate which
is not pledged hereunder, and all covenants, agreements, and other
obligations of the Issuer to the Registered Owners of Notes shall
thereupon cease, terminate, and become void and be discharged and
satisfied. In such event, the Indenture Trustee shall execute and
deliver to the Issuer all such instruments as may be desirable to
evidence such discharge and satisfaction, and the Indenture Trustee
shall pay over or deliver all money held by it under this Indenture to
the party entitled to receive the same under this Indenture.
(b) Notes and any other Obligations issued under this Indenture
will be considered to have been paid if money for their payment or
redemption has been set aside and is being held in trust by the
Indenture Trustee. Any outstanding Note will be considered to have been
paid if the Note is to be redeemed on any date prior to its stated
maturity and notice of redemption has been given as provided in this
Indenture and on said date there shall have been deposited with the
Indenture Trustee either money or Investment Securities described in (a)
of such definition, the principal of and the interest on which when due
will provide money sufficient to pay the principal of and interest to
become due on the Note.
(c) Any Issuer Derivative Payments are deemed to have been paid
and the applicable Derivative Product terminated when payment of all
Issuer Derivative Payments due and payable to each Counterparty under
its respective Derivative Product have been made or duly provided for to
the satisfaction of each Counterparty and the respective Derivative
Product has been terminated.
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(d) In no event shall the Indenture Trustee deliver over to the
Issuer any Financed Eligible Loans originated under the Act unless the
Issuer is an Eligible Lender, if the Act or Regulations then in effect
require the owner or holder of such Financed Eligible Loans to be an
Eligible Lender.
Section 10.03. Cancellation of Paid Notes. Any Notes which have been
paid or purchased by the Issuer, mutilated Notes replaced by new Notes, and any
temporary Note for which definitive Notes have been delivered shall (unless
otherwise directed by the Issuer by Issuer Order) forthwith be cancelled by the
Indenture Trustee and, except for temporary Notes, returned to the Issuer.
ARTICLE XI
TERMINATION
Section 11.01. Termination of the Trust.
(a) The trust created by this Indenture (the "Trust") shall
terminate upon the earlier of (i) the later of (A) payment to the
Registered Owners and to the Indenture Trustee of all amounts required
to be paid to them pursuant to this Indenture and any Supplemental
Indenture and the disposition of all property held as part of the Trust
Estate or (B) the day following the date on which all reimbursement
obligations to the Counterparties, if any, and any other Person as may
be provided for in any Supplemental Indenture have been paid in full,
(ii) the expiration of 21 years from the death of the last survivor of
the descendants of Joseph P. Kennedy (the late ambassador of the United
States to the Court of St. James) living on the date of this Indenture
or (iii) subject to Section 11.01(d), upon the occurrence of a
Liquidation Event (as hereinafter defined). The Issuer shall promptly
notify the Indenture Trustee of any prospective termination pursuant to
this Section 11.01.
(b) Notice of any prospective termination, specifying the Note
Payment Date for payment of the final distribution and requesting the
surrender of the Notes for cancellation, shall be given promptly by the
Indenture Trustee by letter to Registered Owners mailed not less than 10
nor more than 15 days preceding the specified Note Payment Date stating
(i) the Note Payment Date upon which final payment of the Notes shall be
made, (ii) the amount of any such final payment, and (iii) the location
for presentation and surrender of the Notes. Payment of the final
distribution which shall be made only upon presentation and surrender of
the Notes at the corporate trust office of the Indenture Trustee
specified in the notice.
(c) A "Liquidation Event" shall be deemed to have occurred,
subject to Section 11.01(d), upon Dissolution of the Issuer.
(d) The Issuer shall not voluntarily take any action that would
cause it to be deemed dissolved within the meaning of this Article XI.
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In the event of the Dissolution of the Issuer or any action that
would cause the Issuer to cease being deemed a general partner of the
Trust if the Trust were deemed a limited partnership formed under the
Delaware Revised Uniform Limited Partnership Act, and the Issuer's
interest were deemed to represent the sole general partnership interest
in such a partnership, the Trust shall terminate 90 days after the date
of such event and its assets liquidated in accordance with Section
11.01(e) unless both of the following occur:
(i) the Registered Owners representing Registered Owner
Approval, as defined in Section 6.01 hereof, inform the
Indenture Trustee in writing before the end of such 90 day
period that they disapprove of the liquidation of the assets of
the Trust; and
(ii) the Issuer, the Indenture Trustee and the
Counterparties, if any, shall receive an opinion of counsel to
the effect that the continuation of the Trust shall not cause
the Trust to be treated as an association taxable as a
corporation for federal income tax purposes.
(e) Upon receipt by the Indenture Trustee from the Issuer of
notice of the occurrence of a Liquidation Event (as defined in Section
11.01(c)), the Indenture Trustee shall, subject to the direction of the
Registered Owners constituting Registered Owner Approval (provided that,
if Registered Owners constituting Registered Owner Approval shall not
have provided such direction to the Indenture Trustee within 30 days of
the Indenture Trustee having sent a written request for such direction
to the Registered Owners, the Indenture Trustee shall proceed without
such direction) sell the remaining assets of the Trust Estate, if any,
at public or private sale, in a commercially reasonable manner and on
commercially reasonable terms. The Issuer agrees to cooperate with the
Indenture Trustee to effect any such sale, including by executing such
instruments of conveyance or assignment as shall be necessary or
required by the purchaser. Proceeds of sale, net of expenses, shall be
treated as collections on the assets of the Trust and shall be deposited
into the Collection Fund. On the next Note Payment Date the Indenture
Trustee shall cause to be paid to Registered Owners and the Issuer
amounts distributable on such Note Payment Date pursuant to Article V.
Following the termination of the Trust, all right, title and interest in
and to the Financed Eligible Loans and other property and funds in the
Trust Estate (other than funds on deposit in certain accounts for the
payment of expenses) shall be conveyed and transferred to the Issuer.
Section 11.02. Notice. The Indenture Trustee shall give notice of
termination of the Trust to the Issuer and each Rating Agency.
ARTICLE XII
REPORTING REQUIREMENTS
Section 12.01. Annual Statement as to Compliance. The Issuer will cause
each Servicer to deliver to the Administrator, each Rating Agency, the Indenture
Trustee and the Issuer, on or before March 15 of each year, beginning with March
15, 2004, a certificate dated as of December 31 of the preceding year stating
that (a) a review of the activities of the Servicer during the preceding
calendar year (or, in the case of the first such certificate, during the period
from the Closing Date to December 31, 2003) and of its performance under the
70
Servicing Agreement has been made under the supervision of the officer signing
such certificate; and (b) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under the Servicing
Agreement throughout such year, or, there has been a default in the fulfillment
of any such obligation, specifying each such default known to such officer and
the nature and statue thereof.
Section 12.02. Annual Independent Public Accountants' Servicing Report.
Within 75 days of the end of each Servicer's regular fiscal-year or
calendar-year audit period, the Issuer shall cause each Servicer, at its
expense, to cause a firm of independent public accountants to furnish a
statement to the Administrator, each Rating Agency, the Issuer and the Indenture
Trustee to the effect that such firm has examined certain documents and records
relating to the servicing of the Financed Eligible Loans (during the preceding
year) in compliance with the standards for Compliance Audits Attestation
Engagements for Lenders and Lender Servicers Participating in the Federal Family
Education Loan Program and that, on the basis of such examination, such
servicing has been conducted in compliance with such servicing agreements except
for such significant exceptions or errors in records that, in the opinion of
such firm, requires it to report and which are set forth in such report.
Section 12.03. Administrator's Certificate. Each month, not later than
the fifteenth day of each month, the Issuer shall deliver to the Indenture
Trustee, an Officer's Certificate certifying to the accuracy of the monthly
statement contemplated by Section 12.04.
Section 12.04. Statements to Noteholders. On or before the fifteenth day
of each month, the Issuer shall provide to the Indenture Trustee (with a copy to
the Rating Agencies) for the Indenture Trustee to forward within five days of
receipt to each Registered Owner, a statement setting forth information with
respect to the Notes and Financed Student Loans as of the end of the preceding
month, the following to the extent applicable;
(a) the amount of payments with respect to each series and class
of Notes paid with respect to principal during the preceding month;
(b) the amount of payments with respect to each series and class
of Notes paid with respect to interest during the preceding month;
(c) the amount of the payments allocable to any Registered
Owners' interest carryover, if any, together with any remaining
outstanding amount of each thereof;
(d) the principal balance of Financed Eligible Loans as of the
close of business on the last day of the preceding month;
(e) the aggregate outstanding principal amount of the Notes of
each series and class as of the close of business on the last day of the
preceding month, after giving effect to payments allocated to principal
reported under clause (a) above;
(f) the interest rate for any series and class of variable rate
Notes, indicating such interest rate is calculated;
71
(g) the amount of the servicing fees allocated to the Servicer
as of the close of business on the last day of the preceding month;
(h) the amount of the Program Expenses, Realized Losses, any
Auction Agent fees, Market Agent fees, Calculation Agent fees,
Administrator fees, Eligible Lender Trustee fees and Indenture Trustee
fees, if any, allocated as of the close of business on the last day of
the preceding month;
(i) the amount of the Recoveries of Principal and interest
received during the preceding month relating to Financed Eligible Loans;
(j) the amount of the payment attributable to amounts in the
Reserve Fund, the amount of any other withdrawals from the Reserve Fund
and the balance of the Reserve Fund as of the close of business on the
last day of the preceding month;
(k) the portion, if any, of the payments attributable to amounts
on deposit in the Acquisition/Redemption Fund;
(l) the aggregate amount, if any, paid by the Indenture Trustee
to acquire Eligible Loans from amounts on deposit in the
Acquisition/Redemption Fund during the preceding month;
(m) the amount remaining in the Acquisition/Redemption Fund that
has not been used to acquire Eligible Loans and is being transferred to
the Collection Fund, if any;
(n) the aggregate amount, if any, paid for Financed Eligible
Loans purchased from the Trust during the preceding month;
(o) the number and principal amount of Financed Eligible Loans,
as of the close of business on the last day of the preceding month, that
are (i) 30 to 60 days delinquent, (ii) 61 to 90 days delinquent, (iii)
91 to 120 days delinquent, (iv) greater than 120 days delinquent and (v)
for which claims have been filed with the appropriate Guarantee Agency
and which are awaiting payment;
(p) the Aggregate Market Value of the Trust Estate and the
Outstanding principal amount of the Notes as of the close of business on
the last day of the preceding month; and
(q) the number and percentage by dollar amount of (i) rejected
federal reimbursement claims for Financed Eligible Loans, (ii) Financed
Student Loans in forbearance, and (iii) Financed Eligible Loans in
deferment.
A copy of the statements referred to above may be obtained by any
Registered Owner by a written request to the Indenture Trustee, addressed to its
designated corporate trust office.
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IN WITNESS WHEREOF, the Issuer, the Eligible Lender Trustee and the
Indenture Trustee have caused this Indenture to be duly executed by their
respective Authorized Officers, thereunto duly authorized and duly attested, all
as of the day and year first above written.
NELNET EDUCATION LOAN FUNDING, INC.
By /s/ Terry J. Heimes
------------------------------------------
Terry J. Heimes, President
WELLS FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, as Indenture Trustee
By /s/ Scott E. Ulven
------------------------------------------
Scott E. Ulven, Corporate Trust Officer
Acknowledged and accepted as to
clause "C" of the Granting
Clauses as of the day and year
first written above:
WELLS FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, as Eligible Lender Trustee
By /s/ Scott E. Ulven
------------------------------------------
Scott E. Ulven, Corporate Trust Officer
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EXHIBIT A
ELIGIBLE LOAN ACQUISITION CERTIFICATE
This Eligible Loan Acquisition Certificate is submitted pursuant to the
provisions of Section 5.02 of the Indenture of Trust, dated as of June 1, 2003,
as amended (the "Indenture"), among Nelnet Student Loan Funding, Inc. (the
"Issuer") and Wells Fargo Bank Minnesota, National Association, as Indenture
Trustee and Eligible Lender Trustee. All capitalized terms used in this
Certificate and not otherwise defined herein shall have the same meanings given
to such terms in the Indenture. In your capacity as Indenture Trustee, you are
hereby authorized and requested to disburse to _________________ (the "Lender")
the sum of $____________ (or, in the case of an exchange, the Eligible Loans
listed in Exhibit A hereto) for the acquisition of Eligible Loans. With respect
to such Eligible Loans to be acquired, the Issuer hereby certifies as follows:
1. The Eligible Loans are those specified in Schedule A attached hereto
(the "Acquired Eligible Loans"). The remaining unpaid principal amount of each
Acquired Eligible Loan is as shown on such Schedule A.
2. The amount to be disbursed pursuant to this Certificate does not
exceed the amount permitted by Section 5.02 of the Indenture (or, if a Financed
Eligible Loan is being pledged or sold in exchange for an Acquired Eligible Loan
under the Indenture, the aggregate unpaid principal amount of, and accrued
interest on, such Financed Eligible Loan does not exceed the amount permitted by
Section 5.02 of the Indenture) and is being acquired at a price which permits
the results of the cash flow analysis provided to each Rating Agency to be
sustained.
3. Each Acquired Eligible Loan is an Eligible Loan authorized to be
acquired by and is in compliance with the provisions of the Indenture.
4. You have been previously, or are herewith, provided with the
following items (the items listed in (a), (c), (d), (e), (g) and (h) have been
received and are being retained, on your behalf, by the Issuer or the Servicer):
(a) a copy of the Student Loan Purchase Agreement, if applicable,
between the Issuer and the Eligible Lender with respect to the Acquired
Eligible Loans;
(b) a request for and release of lien from an eligible lender
trustee and evidence of pledge to the Indenture, if applicable, as
attached hereto as Annex A;
(c) with respect to each Insured Loan included among the Acquired
Eligible Loans, the Certificate of Insurance relating thereto;
(d) with respect to each Guaranteed Loan included among the
Acquired Eligible Loans, a certified copy of the Guarantee Agreement
relating thereto;
(e) an opinion of counsel to the Issuer specifying each action
necessary to perfect a security interest in all Eligible Loans to be
acquired by the Issuer pursuant to the Student Loan Purchase Agreements
in favor of the Indenture Trustee in the manner provided for by the
provisions of 20 U.S.C. ss. 1087-2(d)(3) or 20 U.S.C. ss.
1082(m)(1)(D)(iv), as applicable, (you are authorized to rely on the
advice of a single blanket opinion of counsel to the Issuer until such
time as the Issuer shall provide any amended opinion to you);
(f) a certificate of an Authorized Representative of the Issuer
to the effect that (i) the Issuer is not in default in the performance
of any of its covenants and agreements made in the Student Loan Purchase
Agreement relating to the Acquired Eligible Loans; (ii) with respect to
all Acquired Eligible Loans which are Insured, Insurance is in effect
with respect thereto, and with respect to all Acquired Eligible Loans
which are Guaranteed, the Guarantee Agreement is in effect with respect
thereto; and (iii) the Issuer is not in default in the performance of
any of its covenants and agreements made in any Contract of Insurance or
the Guarantee Agreement applicable to the Acquired Eligible Loans;
(g) evidence that the promissory notes evidencing the Acquired
Eligible Loans have had stamped thereon or affixed thereto (individually
or by blanket endorsement) a notice specifying that they have been
assigned to the Indenture Trustee with all necessary endorsements; and
(h) instruments duly assigning the Acquired Eligible Loans to the
Indenture Trustee.
5. The Issuer is not, on the date hereof, in default under the Indenture
or, if applicable, in the performance of any of its covenants and agreements
made in the Student Loan Purchase Agreement relating to the Acquired Eligible
Loans. The Issuer is not aware of any default existing on the date hereof under
any of the other documents referred to in paragraph 4 hereof, nor of any
circumstances which would reasonably prevent reliance upon the opinion of
counsel referred to in paragraphs 4(e) hereof.
6. If applicable, all of the conditions specified in the Student Loan
Purchase Agreement applicable to the Acquired Eligible Loans and the Indenture
for the acquisition of the Acquired Eligible Loans and the disbursement hereby
authorized and requested have been satisfied; provided that the Issuer may waive
the requirement of receiving an opinion of counsel from the counsel to the
Lender.
7. If a Financed Eligible Loan is being sold or pledged in exchange for
an Acquired Eligible Loan such sale and exchange shall not adversely affect the
ability of the Trust Estate to make timely principal and interest payments on
its Obligations.
8. With respect to all Acquired Eligible Loans which are Insured,
Insurance is in effect with respect thereto, and with respect to all Acquired
Eligible Loans which are Guaranteed, the Guarantee Agreement is in effect with
respect thereto.
A-2
9. The Issuer is not in default in the performance of any of its
covenants and agreements made in any Contract of Insurance or the Guarantee
Agreement applicable to the Acquired Eligible Loans.
10. The proposed use of moneys in the Acquisition/Redemption Fund is in
compliance with the provisions of the Indenture.
11. The undersigned is authorized to sign and submit this Certificate on
behalf of the Issuer.
12. Eligible Loans are being acquired at a price which permits the
results of the cash flow analyses provided to the Rating Agencies on the Closing
Date to be sustained.
WITNESS my hand this _____ day of ___________.
NELNET EDUCATION LOAN FUNDING, INC.
By
--------------------------------------
Name
------------------------------------
Title
-----------------------------------
A-3
SCHEDULE A
ELIGIBLE Loans To Be Acquired
A-4
ANNEX A
REQUEST FOR AND NOTICE OF RELEASE OF PREVIOUS PLEDGE
AND ACKNOWLEDGMENT OF NEW PLEDGE
Reference is made to the Indenture of Trust dated as of June 1, 2003 (as
amended, the "Indenture"), by and between Nelnet Education Loan Funding, Inc. as
issuer (the "Issuer") and the undersigned, as indenture trustee and eligible
lender trustee (the "Trustee"). Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to them in the Indenture.
By delivery of the Eligible Loan Acquisition Certificate, the Issuer has
directed the Trustee to finance the Eligible Loans identified in Schedule A to
the Eligible Loan Acquisition Certificate (the "Acquired Eligible Loans"). The
Issuer hereby directs the Trustee to release the Acquired Eligible Loans from
the security interest granted by the Issuer to the Trustee pursuant to that
certain [DESCRIPTION OF FINANCING DOCUMENT] dated as of ____________ (the "Prior
Financing") between the Issuer, as issuer under the Prior Financing, and Wells
Fargo Bank Minnesota, National Association, as trustee under the Prior
Financing. The Issuer has satisfied the applicable conditions for release of
such Eligible Loans from the Prior Financing. The Trustee hereby releases the
Acquired Eligible Loans from the pledge of the Prior Financing as of the date
specified below.
By delivery of the Eligible Loan Acquisition Certificate, the Issuer has
also directed the Trustee to acquire the Acquired Eligible Loans as Financed
Eligible Loans pursuant to the Indenture immediately upon their release from the
Prior Financing. The Trustee hereby acknowledges that such Acquired Eligible
Loans have been pledged by the Issuer as a part of the Trust Estate from and
after the date specified below to secure the payment of Notes issued under the
Indenture.
IN WITNESS WHEREOF, the undersigned have caused this Request for and
Notice of Release of Previous Pledge and Acknowledgment of New Pledge to be
executed by their duly authorized offices as of the date specified below.
Nelnet Education Loan Funding, Inc., as
issuer under the Prior Financing and as
Issuer under the Indenture
By:
-------------------------------------
Title:
----------------------------------
Wells Fargo Bank Minnesota, National
Association, as trustee under the Prior
Financing and as Trustee under the
Indenture
By:
-------------------------------------
Title:
----------------------------------
Date:
------------------------------
A-2
EXHIBIT B
Form of Issuer Order
NELNET EDUCATION LOAN FUNDING, INC.
Issuer Order for the transfer of moneys from the Collection Fund to the
Operating Fund pursuant to Section 5.03 of the Indenture.
[__________ __, 200_]
To: Wells Fargo Bank Minnesota, National Association, as indenture trustee
(the "Indenture Trustee" and "Eligible Lender Trustee") under the
Indenture of Trust, dated as of June 1, 2003, among Nelnet Education
Loan Funding, Inc. (the "Issuer"), the Eligible Lender Trustee and the
Indenture Trustee, as supplemented from time to time (the "Indenture")
Ladies and Gentlemen:
Pursuant to Section 5.03 of the Indenture, you hereby are authorized and
directed to transfer moneys in the Collection Fund, on _________ __, 20__, to
the Operating Fund, subject to Section 5.05 of the Indenture.
The Issuer hereby certifies that the amount so transferred (a) does not
exceed the amount budgeted by the Issuer as Program Expenses for such Fiscal
Year with respect to the Notes, (b) does not exceed the amount designated
therefore in the cash flows provided to each Rating Agency and (c) is in
compliance with the provisions of the Indenture and each Supplemental Indenture.
Very truly yours,
NELNET EDUCATION LOAN FUNDING, INC.
By
--------------------------------------
Name
------------------------------------
Title
-----------------------------------
Dated: [__________ __, 200_]
EXHIBIT C
FORM OF STUDENT LOAN PURCHASE AGREEMENT
LOAN PURCHASE AGREEMENT
by and between
NELNET EDUCATION LOAN FUNDING, INC.
and
[SELLER],
Dated _____________________
Section 1. Definitions....................................................1
Section 2. Purchase of FFELP Loans........................................5
Section 3. Representations, Warranties, Covenants and Agreements of
the Seller.....................................................6
Section 4. Conditions of Purchase.........................................7
Section 5. Rejection of FFELP Loans.......................................9
Section 6. Repurchase Obligation..........................................9
Section 7. Notification to Borrowers.....................................10
Section 8. Obligations To Forward Payments and Communications............10
Section 9. Payment of Expenses and Taxes.................................11
Section 10. Indemnification...............................................11
Section 11. Special Provisions Relating to MPN Loans......................11
Section 12. Other Provisions..............................................12
Section 13. Security Interest.............................................15
Section 14. Information and Reporting.....................................16
EXHIBIT A LOAN TRANSFER ADDENDUM
EXHIBIT B SELLER'S CLOSING CERTIFICATE
EXHIBIT C BLANKET ENDORSEMENT OF STUDENT LOAN PROMISSORY NOTES
EXHIBIT D BILL OF SALE
EXHIBIT E REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF SELLER
EXHIBIT F ACKNOWLEDGMENT
C-2
LOAN PURCHASE AGREEMENT
THIS LOAN PURCHASE AGREEMENT (the "Loan Purchase Agreement") made and
entered into as of this _____ day of _______________, 20__, by and between
NELNET EDUCATION LOAN FUNDING, INC., formerly known as NEBHELP, INC., a Nebraska
corporation (the "Corporation") acting by and through WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION, not individually but as Eligible Lender Trustee
(the "Trustee") under the Trust Agreement or Eligible Lender Trust Agreement, as
applicable from time to time (as defined herein) and [SELLER], a
____________________________ corporation, organized and existing under the laws
of the State of Nevada, and having its principal offices at
______________________ (the "Seller").
W I T N E S S E T H :
WHEREAS, the Corporation, by and through the Trustee, desire to purchase
from the Seller certain FFELP Loans, title to which will be held by the Trustee
pursuant to the applicable Trust Agreement or Eligible Lender Trust Agreement
(as defined below), as applicable from time to time, and the Seller desires to
sell certain FFELP Loans to the Corporation, title to which will be held by and
through the Trustee, in accordance with the terms and conditions of this Loan
Purchase Agreement; and
WHEREAS, the Corporation expects to finance from time to time its
purchase and ownership of the FFELP Loans purchased hereunder through the
funding made available under one or more of the Financing Agreements.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
Section 1. Definitions.
"Borrower" means the student or parent obligor under an Eligible Loan.
"Certificate of Insurance" means a certificate of federal loan insurance
issued with respect to an Eligible Loan by the Secretary of Education pursuant
to the provisions of the Higher Education Act.
"Contract of Insurance" means an agreement between the Secretary of
Education and either the Trustee or the Seller providing for the insurance by
the Secretary of Education of the principal of and accrued interest on a FFELP
Loan to the maximum extent permitted under the Higher Education Act.
"Corporation" means Nelnet Education Loan Funding, Inc., f/k/a NEBHELP,
INC., a Nebraska corporation.
"Eligible Lender Trust Agreement" means the Eligible Lender Trust
Agreement dated as of June 1, 2003, between the Trustee and the Corporation.
C-3
"Eligible Loan" means a FFELP Loan authorized to be acquired by the
Corporation by and through the Trustee which (a) is either Insured or
Guaranteed; (b) if such FFELP Loan is a subsidized Stafford loan, qualifies the
holder thereof to receive Interest Subsidy Payments and Special Allowance
Payments; if such FFELP Loan is a consolidation loan authorized under Section
428C of the Higher Education Act, qualifies the holder thereof to receive
Interest Subsidy Payments and Special Allowance Payments to the extent
applicable; and if such FFELP Loan is a PLUS loan authorized under Section 428B
of the Higher Education Act, a SLS loan authorized under Section 428A of the
Higher Education Act, or an unsubsidized Stafford loan authorized under Section
428H of the Higher Education Act, such FFELP Loan qualifies the holder thereof
to receive Special Allowance Payments; (c) complies with each representation and
warranty with respect thereto contained herein; and (d) meets the other criteria
set forth in the Loan Purchase Regulations and is eligible for purchase under
the terms of the applicable Financing Agreement.
"Federal Contracts" means all agreements between a Guarantee Agency and
the Secretary of Education providing for the payment by the Secretary of
Education of amounts authorized to be paid pursuant to the Higher Education Act,
including, but not limited to, reimbursement of amounts paid or payable upon
defaulted Eligible Loans and other student loans insured or guaranteed by any
Guarantee Agency and federal interest subsidy payments and Special Allowance
Payments, if applicable, to holders of qualifying student loans guaranteed by
any Guarantee Agency.
"FFELP Loans" means those specific loans acquired by the Trustee, on
behalf of the Corporation, from the Seller pursuant to this Loan Purchase
Agreement, inclusive of the promissory notes evidencing such loans and the
related documentation in connection with each thereof, which were originated
under the Act or insured by the Secretary of Health and Human Services pursuant
to the Public Health Services Act (the "Higher Education Act").
"Financing Agreement" means, collectively and individually, the
following: (a) the Amended and Restated Warehouse Loan and Security Agreement
dated as of April 28, 2003, by and among the Trustee, the Corporation as
Borrower, NELnet Student Loan Warehouse Corporation 1, as original borrower,
Zions First National Bank as trustee, Royal Bank of Canada, as Alternate Lender
and Facility Agent, and Thunder Bay Funding Inc., as Lender (the "RBC Warehouse
Loan Agreement"); (b) the Warehouse Note Purchase and Security Agreement dated
as of May 1, 2003, among the Corporation, as Borrower, the Trustee, as eligible
lender trustee and indenture trustee thereunder, Quincy Capital Corporation, as
Conduit Lender, Bank of America, N.A., as Alternate Lender and Facility Agent,
Gemini Securitization Corp., as Conduit Lender, Deutsche Bank AG, New York
Branch, as Alternate Lender and Facility Agent, Barton Capital Corporation, as
Conduit Lender, Societe Generale, as Alternate Lender and Facility Agent, and
Bank of America, N.A., as Administrative Agent; (c) the Trust Indenture between
NEBHELP, INC. as assignee and Wells Fargo Bank Minnesota, National Association,
f/k/a Norwest Bank Minnesota, National Association, as successor trustee, dated
as of December 1, 1986; (d) the Trust Indenture dated as of June 1, 1993,
between NEBHELP, INC. as assignee and Wells Fargo Bank Minnesota, National
Association, f/k/a Norwest Bank Minnesota, National Association, as trustee; (e)
Trust Indenture between NEBHELP, INC. as assignee and Wells Fargo Bank
Minnesota, National Association, f/k/a Norwest Bank Minnesota, National
Association, as successor trustee, dated as of November 15, 1985; (f) Trust
Indenture between NEBHELP, INC. as assignee and Wells Fargo Bank Minnesota,
National Association, f/k/a Norwest Bank Minnesota, National Association, as
successor trustee, dated as of July 1, 1988; (g) Trust Indenture between
C-4
NEBHELP, INC. as assignee and Wells Fargo Bank Minnesota, National Association,
f/k/a Norwest Bank Minnesota, National Association, as trustee, dated as of
September 1, 1993; (h) Trust Indenture between NEBHELP, INC. as assignee and
Wells Fargo Bank Minnesota, National Association, f/k/a Norwest Bank Minnesota,
National Association, as trustee, dated as of May 1, 1997; and (i) the Indenture
of Trust among the Corporation and Wells Fargo Bank Minnesota, National
Association, as indenture trustee and eligible lender trustee thereunder, dated
as of June 1, 2003; as the same may be amended, modified, supplemented, restated
or otherwise altered, which is utilized to finance, from time to time, the
Corporation's purchase of the FFELP Loans under this Loan Purchase Agreement.
"Guarantee" or "Guaranteed" means, with respect to a FFELP Loan, the
guarantee by the Guarantee Agency, in accordance with the terms and conditions
of the Guarantee Agreement, of the principal of and accrued interest on the
FFELP Loan to the maximum extent permitted under the Higher Education Act on
FFELP Loans which have been originated, held and serviced in full compliance
with the Higher Education Act, and the coverage of the FFELP Loan by the Federal
Contracts providing, among other things, for reimbursement to the Guarantee
Agency for losses incurred by it on defaulted Eligible Loans guaranteed by it to
the extent of the maximum reimbursement allowed by the Federal Contracts.
"Guarantee Agency" means a state agency or a private nonprofit
institution or organization which administers a Guarantee Program within a State
or any successors and assignees thereof administering the Guarantee Program
which has entered into a Guarantee Agreement with the Trustee on behalf of the
Corporation.
"Guarantee Agreement" means the Federal Contracts, an agreement between
a Guarantee Agency and either the Trustee or the Seller providing for the
Guarantee by such Guarantee Agency of the principal of and accrued interest on
Eligible Loans to Borrowers, made or acquired by the Trustee or the Seller from
time to time, and any other similar guarantee or agreement issued by a Guarantee
Agency to the Corporation or the Trustee pertaining to Financed Eligible Loans.
"Guaranteed Loans" means FFELP Loans that are Guaranteed.
"Guarantee Program" means a Guarantee Agency's student loan guaranty
program pursuant to which such Guarantee Agency guarantees or insures student
loans.
"Higher Education Act" shall mean Title IV, Parts B, F and G, of the
Higher Education Act of 1965, as amended or supplemented and in effect from time
to time, or any successor enactment thereto, and all regulations promulgated
thereunder and any directives issued by the Secretary of Education.
"Insurance" or "Insured" or "Insuring" means, with respect to a FFELP
Loan, the insuring by the Secretary of Education (as evidenced by a Certificate
of Insurance or other document or certification issued under the provisions of
the Higher Education Act) under the Higher Education Act of the principal of and
accrued interest on such FFELP Loan to the maximum extent permitted under the
Higher Education Act for FFELP Loans originated, held and serviced in full
compliance with the Higher Education Act.
C-5
"Insured Loans" means FFELP Loans which are Insured.
"Interest Subsidy Payments" means interest subsidy payments received
from the Secretary of Education pursuant to Section 428 of the Higher Education
Act or similar payments authorized by federal law or regulation.
"Loan Purchase Agreement" means this Loan Purchase Agreement including
all exhibits and schedules attached hereto, and any addenda, supplements or
amendments hereto.
"Loan Purchase Date" means the date as described in Section 2(b) hereof.
"Loan Purchase Regulations" means the rules and regulations of the
Corporation, as may be adopted by the Corporation from time to time (with the
consent of any persons required under the terms of the applicable Financing
Agreement), which pertain to the Program, which shall incorporate all
requirements specified in any indentures or other financing arrangements to
which the Corporation is subject.
"Loan Transfer Schedule" means a written schedule on a form provided by
the Corporation or its servicing agent identifying the Borrower on the FFELP
Loans to be purchased hereunder.
"Master Note" means a Master Promissory Note in the form mandated by
Section 432(m)(1)(D) of the Higher Education Act, as added by Pub. L. 105-244,
ss. 427,112 Stat. 1702 (1998) as amended by Public Law No: 106 554 (enacted
December 21, 2000) and as codified at 20 U.S.C. ss. 1082(m)(1).
"MPN Loan" means a FFELP Loan evidenced by a Master Note.
"Program" means the Corporation's Eligible Loan acquisition program
under which the Trustee has acquired and will acquire Eligible Loans to assist
students in obtaining a post secondary education.
"Secretary of Education" means the Commissioner of Education and the
Secretary of the United States Department of Education (who succeeded to the
functions of the Commissioner of Education pursuant to the Department of
Education Organization Act), or any officer, board, body, commission or agency
succeeding to the functions thereof under the Higher Education Act.
"Seller" means [SELLER], a _____________ [corporation], which is an
"eligible lender" under the criteria established by the Higher Education Act
that has received an eligible lender designation by the Secretary of Education
with respect to Insured Loans or from a Guarantee Agency with respect to
Guaranteed Loans, identified in the introduction to this Loan Purchase
Agreement, which has sold and is selling FFELP Loans to the Corporation
hereunder or, if Seller is not designated as an eligible lender under the Higher
Education Act, Seller holds beneficial ownership of FFELP Loans through its
eligible lender trustee, which is an eligible lender under the Higher Education
Act.
C-6
"Special Allowance Payments" means special allowance payments authorized
to be made by the Secretary of Education pursuant to Section 438 of the Higher
Education Act or similar allowances authorized from time to time by federal law
or regulation.
"Trust Agreement" means one of the following, as applicable: (a) the
Amended and Restated Warehouse Loan and Security Agreement dated as of April 28,
2003, by and among the Trustee, the Corporation as Borrower, NELnet Student Loan
Warehouse Corporation 1, as original borrower, Zions First National Bank as
trustee, Royal Bank of Canada, as Alternate Lender and Facility Agent, and
Thunder Bay Funding Inc., as Lender (the "RBC Warehouse Loan Agreement"); (b)
the Warehouse Note Purchase and Security Agreement dated as of May 1, 2003,
among the Corporation, as Borrower, the Trustee, as eligible lender trustee and
indenture trustee thereunder, Quincy Capital Corporation, as Conduit Lender,
Bank of America, N.A., as Alternate Lender and Facility Agent, Gemini
Securitization Corp., as Conduit Lender, Deutsche Bank AG, New York Branch, as
Alternate Lender and Facility Agent, Barton Capital Corporation, as Conduit
Lender, Societe Generale, as Alternate Lender and Facility Agent, and Bank of
America, N.A., as Administrative Agent; (c) the Trust Indenture between NEBHELP,
INC. as assignee and Wells Fargo Bank Minnesota, National Association, f/k/a
Norwest Bank Minnesota, National Association, as successor trustee, dated as of
December 1, 1986; (d) the Trust Indenture dated as of June 1, 1993, between
NEBHELP, INC. as assignee and Wells Fargo Bank Minnesota, National Association,
f/k/a Norwest Bank Minnesota, National Association, as trustee; (e) Trust
Indenture between NEBHELP, INC. as assignee and Wells Fargo Bank Minnesota,
National Association, f/k/a Norwest Bank Minnesota, National Association, as
successor trustee, dated as of November 15, 1985; (f) Trust Indenture between
NEBHELP, INC. as assignee and Wells Fargo Bank Minnesota, National Association,
f/k/a Norwest Bank Minnesota, National Association, as successor trustee, dated
as of July 1, 1988; (g) Trust Indenture between NEBHELP, INC. as assignee and
Wells Fargo Bank Minnesota, National Association, f/k/a Norwest Bank Minnesota,
National Association, as trustee, dated as of September 1, 1993; (h) Trust
Indenture between NEBHELP, INC. as assignee and Wells Fargo Bank Minnesota,
National Association, f/k/a Norwest Bank Minnesota, National Association, as
trustee, dated as of May 1, 1997; and (i) the Indenture of Trust among the
Corporation and eligible lender trustee thereunder and Wells Fargo Bank
Minnesota, National Association, as indenture trustee, dated as of June 1, 2003.
"Trustee" means Wells Fargo Bank Minnesota, National Association, acting
in its capacity as Eligible Lender Trustee under the Trust Agreement or Eligible
Lender Trust Agreement, as applicable, and not in its individual capacity.
Section 2. Purchase of FFELP Loans.
(a) Subject to the terms and conditions and in reliance upon the
representations, warranties and agreements set forth herein, the Seller
(i) has sold to the Trustee, acting on behalf of the Corporation, and
the Corporation, acting by and through the Trustee under the Trust
Agreement, has purchased from the Seller the FFELP Loans which are
Eligible Loans specified in Annex I to this Loan Purchase Agreement; and
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(ii) agrees to sell to the Trustee, acting on behalf of the Corporation,
and the Corporation, acting by and through the Trustee under the Trust
Agreement or Eligible Lender Trust Agreement, as applicable, on behalf
of the Corporation, agrees to buy from the Seller, a portfolio of FFELP
Loans which are Eligible Loans in the aggregate unpaid principal amount
as set forth in the Loan Transfer Addendum in the form set forth in
Exhibit A hereto. Additional portfolios of FFELP Loans may be purchased
from the Seller hereunder by the Corporation by and through the Trustee
from time to time in the future, if the parties hereto execute and
deliver a subsequent Loan Transfer Addendum for each such purchase of a
portfolio in the form set forth in Exhibit A hereto, reflecting the
aggregate unpaid principal balance of Eligible Loans contained in such
portfolio and the Loan Purchase Date, and if the Seller executes and
delivers to the Corporation all documents required under Section 4
hereof as of the applicable Loan Purchase Date. Any subsequent purchase
of an additional portfolio of FFELP Loans shall be governed in all
respects by this Loan Purchase Agreement together with the Loan Transfer
Addendum pertaining to such portfolio. The Seller shall deliver a Loan
Transfer Schedule to the Corporation, not less than 30 days prior to the
applicable Loan Purchase Date. Consummation of the sale of each FFELP
Loan shall require execution and delivery to the Corporation of the
Seller's Closing Certificate in the form of Exhibit B hereto (and
delivery of the documents described in Exhibit B hereto), the blanket
endorsement and bill of sale as well as execution and delivery by the
Seller in the forms set forth in Exhibits C and D hereto, respectively.
It is the intention of the Seller that the transfer from the Seller to
the Trustee on behalf of the Corporation constitutes a true sale of the
FFELP Loans hereunder and that neither the interest in nor title to the
FFELP Loans shall become or be deemed property of the Seller for any
purpose under applicable law.
(b) Delivery and payment for the FFELP Loans shall take place at
a location and on a date (the "Loan Purchase Date") to be specified by
the Corporation. The applicable Loan Purchase Date shall not be later
than the date set forth in the Loan Transfer Addendum pertaining to such
FFELP Loans.
(c) Subject to the terms and conditions of this Loan Purchase
Agreement, the Corporation agrees to purchase the FFELP Loans by and
through the Trustee at a price equal to _____% of the outstanding unpaid
principal amount thereof on the Loan Purchase Date with proceeds from
the obligations issued pursuant to the Financing Agreement, or such
other amount agreed upon and specified in the Loan Transfer Addendum as
set forth in Exhibit A. The Seller shall be responsible for reporting to
the Secretary of Education and, if required by the provisions of the
Higher Education Act, offsetting against Interest Subsidy Payments and
Special Allowance Payments made to the Seller by the Secretary of
Education the entire amount of any origination fee which is authorized
to be charged by the Higher Education Act with respect to the FFELP
Loans sold hereunder. Additionally, the Seller shall, as a condition to
the purchase by the Corporation of any FFELP Loan, be required to pay to
the Corporation on the Loan Purchase Date the amount of any such
origination fee which has not at that time been used to offset such
Special Allowance Payments or Interest Subsidy Payments, to the extent
that the Special Allowance Payments or Interest Subsidy Payments
received by the Trustee in connection with such FFELP Loans shall be
affected. Seller shall continue due diligence servicing in compliance
with the Higher Education Act, at Seller's cost, up to the applicable
Loan Purchase Date; thereafter, servicing shall be paid for by, and
shall be the responsibility of, the Corporation.
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(d) Subject to the terms and conditions of this Loan Purchase
Agreement, Seller shall sell to the Corporation, by and through the
Trustee, all Eligible Loans made to the same Borrower(s) which are held
by or on behalf of Seller (serial loans).
(e) If Seller originates or purchases a FFELP Loan which is a
consolidation loan under Section 428C of the Higher Education Act, and
the proceeds of such consolidation loan are used to repay the principal
and interest due on a FFELP Loan sold by Seller to the Corporation
hereunder, then Seller shall rebate the premiums paid by the Corporation
to Seller in connection with the purchase of said FFELP Loan by paying
to the Corporation an amount equal to the same percentage of the
principal balance of said FFELP Loan then outstanding as was originally
paid by the Corporation therefor.
Section 3. Representations, Warranties, Covenants and Agreements of the
Seller.
(a) With respect to FFELP Loans sold on a Loan Purchase Date, the
Seller hereby makes the representations and warranties set forth in
Exhibit E hereto as of such Loan Purchase Date. Each representation,
warranty, certification, covenant and agreement contained in this Loan
Purchase Agreement shall survive the applicable Loan Purchase Date.
(b) The Seller shall not organize under the law of any
jurisdiction other than the State under which it is organized as of the
date hereof (whether changing its jurisdiction of organization or
organizing under an additional jurisdiction) without giving 30 days
prior written notice of such action to the Corporation. Before effecting
such change, the Seller shall prepare and file in the appropriate filing
office any financing statements or other statements necessary to
continue the perfection of the Corporation's interests in the FFELP
Loans.
Section 4. Conditions of Purchase. The Corporation's obligation to
purchase and pay for the FFELP Loans hereunder by and through the Trustee as of
the date hereof and any applicable Loan Purchase Date shall be subject to each
of the following conditions precedent:
(a) All representations, warranties and statements by or on
behalf of the Seller contained in this Loan Purchase Agreement shall be
true on the date hereof and the applicable Loan Purchase Date.
(b) Any notification to or approval by the Secretary of Education
or a Guarantee Agency required by the Higher Education Act or a
Guarantee Agreement as a condition to the assignment of the FFELP Loans
shall have been made or received and evidence thereof delivered to the
Corporation.
(c) The entire interest of the Seller in each FFELP Loan shall
have been duly assigned by endorsement in the form set forth in Exhibit
C hereto, such endorsement to be without recourse except as provided in
Section 6 hereof.
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(d) Physical custody and possession of the FFELP Loans (including
all information and documentation which is described in the Seller's
Closing Certificate as specified in Exhibit B hereto) shall be
transferred in the manner directed by the Corporation.
(e) The Corporation shall receive an opinion of the Seller's
counsel, dated as of the date hereof covering each sale of FFELP Loans,
in form and substance satisfactory to the Corporation and the Trustee
with respect to the Trust Agreement or Zions First National Bank as
Trustee with respect to the RBC Warehouse Loan Agreement, as applicable,
to the effect that (i) this Loan Purchase Agreement has been duly
authorized, executed and delivered by the Seller and constitutes the
legal, valid, binding and enforceable obligation of the Seller; (ii) the
blanket endorsement and bill of sale required by this Loan Purchase
Agreement have been duly authorized, executed and delivered by the
Seller; (iii) with respect to all Insured Loans being acquired, the
applicable Contract of Insurance has been duly authorized, executed and
delivered by the Seller; (iv) with respect to all Guaranteed Loans being
acquired, the applicable Guarantee Agreement has been duly authorized,
executed and delivered by the Seller; (v) assuming the due execution and
delivery thereof, each FFELP Loan constitutes the legal, valid and
binding obligation of the Borrower (and of each endorser, if any)
thereof, enforceable in accordance with its terms; (vi) to the knowledge
of the Seller's counsel, the execution and delivery of this Loan
Purchase Agreement, the consummation of the transactions therein
contemplated and compliance with the terms, conditions and provisions of
this Loan Purchase Agreement do not and will not conflict with or result
in a breach of any of the terms, conditions or provisions of the
charter, articles or bylaws of the Seller or any agreement or instrument
to which the Seller is a party or by which it is bound or constitute a
default thereunder; (vii) to the knowledge of the Seller's counsel, the
Seller is not a party to or bound by any agreement or instrument or
subject to any charter or other corporation restriction or judgment,
order, writ, injunction, decree, law, rule or regulation which may
materially and adversely affect the ability of the Seller to perform its
obligations under this Loan Purchase Agreement; (viii) no consent,
approval or authorization of any government or governmental body,
including, without limitation, the Federal Deposit Insurance Corporation
("FDIC"), the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System or any state bank regulatory agency, is required
in connection with the consummation of the transactions contemplated in
this Loan Purchase Agreement; (ix) this Loan Purchase Agreement shall
constitute a security agreement under Nebraska law and shall be
effective to create, in favor of the Corporation, a perfected valid
security interest in the FFELP Loans subject to no prior liens; (x) if
the Corporation and the Seller are affiliates, that (A) if the Seller
became a debtor under the United States Bankruptcy Code, 11 U.S.C.
ss.ss. 101 et seq., as amended (the "Bankruptcy Code"), (1) Section
541(a)(1) of the Bankruptcy Code would not apply to deem the FFELP sold
by the Seller to the Corporation and the proceeds therefrom as property
of the bankruptcy estate of the Seller; and, therefore, (2) Section
362(a) of the bankruptcy Code would not apply to stay payment to the
Corporation or its assignees; and (B) if the Seller became a debtor
under the Bankruptcy Code, a court would not disregard the separate
identity of the Corporation so that the assets of the Seller would be
consolidated with and become a part of the Seller's bankruptcy estate;
and (xi) if the Seller is a bank or savings association the deposits of
which are insured by the FDIC (a "Bank") and the FDIC were appointed as
receiver or conservator of such Bank, a court would not recharacterize
the transfer and assignment of the FFELP Loans to the Borrower as a
pledge to secure a borrowing rather than a sale of the FFELP Loans.
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(f) Delivery by the Seller to the Corporation on or before the
date hereof of the following documentation: Seller's general certificate
in the form of Exhibit G hereto; Seller's Closing Certificate in the
form of Exhibit B hereto; blanket endorsement in the form of Exhibit C
hereto; bill of sale in the form of Exhibit D hereto; UCC 1 Financing
Statements evidencing the transfer from the Seller to the Corporation
and the Trustee on behalf of the Corporation, and UCC lien searches
sufficiently in advance of the date hereof so as to permit review
thereof by the Corporation to its satisfaction, if either or both are
requested by the Corporation or a party to the Financing Agreement; and
UCC termination statements or releases, if any, releasing any security
interest granted by the Seller in any FFELP Loan.
(g) Delivery by the Seller to the Corporation, (i) prior to the
date hereof, of a complete Annex I listing the FFELP Loans previously
transferred by the Seller to the Corporation; and (ii) prior to the Loan
Purchase Date, of a fully executed and completed Loan Transfer Addendum
substantially in the form of Exhibit A hereto with respect to FFELP
Loans referred to in the bill of sale, and delivery of a Loan Transfer
Schedule as required in Section 2(a) hereof.
(h) Adequate funds are available to the Corporation from an
indenture, Trust Agreement or other Financing Agreement relating to the
Corporation's borrowings which will finance the purchase of FFELP Loans
under this Loan Purchase Agreement.
(i) Delivery by the Seller of a closing certificate dated as of
the date hereof in form and substance satisfactory to the Corporation
and the Trustee with respect to the Trust Agreement or Zions First
National Bank as Trustee with respect to the RBC Warehouse Loan
Agreement, as applicable, and a certificate dated as of the date hereof
of the a certificate in the form attached as Annex A to the true
sale/non consolidation opinion of Kutak Rock LLP dated June 24, 2003.
Section 5. Rejection of FFELP Loans.
(a) If (i) the Seller is unable to make or furnish the
representations and warranties required to be made or furnished by it
pursuant to this Loan Purchase Agreement as to a FFELP Loan; (ii) the
Corporation determines that the Seller is unable to fulfill one or more
covenants or conditions of this Loan Purchase Agreement as to a FFELP
Loan; (iii) the Corporation, in its reasonable judgment, deems that a
FFELP Loan does not comply with the terms and conditions of this Loan
Purchase Agreement or is not being delivered in compliance with such
terms and conditions; or (iv) the Corporation, in its reasonable
judgment deems that a FFELP Loan is for any reason unacceptable to it,
then the Corporation, within 30 days of the Loan Purchase Date, may
refuse to accept and pay for such FFELP Loan (or any substitute FFELP
Loan offered by the Seller in lieu thereof).
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(b) If the Corporation rejects a FFELP Loan, any such FFELP Loan
shall be returned to the Seller by registered mail (for repurchase
pursuant to Section 6 hereof if the student loan has previously been
purchased by the Corporation), together with a letter identifying each
returned FFELP Loan and stating the basis for its return. The
Corporation shall cause any FFELP Loan returned to the Seller which has
been endorsed to the Trustee to be endorsed by the Trustee to the Seller
in the form set forth in Exhibit F hereto.
The liability of the Corporation in connection with the loss of or
damage to any FFELP Loan to be returned to the Seller is limited to such loss or
damage occurring as a result of its gross negligence or willful misconduct in
handling or safekeeping FFELP Loans.
Section 6. Repurchase Obligation. If:
(a) any representation or warranty made or furnished by the
Seller in or pursuant to this Loan Purchase Agreement shall prove to
have been materially incorrect;
(b) the Secretary of Education or a Guarantee Agency, as the case
may be, refuses to honor all or part of a claim filed with respect to a
FFELP Loan (including any claim for Interest Subsidy Payments, Special
Allowance Payments, Insurance, reinsurance or Guarantee payments) on
account of any circumstance or event that occurred prior to the sale of
such FFELP Loan to the Corporation by and through the Trustee;
(c) on account of any circumstance or event that occurred prior
to the sale of a FFELP Loan to the Corporation, by and through the
Trustee, a defense is asserted by a Borrower (or endorser, if any) of
the FFELP Loan with respect to Borrower's obligation to pay all or any
part of the FFELP Loan, and the Corporation, in good faith, believes
that the facts reported, if true, raise a reasonable doubt as to the
legal enforceability of such FFELP Loan;
(d) a FFELP Loan is required to be repurchased pursuant to
Section 5(b) hereof; or
(e) the instrument which Seller purports to be a FFELP Loan is
not, in fact, a FFELP Loan;
then the Seller shall repurchase such FFELP Loan or purported FFELP Loan upon
the request of the Corporation by paying to the Corporation the then outstanding
principal balance of such FFELP Loan or purported FFELP Loan multiplied by the
percentage used to calculate the purchase price specified in the applicable Loan
Transfer Addendum, or otherwise (or such greater amount as may be necessary to
make the Corporation and the Trustee whole in light of the purchase price
originally paid by the Corporation for such loan), plus interest and applicable
Special Allowance Payments with respect to such FFELP Loan or purported FFELP
Loan from the Loan Purchase Date to and including the date of repurchase, plus
any amounts owed to the Secretary of Education with respect to the repurchased
FFELP Loan or purported FFELP Loan, plus any attorneys' fees, legal expenses,
court costs, servicing fees or other expenses incurred by the Corporation and
the Trustee in connection with such FFELP Loan or purported FFELP Loan.
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Section 7. Notification to Borrowers. The servicing agent on behalf of
the Seller shall notify Borrowers under the FFELP Loans as required by the
Higher Education Act of the assignment and transfer to the Trustee of the
Seller's interest in such FFELP Loans and the Seller shall direct each Borrower
to make all payments thereon directly to the Corporation or as it may otherwise
designate.
Section 8. Obligations To Forward Payments and Communications.
(a) The Seller shall promptly remit, or cause to be remitted, to
the Corporation all funds received by the Seller after the applicable
Loan Purchase Date which constitute payments of principal or interest
(including Interest Subsidy Payments) or Special Allowance Payments
accrued after the applicable Loan Purchase Date with respect to any
FFELP Loan.
(b) The Seller shall immediately transmit to the Corporation any
communication received by the Seller after the applicable Loan Purchase
Date with respect to a FFELP Loan or the Borrower under such a FFELP
Loan. Such communication shall include, but not be limited to, letters,
notices of death or disability, adjudication of bankruptcy and similar
documents and forms requesting deferment of repayment or loan
cancellations.
Section 9. Payment of Expenses and Taxes. Each party to this Loan
Purchase Agreement shall pay its own expenses incurred in connection with the
preparation, execution and delivery of this Loan Purchase Agreement and the
transactions herein contemplated, including, but not limited to, the fees and
disbursements of counsel; provided, however, that Seller shall pay any transfer
or other taxes and recording or filing fees payable in connection with the sale
and purchase of the FFELP Loans.
Section 10. Indemnification. The Seller specifically acknowledges that
the Corporation, in obtaining financing, will be making representations and
warranties regarding the FFELP Loans based in part on the accuracy of the
Seller's representations and warranties in this Loan Purchase Agreement. The
Seller agrees to indemnify and save the Trustee, the Corporation, the parties to
the Financing Agreement and noteholders under the Financing Agreement (together
with each of their respective successors, assignees, officers, directors, agents
and employees) harmless of, from and against any and all loss, liability, cost,
damage or expense, including reasonable attorneys' fees and costs of litigation,
incurred by reason of any breach of the Seller's warranties, representations or
covenants hereunder or any false or misleading representations of the Seller or
any failure to disclose any matter which makes the warranties and
representations herein misleading or any inaccuracy in any information furnished
by the Seller in connection herewith.
Section 11. Special Provisions Relating to MPN Loans.
(a) The Seller hereby represents and warrants that the Seller is
transferring all of its right title and interest in the MPN Loans to the
Corporation, that it has not assigned any interest in such MPN Loans
(other than security interests that have been released or ownership
interests that the Seller has reacquired) to any person other than the
Corporation, and that no prior holder of the MPN Loans has assigned any
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interest in such MPN Loans (other than security interests that have been
released or ownership interests that such prior holder has reacquired)
to any person other than a predecessor in title to the Seller. The
Seller hereby covenants that the Seller shall not attempt to transfer to
any other person any interest in any MPN Loan assigned hereunder.
(b) The Seller hereby authorizes the Corporation to file a UCC-1
financing statement identifying the Seller as debtor and the Corporation
as secured party and describing the MPN Loans sold pursuant to this Loan
Purchase Agreement. The preparation or filing of such UCC-1 financing
statement is solely for additional protection of the Corporation's
interest in the MPN Loans and shall not be deemed to contradict the
express intent of the Seller and the Corporation that the transfer of
MPN Loans under this Loan Purchase Agreement is an absolute assignment
of such MPN Loans and is not a transfer of such MPN Loans as security
for a debt.
Section 12. Other Provisions.
(a) The Seller shall, at its expense, furnish to the Corporation
such additional information concerning the Seller's student loan
portfolio as the Corporation may reasonably request.
(b) The Seller shall, at its expense, execute all other documents
and take all other steps as may be requested by the Corporation or the
Trustee from time to time to effect the sale hereunder of the FFELP
Loans.
(c) The provisions of this Loan Purchase Agreement cannot be
waived or modified unless such waiver or modification be in writing and
signed by the parties hereto. Inaction or failure to demand strict
performance shall not be deemed a waiver.
(d) This Loan Purchase Agreement shall be governed by the laws of
the State of Nebraska.
(e) All covenants and agreements herein contained shall extend to
and be obligatory upon all successors of the respective parties hereto.
(f) This Loan Purchase Agreement may be simultaneously executed
in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
(g) If any provision of this Loan Purchase Agreement shall be
held, deemed to be or shall, in fact, be inoperative or unenforceable as
applied in any particular situation, such circumstances shall not have
the effect of rendering the provision in question inoperative or
unenforceable in any other situation or of rendering any other provision
or provisions herein contained invalid, inoperative or unenforceable to
any extent whatsoever. The invalidity of any one or more phrases,
sentences, clauses or paragraphs herein contained shall not affect the
remaining portions of this Loan Purchase Agreement or any part hereof.
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(h) All notices, requests, demands or other instruments which may
or are required to be given by either party to the other shall be in
writing, and each shall be deemed to have been properly given when
served personally on an officer of the party to whom such notice is
given or upon expiration of a period of 48 hours from and after the
postmark thereof when mailed, postage prepaid, by registered or
certified mail, requesting return receipt, by overnight courier, or by
facsimile, addressed as follows:
If to the Corporation: Nelnet Education Loan Funding, Inc.
121 South 13th Street, Suite 201
Lincoln, NE 68508
Attention: Terry J. Heimes
Telephone: (402) 458 2301
Facsimile: (402) 458 2399
with a copy to the Trustee at: Wells Fargo Bank Minnesota, National
Association
Corporate Trust Services
6th and Marquette, N9303 110
Minneapolis, MN 55479
Attention: Corporate Trust Department
Telephone: (612) 667 4802
Facsimile: (612) 667 2149
If to the Seller, addressed in the manner as set forth in the first
paragraph of this Loan Purchase Agreement.
Either party may change the address and name of the addressee to which
subsequent notices are to be sent to it by notice to the others given as
aforesaid, but any such notice of change, if sent by mail, shall not be
effective until the fifth day after it is mailed.
(i) This Loan Purchase Agreement may not be terminated by either
party hereto except in the manner and with the effect herein
specifically provided for.
(j) Time is of the essence in this Loan Purchase Agreement.
(k) This Loan Purchase Agreement shall not be assignable by the
Seller, in whole or in part, without the prior written consent of the
Corporation.
(l) No remedy by the terms of this Loan Purchase Agreement
conferred upon or reserved to the Corporation is intended to be
exclusive of any other remedy, but each and every such remedy shall be
cumulative and in addition to every other remedy given under this Loan
Purchase Agreement or existing at law or in equity (including, without
limitation, the right to such equitable relief by way of injunction) or
by statute on or after the date of this Loan Purchase Agreement.
(m) Acts to be taken by the Corporation with respect to acquiring
and holding title to FFELP Loans hereunder shall be taken by the Trustee
as directed by the Corporation, which qualifies as an "eligible lender"
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trustee under the Higher Education Act, and all references herein to the
Corporation shall incorporate by this reference the fact that the
Trustee will be acquiring and holding title to FFELP Loans on behalf of
the Corporation, all as required under the Higher Education Act.
(n) The parties hereto acknowledge that the Trustee with respect
to the Trust Agreement or Zions First National Bank as Trustee with
respect to the RBC Warehouse Loan Agreement, as applicable, and other
parties to the Financing Agreement, shall be third party beneficiaries
of this Loan Purchase Agreement with the power and right to enforce the
provisions thereof, and the Trustee with respect to the Trust Agreement
or Zions First National Bank as Trustee with respect to the RBC
Warehouse Loan Agreement, as applicable, and any such credit providers
may become an assignee of the Corporation. The foregoing creates a
permissive right on the part of such third party beneficiaries, and such
third party beneficiaries shall be under no duties or obligations
hereunder.
(o) This Loan Purchase Agreement has been made and entered into
not only for the benefit of the Corporation and Seller but also for the
benefit of the Trustee with respect to the Trust Agreement or Zions
First National Bank as Trustee with respect to the RBC Warehouse Loan
Agreement, as applicable, in connection with the financing of Eligible
Loans as defined in the RBC Warehouse Loan Agreement, and upon
assignment by the Corporation to the Trustee with respect to the Trust
Agreement or Zions First National Bank as Trustee with respect to the
RBC Warehouse Loan Agreement, as applicable, its provisions may be
enforced not only by the parties to this Loan Purchase Agreement but by
the Trustee with respect to the Trust Agreement or Zions First National
Bank as Trustee with respect to the RBC Warehouse Loan Agreement, as
applicable. The foregoing creates a permissive right on behalf of the
Trustee with respect to the Trust Agreement or Zions First National Bank
as Trustee with respect to the RBC Warehouse Loan Agreement, as
applicable, and neither shall be under any duties or obligations
hereunder.
This Loan Purchase Agreement shall inure to the benefit of the Trustee
with respect to the Eligible Lender Trust Agreement and Zions First National
Bank, as Trustee with respect to the RBC Warehouse Loan Agreement and its
successors and assigns. Without limiting the generality of the foregoing, all
representations, covenants and agreements in this Loan Purchase Agreement which
expressly confer rights upon the Trustee with respect to the Eligible Lender
Trust Agreement and Zions First National Bank, as Trustee with respect to the
RBC Warehouse Loan Agreement shall be for the benefit of and run directly to,
the Trustee with respect to the Eligible Lender Trust Agreement and Zions First
National Bank, as Trustee with respect to the RBC Warehouse Loan Agreement, and
the Trustee with respect to the Eligible Lender Trust Agreement and Zions First
National Bank, as Trustee with respect to the RBC Warehouse Loan Agreement shall
be entitled to rely on and enforce such representations, covenants and
agreements to the same extent as if it were a party hereto. The foregoing
creates a permissive right on behalf of the Trustee with respect to the Eligible
Lender Trust Agreement and Zions First National Bank, as Trustee with respect to
the RBC Warehouse Loan Agreement, and neither the Trustee with respect to the
Eligible Lender Trust Agreement nor Zions First National Bank, as Trustee with
respect to the RBC Warehouse Loan Agreement shall be under any duties or
obligations hereunder.
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Section 13. Security Interest. The parties to this Loan Purchase
Agreement intend that the conveyance of the Seller's right, title and interest
in and to the FFELP Loans sold pursuant to this Loan Purchase Agreement (the
"Student Loans") shall constitute an absolute sale, conveying good title free
and clear of any liens, claims, encumbrances or rights of others from the Seller
to the Corporation. The parties to this Loan Purchase Agreement intend that the
arrangements with respect to the Student Loans shall constitute a purchase and
sale of such Student Loans and not a loan. In the event, however, that it were
determined by a court of competent jurisdiction that the transactions evidenced
by this Loan Purchase Agreement shall constitute a loan and not a purchase and
sale, the parties hereto intend that this Loan Purchase Agreement would
constitute a security agreement under applicable law and that the Seller shall
be deemed to have granted, and hereby does grant (subject to the condition
above), to the Corporation (and the Trustee) a first priority perfected security
interest in all of the Seller's right, title and interest, whether now owned or
hereafter acquired, in, to and under all accounts, general intangibles, chattel
paper, instruments, documents, goods, investment property, money, deposit
accounts, certificates of deposit, letters of credit, advices of credit and
other property consisting of, arising from or related to the following
collateral to secure the rights of the Corporation hereunder and the obligations
of the Seller hereunder (collectively, the "Pledged Collateral"):
(a) all Student Loans;
(b) all revenues and recoveries of principal from Student Loans,
including all borrower payments and reimbursements of principal and
accrued interest on default claims received from any Guarantor;
(c) any other revenues and recoveries of principal and interest
and other payments and reimbursements of principal and accrued interest
received with respect to any Student Loan and any other collection of
cash with respect to such Student Loan (including, but not limited to,
Interest Subsidy Payments, Special Allowance Payments, finance charges
and payments representing the repurchase of any Student Loan or rebate
of premium thereon pursuant to this Loan Purchase Agreement) received or
deemed to have been received and all other cash collections, tax refunds
and other cash proceeds of the Pledged Collateral held in various funds
and accounts created under this Loan Purchase Agreement;
(d) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Student Loans, whether pursuant to the contract related to such Student
Loans or otherwise;
(e) all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch
cards, data processing software and related property and rights)
maintained with respect to Student Loans otherwise in respect of the
Pledged Collateral; and
(f) all proceeds of the foregoing (including, but not by way of
limitation, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind,
and other forms of obligations and receivables or other liquidated
property which at any time constitute all or part or are included in the
proceeds of any of the foregoing property).
C-17
The Seller agrees that from time to time, at its expense, it will
properly execute and deliver all further instruments and documents (including,
without limitation, UCC-1 financing statements and custodian agreements with the
Servicer), and take all further action that Corporation may reasonably request
in order to perfect, protect or more fully evidence the Corporation's interest
in the Pledged Collateral or to enable the Corporation to exercise or enforce
any of its rights hereunder.
Section 14. Information and Reporting. Seller shall furnish to the
Corporation: (a) upon execution of this Agreement, Seller's most recent audited
financial statement prepared in accordance with generally accepted accounting
principles and duly certified by nationally recognized independent certified
public accountants selected by Seller, as well as Seller's most recent unaudited
financial statement and balance sheet; (b) as soon as available and in any event
within 90 days after the end of each fiscal year of the Seller, an updated
audited financial statement prepared in accordance with generally accepted
accounting principles and duly certified by nationally recognized independent
certified public accountants selected by Seller; and (c) such other financial
information as the Corporation may reasonably request from time to time. Seller
shall verify and reconcile Eligible Loan disbursements and cancellations of
Eligible Loans sold hereunder, in such manner as the Corporation may reasonably
request from time to time. Seller shall furnish to the Corporation a certificate
of good standing and a certified copy of resolutions of Seller's board of
directors approving and authorizing execution and performance of this Agreement
and all ancillary documents with respect thereto in a form reasonably
satisfactory to the Corporation.
C-18
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
[SELLER]
By
----------------------------------------
Name
--------------------------------------
Title
-------------------------------------
NELNET EDUCATION LOAN FUNDING, INC., F/K/A
NEBHELP, INC.
By
----------------------------------------
Name
--------------------------------------
Title
-------------------------------------
C-19
EXHIBIT A TO EXHIBIT C
LOAN TRANSFER ADDENDUM
This Loan Transfer Addendum (the "Addendum") is made and entered into as
of the ___ day of ___________, _____, by and between Nelnet Education Loan
Funding, Inc., f/k/a NEBHELP, INC. (the "Corporation") and _______________ (the
"Seller").
WHEREAS, the parties hereto entered into that Loan Purchase Agreement
dated as of ________________, ______, (the "Loan Purchase Agreement"), and the
Seller wishes to sell a portfolio of Eligible Loans (as defined in the Loan
Purchase Agreement) to the Corporation, pursuant to and in accordance with the
terms and conditions of the Loan Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms in this Addendum shall
have the same meanings given to them in the Loan Purchase Agreement, unless
otherwise specifically stated herein.
Section 2. Purchase of Eligible Loans. Subject to the terms and
conditions of the Loan Purchase Agreement and in reliance upon the
representations, warranties and covenants as set forth in the Loan Purchase
Agreement, the Seller agrees to sell to the Trustee, as trustee under the
[Trust] [Eligible Lender Trust] Agreement on behalf of the Corporation, a
portfolio of Eligible Loans identified in the Loan Transfer Schedule attached
hereto, having an aggregate outstanding principal balance of approximately
$______________ (the "Current Purchase Portfolio").
Section 3. Purchase Price. Subject to the terms and conditions of the
Loan Purchase Agreement, the Corporation agrees to purchase the Eligible Loans
in the Current Purchase Portfolio at a purchase price equal to _____% of the
aggregate unpaid principal balance thereon plus 100% of the accrued and unpaid
interest thereon, each as of the Loan Purchase Date set forth in Section 4
hereof.
Section 4. Loan Purchase Date. The Loan Purchase Date shall be no later
than ______________-, ________.
Section 5. Representations and Warranties. The Seller hereby reconfirms
all the representations and warranties set forth in the Loan Purchase Agreement
as of the Loan Purchase Date set forth in Section 4 hereof.
Section 6. Effect on Loan Purchase Agreement. This Addendum sets forth
the terms of purchase and sale solely with respect to the Current Purchase
Portfolio. This Addendum shall have no effect upon any other sale or purchase of
any Eligible Loans consummated or contemplated prior to or after the Loan
C-20
Purchase Date, and all other terms, conditions and agreements contained in the
Loan Purchase Agreement shall remain in full force and effect. Prior or
subsequent purchases and sales of Eligible Loans shall each be governed by a
separate Loan Transfer Addendum.
Section 7. Special Terms. [Reserved].
[SELLER]
By
----------------------------------------
Name
--------------------------------------
Title
-------------------------------------
NELNET EDUCATION LOAN FUNDING, INC., F/K/A
NEBHELP, INC.
By
----------------------------------------
Name
--------------------------------------
Title
-------------------------------------
C-21
EXHIBIT B TO EXHIBIT C
SELLER'S CLOSING CERTIFICATE
(DO NOT COMPLETE) (the "Seller") does hereby certify that all
representations, warranties and statements by or on behalf of the Seller
contained in a certain Loan Purchase Agreement dated ____________________,
________ (the "Agreement"), by and between the Seller and Nelnet Education Loan
Funding, Inc., f/k/a NEBHELP, INC. (the "Corporation"), are true and correct on
and as of the Loan Purchase Date, without exception or qualification whatsoever;
FURTHERMORE, the Seller does hereby certify that the following
documents, where applicable to each FFELP Loan (as defined in the Agreement)
acquired under the Agreement, have heretofore been furnished to the Corporation
or are simultaneously herewith delivered in accordance with the instructions of
the Corporation, pursuant to Section 4(d) of the Agreement:
(a) Department of Education application or Guarantee Agency
application, as supplemented;
(b) Interim note(s) for each Loan that is not an MPN Loan Payout
note(s) for each Loan that is not an MPN Loan;
(c) Disclosure and Loan information statement;
(d) Certificate of Insurance and Contract of Insurance with
respect to each Insured Loan (or certified copy thereof);
(e) Guarantee Agreement, Agreement for Participation in the
Guaranteed Loan Program and Notification of Loan;
(f) Approval by the Guarantee Agency with respect to each
Guaranteed Loan (or certified copy thereof);
(g) Any other documentation held by the Seller relating to the
history of such Eligible Loan;
(h) Secretary of Education and Guarantee Agency Loan Transfer
Statements;
(i) Uniform Commercial Code financing statement, if any, securing
any interest in an Eligible Loan to be Financed, and an executed
termination statement related thereto; and
(j) Evidence of Loan disbursement Any other document required to
be submitted with a claim to the Guarantee Agency.
C-22
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed and delivered by an officer hereunto duly authorized as of the Loan
Purchase Date, __________.
NAME OF SELLER
[DO NOT COMPLETE]
By
----------------------------------------
[DO NOT SIGN]
Title
-------------------------------------
[DO NOT SIGN]
C-23
EXHIBIT C TO EXHIBIT C
BLANKET ENDORSEMENT OF
STUDENT LOAN PROMISSORY NOTES
Pursuant to the Loan Purchase Agreement dated __________, the
undersigned ("Seller"), by execution of this instrument, hereby endorses all
promissory notes purchased by Wells Fargo Bank Minnesota, National Association,
as Eligible Lender Trustee (the "Trustee") under [Trust Agreement between the
Trustee and Nelnet Education Loan Funding, Inc., f/k/a NEBHELP, INC. (the
"Corporation")]. This endorsement is in blank, unrestricted form. This
endorsement is without recourse, except as provided under the terms of the Loan
Purchase Agreement. All right, title, and interest of Seller in and to the
promissory notes and related documentation identified in the attached loan
ledger are transferred and assigned to Trustee on behalf of the Corporation.
This endorsement may be further manifested by attaching this instrument
or a facsimile hereof to each or any of the Promissory Notes and related
documentation acquired by the Trustee on behalf of the Corporation from Seller,
or by attaching this instrument to the loan ledger schedule, as the Corporation
may require or deem necessary.
Dated this ___ day of ______________, _____.
NAME OF SELLER
[DO NOT COMPLETE]
By
---------------------------------------
[DO NOT SIGN] [SIGNATURE OF AUTHORIZED
OFFICER OF SELLER]
C-24
EXHIBIT D TO EXHIBIT C
BILL OF SALE
FOR VALUE RECEIVED, ________________________ (the "Seller"), pursuant to
the terms and conditions of that certain Loan Purchase Agreement dated as of
___________, _____ (the "Agreement") between the Seller and Nelnet Education
Loan Funding, Inc., f/k/a NEBHELP, INC. (the "Corporation") does hereby grant,
sell, assign, transfer and convey to Wells Fargo Bank Minnesota, National
Association, solely in its capacity as Eligible Lender Trustee (the "Trustee")
on behalf of the Corporation and its successors and assigns, all right, title
and interest of the Seller in and to the following:
1. The loans described in Annex I attached hereto (the "Loans"),
including the guarantee of the Loans issued by a guarantee agency pursuant to
the Federal Family Education Loan Program (20 U.S.C. ss. 1071 et seq.);
2. All promissory notes and related documentation evidencing the
indebtedness represented by such Loans; and
3. All proceeds of the foregoing including, without limitation, all
payments made by the obligor thereunder or with respect thereto, all guarantee
payments made by any guarantee agency with respect thereto, and all interest
benefit payments and special allowance payments with respect thereto made under
Title IV, Part B, of the Higher Education Act of 1965, as amended, and all
rights to receive such payments, but excluding any proceeds of the sale made
hereby.
TO HAVE AND TO HOLD the same unto the Trustee on behalf of the
Corporation, its successors and assigns, forever. This Bill of Sale is made
pursuant to and is subject to the terms and provisions of the Agreement, and is
without recourse, except as provided in the Agreement.
IN WITNESS WHEREOF, the Seller has caused this instrument to be executed
by one of its officers duly authorized to be effective as of the ____ day of
______, _____.
[NAME OF SELLER]
By
-------------------------------------------
Name
-----------------------------------------
Title
----------------------------------------
C-25
EXHIBIT E TO EXHIBIT C
REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS OF SELLER
1. Any information furnished by the Seller to the Corporation, or the
Corporation's agents with respect to a FFELP Loan, including the Loan Transfer
Schedule attached to the Loan Transfer Addendum, is true, complete and correct.
2. The amount of the unpaid principal balance of each FFELP Loan is due
and owing, and no counterclaim, offset, defense or right to rescission exists
with respect to any FFELP Loan which can be asserted and maintained or which,
with notice, lapse of time or the occurrence or failure to occur of any act or
event could be asserted and maintained by the Borrower against the Trustee or
the Corporation as assignee thereof. The Seller shall have taken all reasonable
actions to assure that no maker of a FFELP Loan has or may acquire a defense to
the payment thereof. No payment of principal or interest with respect to any
FFELP Loan is, as of the date hereof, more than 60 days delinquent and no
applicable payment of principal or interest with respect to any FFELP Loan will,
at the applicable Loan Purchase Date, be more than 60 days delinquent. No FFELP
Loan carries a rate of interest less than, or in excess of, the applicable rate
of interest required by the Higher Education Act. If the Higher Education Act
permits Sellers to charge an interest rate less than the applicable rate of
interest, no FFELP Loan purchased hereunder bears interest at a rate lower than
the applicable rate of interest; provided, however, that the Corporation may
approve, in its sole discretion, in writing, interest reductions which are part
of a borrower repayment incentive program of Seller, the terms of which have
been fully described in detail and in writing to the Corporation.
3. Each FFELP Loan has been duly executed and delivered and constitutes
the legal, valid and binding obligations of the maker (and the endorser, if any)
thereof, enforceable in accordance with its terms.
4. Each FFELP Loan complies in all respects with the requirements of the
Higher Education Act and the Loan Purchase Regulations and is an Eligible Loan,
as that term is defined in the Loan Purchase Agreement.
5. The Seller or Seller's eligible lender trustee has applied for and
received the Secretary of Education's or a Guarantee Agency's designation, as
the case may be, as an "Eligible Lender" under the Higher Education Act, and the
Seller has entered into all agreements required to be entered into for
participation in the Federal Family Education Loan Program under the Higher
Education Act.
6. The Seller and the Seller's eligible lender trustee on behalf of
Seller is the sole owner and holder of each FFELP Loan and has full right and
authority to sell and assign the same free and clear of all liens, pledges or
encumbrances; no FFELP Loan has been pledged or assigned for any purpose; and
each FFELP Loan is free of any and all liens, charges, encumbrances and security
interests of any description. The Corporation has a valid and perfected first
priority security interest in the Pledged Collateral.
C-26
7. Each FFELP Loan is either Insured or Guaranteed; such Insurance or
Guarantee, as the case may be, is in full force and effect, is freely
transferable as an incident to the sale of each FFELP Loan; all amounts due and
payable to the Secretary of Education or a Guarantee Agency, as the case may be,
have been or will be paid in full by the Seller, and none of the FFELP Loans has
at any time been tendered to either the Secretary of Education or any Guarantee
Agency for payment.
8. There are no circumstances or conditions with respect to any FFELP
Loan, the Borrower thereunder or the creditworthiness of said Borrower that
would reasonably cause prudent private investors to regard any of the FFELP
Loans as an unacceptable investment, or adversely affect the value or
marketability thereof, the insurance thereof and any applicable Guarantee.
9. Each FFELP Loan was made in compliance with all applicable local,
State and federal laws, rules and regulations, including, without limitation,
all applicable nondiscrimination, truth in lending, consumer credit and usury
laws.
10. The Seller has carefully reviewed the Loan Purchase Regulations
supplied by the Corporation and has complied with the Loan Purchase Regulations.
11. The FFELP Loans pursuant to the Agreement include all Eligible Loans
of any one Borrower held by the Seller.
12. The Seller has, and its officers acting on its behalf have, full
legal authority to engage in the transactions contemplated by the Loan Purchase
Agreement; the execution and delivery of the Loan Purchase Agreement, the
consummation of the transactions herein contemplated and compliance with the
terms, conditions and provisions of the Loan Purchase Agreement do not and will
not conflict with or result in a breach of any of the terms, conditions or
provisions of the charter, articles or bylaws of the Seller or any agreement or
instrument to which the Seller is a party or by which it is bound or constitute
a default thereunder; the Seller is not a party to or bound by any agreement or
instrument or subject to any charter or other corporation restriction or
judgment, order, writ, injunction, decree, law, rule or regulation which may
materially and adversely affect the ability of the Seller to perform its
obligations under the Loan Purchase Agreement and the Loan Purchase Agreement
constitutes a valid and binding obligation of the Seller enforceable against it
in accordance with its terms, and no consent, approval or authorization of any
government or governmental body, including, without limitation, the Federal
Savings and Loan Insurance Corporation, the Federal Deposit Insurance
Corporation, the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System or any state bank regulatory agency, is required in
connection with the consummation of the transactions herein contemplated.
13. The Seller is duly organized, validly existing and in good standing
under the laws of its applicable jurisdiction and has the power and authority to
own its assets and carry on its business as now being conducted.
14. The Seller and any independent servicer have each exercised due
diligence and reasonable care in making, administering, servicing and collecting
the FFELP Loans, and the Seller has conducted a reasonable investigation of
C-27
sufficient scope and content to enable it duly to make the representations and
warranties contained in this Exhibit E. The Seller shall be solely responsible
for the payment of the costs and expenses incident to origination of FFELP
Loans, without any right of reimbursement therefor from the Corporation.
15. With respect to all Insured Eligible Loans being acquired, Insurance
is in effect with respect thereto; the applicable Contract and Certificates of
Insurance are valid and binding upon the parties thereto in all respects
material to the security for any bonds and/or notes issued by the Corporation;
and the Seller is not in default in the performance of any of its covenants and
agreements made in respect thereof.
16. With respect to all Guaranteed Eligible Loans being acquired, a
Guarantee Agreement is in effect with respect thereto and is valid and binding
upon the parties thereto in all respects material to the security of the bonds
and/or notes issued by the Corporation to finance the FFELP Loans; and the
Seller is not in default in the performance of any of its covenants and
agreements made in such Guarantee Agreement.
17. The Seller does not (a) discriminate by pattern or practice against
any particular class or category of students by requiring, as a condition to the
receipt of a student loan, that a student or his family maintain a business
relationship with the Seller, except as may be permitted under applicable laws;
or (b) discriminate on the basis of race, sex, color, creed or national origin.
18. The FFELP Loans are a representative sample of all student loans
held by the Seller with respect to the educational institution attended by, or
the age, sex, race, national origin or place of residence of, the Borrower to
whom such loans were made, or with respect to any other identifying
characteristic of such Borrowers.
19. Each instrument transferred to the Corporation under the Loan
Purchase Agreement is a FFELP Loan which constitutes an Eligible Loan.
20. No promissory note evidencing an Eligible Loan bears any apparent
evidence of forgery or alteration or is otherwise so irregular or incomplete as
to call into question its authenticity.
21. Except as may have been disclosed by the UCC lien search required by
Section 4(f) hereof for the Seller, no other financing statements or assignment
filings naming the Seller as debtor or assignor under its legal name or trade
names has been filed.
22. The fair salable value of the assets on a going concern basis of the
Seller and its subsidiaries, on a consolidated basis, as of the time of each
sale of FFELP Loans hereunder is in excess of the total amount of their
liabilities.
C-28
EXHIBIT F TO EXHIBIT C
ACKNOWLEDGMENT
The assignment of the within promissory note and related documents to
(DO NOT COMPLETE) under a Loan Purchase Agreement between ____________________
and ____________________, dated as of ____________________, _____, did not
become effective thereunder, and no rights in the same have been conveyed
thereby.
Dated: [DO NOT COMPLETE]
-----------------------------------
C-29