EXHIBIT 4.14
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INDENTURE OF TRUST
by and among
NELNET EDUCATION LOAN FUNDING, INC.
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Indenture Trustee
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Eligible Lender Trustee
Dated as of April 1, 2004
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NELNET EDUCATION LOAN FUNDING, INC.
Reconciliation and tie between Trust Indenture Act of 1939 and Indenture
of Trust, dated as of April 1, 2004.
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, 5.12
314(d)(1) 5.12
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
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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
THE Series 2004-2 Notes
Section 2.01. Series 2004-2 Note Details...................................28
Section 2.02. Execution of Series 2004-2 Notes.............................31
Section 2.03. Registration, Transfer and Exchange of Series 2004-2
Notes; Persons Treated as Registered Owners..................32
Section 2.04. Lost, Stolen, Destroyed and Mutilated Series 2004-2 Notes....35
Section 2.05. Forms of Series 2004-2 Notes.................................36
Section 2.06. Indenture Trustee's Authentication Certificate...............36
Section 2.07. Cancellation and Destruction of Series 2004-2 Notes by
the Indenture Trustee........................................36
Section 2.08. Temporary Series 2004-2 Notes................................36
Section 2.09. Redemption of and Principal Reduction Payments on the
Series 2004-2 Notes..........................................37
Section 2.10. Delivery of Series 2004-2 Notes..............................42
Section 2.11. Deposit of Series 2004-2 Note Proceeds.......................42
ARTICLE III
PARITY AND PRIORITY OF LIEN; OTHER OBLIGATIONS; AND DERIVATIVE PRODUCTS
Section 3.01. Parity and Priority of Lien..................................42
Section 3.02. Other Obligations............................................43
Section 3.03. Derivative Products; Counterparty Payments; Issuer
Derivative Payments..........................................44
ARTICLE IV
PROVISIONS APPLICABLE TO THE series 2004-2 NOTES; DUTIES OF THE ISSUER
Section 4.01. Payment of Principal, Interest and Premium...................44
Section 4.02. Representations and Warranties of the Issuer.................44
Section 4.03. Covenants as to Additional Conveyances.......................44
Section 4.04. Further Covenants of the Issuer..............................45
Section 4.05. Enforcement of Servicing Agreements..........................46
Section 4.06. Procedures for Transfer of Funds.............................47
Section 4.07. Additional Covenants with Respect to the Higher
Education Act................................................47
Section 4.08. Financed Eligible Loans; Collections Thereof; Assignment
Thereof......................................................48
Section 4.09. Appointment of Agents, Etc...................................49
Section 4.10. Capacity to Sue..............................................49
Section 4.11. Continued Existence; Successor to Issuer.....................49
Section 4.12. Amendment of Student Loan Purchase Agreements................49
Section 4.13. Representations; Negative Covenants..........................49
Section 4.14. Additional Covenants.........................................55
Section 4.15. Providing of Notice..........................................56
Section 4.16. Reports by Issuer............................................57
Section 4.17. Statement as to Compliance...................................57
Section 4.18. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee............................................58
Section 4.19. Representations of the Issuer Regarding the Indenture
Trustee's Security Interest..................................58
Section 4.20. Covenants of the Issuer Regarding the Indenture
Trustee's Security Interest..................................59
Section 4.21. Tax Treatment................................................59
Section 4.22. Opinions as to Indenture Trust Estate........................60
ARTICLE V
FUNDS
Section 5.01. Creation and Continuation of Funds and Accounts..............60
Section 5.02. Acquisition Fund.............................................61
Section 5.03. Capitalized Interest Fund....................................63
Section 5.04. Class B Supplemental Reserve Fund............................64
Section 5.05. Collection Fund..............................................65
Section 5.06. Note Payment Fund............................................70
Section 5.07. Remarketing Fee Fund.........................................73
Section 5.08. Reserve Fund.................................................74
Section 5.09. Supplemental Interest Fund...................................74
Section 5.10. Transfers to Issuer..........................................75
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Section 5.11. Investment of Funds Held by Indenture Trustee................75
Section 5.12. Investment Securities........................................76
Section 5.13. Release; Sale of Financed Eligible Loans.....................78
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default Defined....................................79
Section 6.02. Remedy on Default; Possession of Trust Estate................80
Section 6.03. Remedies on Default; Advice of Counsel.......................81
Section 6.04. Remedies on Default; Sale of Trust Estate....................81
Section 6.05. Appointment of Receiver......................................82
Section 6.06. Restoration of Position......................................82
Section 6.07. Purchase of Properties by Indenture Trustee or
Registered Owners............................................82
Section 6.08. Application of Sale Proceeds.................................83
Section 6.09. Accelerated Maturity.........................................83
Section 6.10. Remedies Not Exclusive.......................................83
Section 6.11. Direction of Indenture Trustee...............................83
Section 6.12. Right to Enforce in Indenture Trustee........................84
Section 6.13. Physical Possession of Obligations not Required..............84
Section 6.14. Waivers of Events of Default.................................85
Section 6.15. Notice of Defaults...........................................85
ARTICLE VII
THE INDENTURE TRUSTEE
Section 7.01. Acceptance of Trust..........................................85
Section 7.02. Recitals of Others...........................................86
Section 7.03. As to Filing of Indenture....................................86
Section 7.04. Indenture Trustee May Act Through Agents.....................86
Section 7.05. Indemnification of Indenture Trustee.........................87
Section 7.06. Indenture Trustee's Right to Reliance........................88
Section 7.07. Compensation of Indenture Trustee............................89
Section 7.08. Indenture Trustee May Own Series 2004-2 Notes................89
Section 7.09. Resignation of Indenture Trustee.............................89
Section 7.10. Removal of Indenture Trustee.................................90
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Section 7.11. Successor Indenture Trustee..................................90
Section 7.12. Manner of Vesting Title in Indenture Trustee.................90
Section 7.13. Additional Covenants by the Indenture Trustee to Conform
to the Higher Education Act..................................91
Section 7.14. Right of Inspection..........................................91
Section 7.15. Limitation with Respect to Examination of Reports............91
Section 7.16. Servicing Agreement..........................................92
Section 7.17. Additional Covenants of Indenture Trustee....................92
Section 7.18. Duty of Indenture Trustee with Respect to Rating Agencies....92
Section 7.19. Merger of the Indenture Trustee..............................93
Section 7.20. Receipt of Funds from Servicers..............................93
Section 7.21. Special Circumstances Leading to Resignation of
Indenture Trustee............................................93
Section 7.22. Survival of Indenture Trustee's Rights to Receive
Compensation, Reimbursement and Indemnification..............93
Section 7.23. Corporate Indenture Trustee Required; Eligibility;
Conflicting Interests........................................93
Section 7.24. Indenture Trustee May File Proofs of Claim...................94
Section 7.25. Payment of Taxes and Other Governmental Charges..............95
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.01. Supplemental Indentures Not Requiring Consent of
Registered Owners............................................95
Section 8.02. Supplemental Indentures Requiring Consent of Registered
Owners.......................................................96
Section 8.03. Additional Limitation on Modification of Indenture...........97
Section 8.04. Notice of Defaults...........................................97
Section 8.05. Conformity With the Trust Indenture Act......................98
ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Notices......................................................98
Section 9.02. Covenants Bind Issuer........................................99
Section 9.03. Lien Created.................................................99
Section 9.04. Severability of Lien.........................................99
Section 9.05. Consent of Registered Owners Binds Successors................99
Section 9.06. Nonliability of Directors; No General Obligation............100
Section 9.07. Nonpresentment of Series 2004-2 Notes or Interest Checks....100
Section 9.08. Security Agreement..........................................100
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Section 9.09. Laws Governing..............................................100
Section 9.10. Severability................................................100
Section 9.11. Exhibits....................................................101
Section 9.12. Non-Business Days...........................................101
Section 9.13. Parties Interested Herein...................................101
Section 9.14. Obligations Are Limited Obligations.........................101
Section 9.15. Counterparty Rights.........................................101
Section 9.16. Disclosure of Names and Addresses of Registered Owners......101
Section 9.17. Aggregate Principal Amount of Obligations...................102
Section 9.18. Financed Eligible Loans.....................................102
Section 9.19. No Petition; Subordination..................................102
Section 9.20. Conflict with Trust Indenture Act...........................102
ARTICLE X
PAYMENT AND CANCELLATION OF NOTES AND SATISFACTION OF INDENTURE
Section 10.01. Trust Irrevocable...........................................103
Section 10.02. Satisfaction of Indenture...................................103
Section 10.03. Cancellation of Paid Series 2004-2 Notes....................103
ARTICLE XI
TERMINATION
Section 11.01. Termination of the Trust....................................104
Section 11.02. Notice......................................................105
ARTICLE XII
REPORTING REQUIREMENTS
Section 12.01. Annual Statement as to Compliance...........................105
Section 12.02. Annual Independent Public Accountants' Servicing Report.....106
Section 12.03. Issuer's Certificate........................................106
Section 12.04. Statements to Registered Owners.............................106
APPENDIX A CERTAIN TERMS AND PROVISIONS OF THE Reset RATE NOTES..............1
APPENDIX B CERTAIN TERMS AND PROVISIONS OF THE AUCTION RATE NOTES............1
EXHIBIT A FORM OF LIBOR RATE NOTES...........................................1
EXHIBIT B FORM OF RESET RATE NOTES...........................................1
EXHIBIT C FORM OF auction rate NOTES.........................................1
EXHIBIT D NOTICE OF PAYMENT DEFAULT..........................................1
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EXHIBIT E NOTICE OF CURE OF PAYMENT DEFAULT..................................1
EXHIBIT F NOTICE OF PROPOSED CHANGE IN LENGTH OF ONE OR MORE AUCTION
PERIODS......................................................................1
EXHIBIT G NOTICE ESTABLISHING CHANGE IN LENGTH OF ONE OR MORE AUCTION
PERIODS......................................................................1
EXHIBIT H NOTICE OF CHANGE IN AUCTION DATE...................................1
EXHIBIT I ELIGIBLE LOAN ACQUISITION CERTIFICATE..............................1
EXHIBIT J FORM OF MONTHLY SERVICING PAYMENT DATE CERTIFICATE.................1
EXHIBIT K FORM OF DISTRIBUTION DATE CERTIFICATE..............................1
EXHIBIT L FORM OF STUDENT LOAN PURCHASE AGREEMENT............................1
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of April 1, 2004 (this "Indenture"),
is by and among NELNET EDUCATION LOAN FUNDING, INC., a corporation duly
organized and existing under the laws of the State of Nebraska (the "Issuer"),
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association duly
organized and operating under the laws of the United States of America, as
indenture trustee hereunder (together with its successors, the "Indenture
Trustee"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as eligible lender
trustee hereunder (together with its successors, the "Eligible Lender Trustee")
(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
"Series 2004-2 Notes") and the payments to any Counterparty; and
WHEREAS, this Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), 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 the Series 2004-2 Notes (the Registered Owners evidencing their
consent by their acceptance of the Series 2004-2 Notes) and any Counterparty
(the Counterparty evidencing its consent by its execution and delivery of a
Derivative Product) 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 Series 2004-2 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 Series 2004-2 Notes and 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 released from the lien of the Trust
Estate as provided herein);
GRANTING CLAUSE B
All moneys and investments held in the Funds and Accounts created
pursuant to Section 5.01 hereof;
GRANTING CLAUSE C
The Financed Eligible Loans (other than Financed Eligible Loans released
from the lien of the Trust Estate as provided herein);
GRANTING CLAUSE D
The Servicing Agreements, the Administration Agreement, the Escrow
Reserve 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 or any related Counterparty
Guarantee; 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 Series 2004-2 Notes, without preference of any Series
2004-2 Note over any other, except as provided herein, and for enforcement of
the payment of the Series 2004-2 Notes in accordance with their terms, and all
other sums payable hereunder (including payments due and payable to any
Counterparty) or on the Series 2004-2 Notes, and for the performance of and
compliance with the obligations, covenants, and conditions of this Indenture, as
if all the Series 2004-2 Notes and any Derivative Products at any time
Outstanding had been executed and delivered simultaneously with the execution
and delivery of this Indenture;
2
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall
well and truly pay, or cause to be paid, the principal of the Series 2004-2
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 Series 2004-2 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 (certain additional terms relating to the Series
2004-2 Notes are defined in Appendices A and B hereto):
"ACCOUNT" shall mean any of the accounts created and established within
any Fund pursuant to this Indenture.
"ACQUISITION FUND" shall mean the Fund by that name created in Section
5.01(a) hereof and further described in Section 5.02 hereof, including any
Accounts and Subaccounts created therein.
"ACCRUAL PERIOD" shall mean, with respect to a Quarterly Distribution
Date and a Class of the LIBOR Rate Notes, the period from and including the
immediately preceding Quarterly Distribution Date for such Class of the LIBOR
Rate Notes, or in the case of the initial such period the Closing Date, to but
excluding such current Quarterly Distribution Date. The term "Accrual Period"
shall have the meaning assigned to such term in Appendix A with respect to the
Reset Rate Notes and in Appendix B with respect to the Auction Rate Notes.
"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 Higher Education
Act.
"ADD-ON PERIOD" shall mean the period of 180 days after the date of
origination of any Consolidation Loan financed by the Issuer.
"ADMINISTRATION AGREEMENT" shall mean the Administrative Services
Agreement, dated as of April 1, 2004, among the Issuer, the Indenture Trustee,
the Eligible Lender Trustee and National Education Loan Network, Inc., as
administrator, and any other Administration Agreement entered into between the
Issuer and an entity that will provide administrative services for the Issuer,
each as amended and supplemented pursuant to the terms and provisions thereof.
"ADMINISTRATION FEE" shall mean an amount equal to 0.18% per annum,
based on the aggregate principal amount of the Financed Eligible Loans within
the Trust Estate at any time, as determined by the Administrator.
3
"ADMINISTRATOR" shall mean National Education Loan Network, Inc. in its
capacity as administrator of the Issuer and the Financed Eligible Loans, and any
successor thereto in accordance with the Administration Agreement.
"AGENT MEMBER" shall mean a member of, or participant in, a Securities
Depository.
"AGGREGATE VALUE" shall mean on any calculation date the sum of the
Values of all assets of the Trust Estate.
"ASSIGNMENT AGREEMENT" shall mean the Partial Assignment Agreement,
dated as of April 1, 2004, 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, as amended and
supplemented pursuant to the terms and provisions thereof.
"AUCTION RATE DISTRIBUTION DATE" shall mean, with respect to each Class
of the Auction Rate Notes, (a) so long as such Class of the Auction Rate Notes
bear interest at an Auction Rate Notes Interest Rate for an Auction Period of
not greater than 90 days, the Business Day immediately following the expiration
of the Initial Period for such Auction Rate Notes, and each related Auction
Period thereafter, commencing as provided in an Issuer Order pursuant to Section
2.03(c) of Appendix A hereto for the Class A-5a Notes if the Class A-5a Notes
are reset to bear interest at an Auction Rate pursuant to Section 2.01(f) of
Appendix A hereto and commencing on May 28, 2004 for the Class A-5b Notes and
May 28, 2004 for the Class A-5c Notes, May 28, 2004 for the Class B-1 Notes and
May 28, 2004 for the Class B-2 Notes; and (b) if and for so long as such Class
of the Auction Rate Notes bear interest at an Auction Rate Notes Interest Rate
for an Auction Period of greater than 90 days, the 25th day of each February,
May, August and November and the Business Day immediately following the
expiration of the related Auction Period. On any Auction Rate Distribution Date
that is a designated calendar date (such as described in clause (b) above), if
the designated date is not a Business Day, interest shall be payable on the next
succeeding Business Day in the amount accrued to but excluding the designated
calendar date and no interest shall accrue on the payment so deferred during the
intervening period. On any Auction Rate Distribution Date that is not a
designated calendar date (such as described in clause (a) above), interest shall
be payable in the amount accrued to but excluding the date on which interest is
actually paid.
"AUCTION RATE NOTES" shall mean, collectively, the Class A-5a Notes (but
only if the Class A-5a Notes have been reset to bear interest at an Auction Rate
pursuant to Section 2.01(f) of Appendix A hereto), the Class A-5b Notes, the
Class A-5c Notes and the Class B Notes.
"AUCTION RATE NOTES CARRY-OVER AMOUNT" shall have the meaning ascribed
to such term in Appendix B hereto.
"AUTHORIZED DENOMINATIONS" shall mean (a) with respect to each Class of
the LIBOR Rate Notes and the Reset Rate Notes, $5,000 and any integral multiple
of $1,000 in excess thereof, and (b) with respect to the Auction Rate Notes,
$50,000 and any integral multiple thereof.
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"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 of Directors 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 of Directors to act on the Issuer's behalf.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Issuer.
"BUSINESS DAY" shall have the meanings ascribed to such term in
Appendices A and B hereto.
"CAPITALIZED INTEREST FUND" shall mean the Fund by that name created in
Section 5.01(b) hereof and further described in Section 5.03 hereof, including
any Accounts and Subaccounts created therein.
"CERTIFICATE OF INSURANCE" shall mean any certificate evidencing a
Financed Eligible Loan is Insured pursuant to a Contract of Insurance.
"CLASS" shall mean, (a) with the respect to the LIBOR Rate Notes, any or
all of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes, (b) with the respect to the Reset Rate Notes, the Class A-5a
Notes (unless the Class A-5a Notes have been reset to bear interest at an
Auction Rate pursuant to Section 2.01(f) of Appendix A hereto), and (c) with the
respect to the Auction Rate Notes, any or all of the Class A-5a Notes (but only
if the Class A-5a Notes have been reset to bear interest at an Auction Rate
pursuant to Section 2.01(f) of Appendix A hereto), Class A-5b Notes, the Class
A-5c Notes, the Class B-1 Notes and the Class B-2 Notes.
"CLASS A NOTES" shall mean, collectively, the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5a Notes, the
Class A-5b Notes and the Class A-5c Notes.
"CLASS A-1 INTEREST ACCOUNT" shall mean the Account by that name created
by Section 5.01(e) hereof within the Note Payment Fund and further described in
Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-1 NOTES" shall mean the $167,000,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Senior Class 2004-2A-1 LIBOR
Rate Notes.
"CLASS A-1 NOTES INTEREST DISTRIBUTION AMOUNT" shall mean, for each
Quarterly Distribution Date, the sum of (a) the amount of interest accrued at
the Class A-1 Notes Interest Rate for the related Accrual Period on the
Outstanding Amount of the Class A-1 Notes immediately prior to such Quarterly
Distribution Date; and (b) the Class A-1 Notes Interest Shortfall for such
Quarterly Distribution Date, based on the actual number of days in such Accrual
Period divided by 360 and rounding the resultant figure to the fifth decimal
place, as determined by the Issuer, or by the Administrator on behalf of the
Issuer.
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"CLASS A-1 NOTES INTEREST RATE" shall mean, for any Accrual Period after
the initial Accrual Period, Three-Month LIBOR as determined by the Issuer, or by
the Administrator on behalf of the Issuer, on the related LIBOR Determination
Date, plus 0.00%, based on the actual number of days in such Accrual Period
divided by 360. For the initial Accrual Period, the Class A-1 Notes Interest
Rate shall mean 1.21909%, based on the actual number of days in such Accrual
Period divided by 360.
"CLASS A-1 NOTES INTEREST SHORTFALL" shall mean, with respect to any
Quarterly Distribution Date, the excess, if any, of (a) the Class A-1 Notes
Interest Distribution Amount on the immediately preceding Quarterly Distribution
Date over (b) the amount of interest actually distributed to the Registered
Owners of the Class A-1 Notes on such preceding Quarterly Distribution Date,
plus interest on the amount of such excess interest due to the Registered Owners
of the Class A-1 Notes, to the extent permitted by law, at the interest rate
borne by the Class A-1 Notes from such immediately preceding Quarterly
Distribution Date to the current Quarterly Distribution Date, as determined by
the Issuer, or by the Administrator on behalf of the Issuer.
"CLASS A-1 REDEMPTION ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-2 INTEREST ACCOUNT" shall mean the Account by that name created
by Section 5.01(e) hereof within the Note Payment Fund and further described in
Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-2 NOTES" shall mean the $178,000,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Senior Class 2004-2A-2 LIBOR
Rate Notes.
"CLASS A-2 NOTES INTEREST DISTRIBUTION AMOUNT" shall mean, for each
Quarterly Distribution Date, the sum of (a) the amount of interest accrued at
the Class A-2 Notes Interest Rate for the related Accrual Period on the
Outstanding Amount of the Class A-2 Notes immediately prior to such Quarterly
Distribution Date; and (b) the Class A-2 Notes Interest Shortfall for such
Quarterly Distribution Date, based on the actual number of days in such Accrual
Period divided by 360 and rounding the resultant figure to the fifth decimal
place, as determined by the Issuer, or by the Administrator on behalf of the
Issuer.
"CLASS A-2 NOTES INTEREST RATE" shall mean, for any Accrual Period after
the initial Accrual Period, Three-Month LIBOR as determined by the Issuer, or by
the Administrator on behalf of the Issuer, on the related LIBOR Determination
Date, plus 0.03%, based on the actual number of days in such Accrual Period
divided by 360. For the initial Accrual Period, the Class A-2 Notes Interest
Rate shall mean 1.24909%, based on the actual number of days in such Accrual
Period divided by 360.
"CLASS A-2 NOTES INTEREST SHORTFALL" shall mean, with respect to any
Quarterly Distribution Date, the excess, if any, of (a) the Class A-2 Notes
Interest Distribution Amount on the immediately preceding Quarterly Distribution
Date over (b) the amount of interest actually distributed to the Registered
Owners of the Class A-2 Notes on such preceding Quarterly Distribution Date,
6
plus interest on the amount of such excess interest due to the Registered Owners
of the Class A-2 Notes, to the extent permitted by law, at the interest rate
borne by the Class A-2 Notes from such immediately preceding Quarterly
Distribution Date to the current Quarterly Distribution Date, as determined by
the Issuer, or by the Administrator on behalf of the Issuer.
"CLASS A-2 REDEMPTION ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-3 INTEREST ACCOUNT" shall mean the Account by that name created
by Section 5.01(e) hereof within the Note Payment Fund and further described in
Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-3 NOTES" shall mean the $103,000,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Senior Class 2004-2A-3 LIBOR
Rate Notes.
"CLASS A-3 NOTES INTEREST DISTRIBUTION AMOUNT" shall mean, for each
Quarterly Distribution Date, the sum of (a) the amount of interest accrued at
the Class A-3 Notes Interest Rate for the related Accrual Period on the
Outstanding Amount of the Class A-3 Notes immediately prior to such Quarterly
Distribution Date; and (b) the Class A-3 Notes Interest Shortfall for such
Quarterly Distribution Date, based on the actual number of days in such Accrual
Period divided by 360 and rounding the resultant figure to the fifth decimal
place, as determined by the Issuer, or by the Administrator on behalf of the
Issuer.
"CLASS A-3 NOTES INTEREST RATE" shall mean, for any Accrual Period after
the initial Accrual Period, Three-Month LIBOR as determined by the Issuer, or by
the Administrator on behalf of the Issuer, on the related LIBOR Determination
Date, plus 0.10%, based on the actual number of days in such Accrual Period
divided by 360. For the initial Accrual Period, the Class A-3 Notes Interest
Rate shall mean 1.31909%, based on the actual number of days in such Accrual
Period divided by 360.
"CLASS A-3 NOTES INTEREST SHORTFALL" shall mean, with respect to any
Quarterly Distribution Date, the excess, if any, of (a) the Class A-3 Notes
Interest Distribution Amount on the immediately preceding Quarterly Distribution
Date over (b) the amount of interest actually distributed to the Registered
Owners of the Class A-3 Notes on such preceding Quarterly Distribution Date,
plus interest on the amount of such excess interest due to the Registered Owners
of the Class A-3 Notes, to the extent permitted by law, at the interest rate
borne by the Class A-3 Notes from such immediately preceding Quarterly
Distribution Date to the current Quarterly Distribution Date, as determined by
the Issuer, or by the Administrator on behalf of the Issuer.
"CLASS A-3 REDEMPTION ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
7
"CLASS A-4 INTEREST ACCOUNT" shall mean the Account by that name created
by Section 5.01(e) hereof within the Note Payment Fund and further described in
Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-4 NOTES" shall mean the $203,000,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Senior Class 2004-2A-4 LIBOR
Rate Notes.
"CLASS A-4 NOTES INTEREST DISTRIBUTION AMOUNT" shall mean, for each
Quarterly Distribution Date, the sum of (a) the amount of interest accrued at
the Class A-4 Notes Interest Rate for the related Accrual Period on the
Outstanding Amount of the Class A-4 Notes immediately prior to such Quarterly
Distribution Date; and (b) the Class A-4 Notes Interest Shortfall for such
Quarterly Distribution Date, based on the actual number of days in such Accrual
Period divided by 360 and rounding the resultant figure to the fifth decimal
place, as determined by the Issuer, or by the Administrator on behalf of the
Issuer.
"CLASS A-4 NOTES INTEREST RATE" shall mean, for any Accrual Period after
the initial Accrual Period, Three-Month LIBOR as determined by the Issuer, or by
the Administrator on behalf of the Issuer, on the related LIBOR Determination
Date, plus 0.14%, based on the actual number of days in such Accrual Period
divided by 360. For the initial Accrual Period, the Class A-4 Notes Interest
Rate shall mean 1.35909%, based on the actual number of days in such Accrual
Period divided by 360.
"CLASS A-4 NOTES INTEREST SHORTFALL" shall mean, with respect to any
Quarterly Distribution Date, the excess, if any, of (a) the Class A-4 Notes
Interest Distribution Amount on the immediately preceding Quarterly Distribution
Date over (b) the amount of interest actually distributed to the Registered
Owners of the Class A-4 Notes on such preceding Quarterly Distribution Date,
plus interest on the amount of such excess interest due to the Registered Owners
of the Class A-4 Notes, to the extent permitted by law, at the interest rate
borne by the Class A-4 Notes from such immediately preceding Quarterly
Distribution Date to the current Quarterly Distribution Date, as determined by
the Issuer, or by the Administrator on behalf of the Issuer.
"CLASS A-4 REDEMPTION ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-5a INTEREST ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-5a NOTES" shall mean the $200,000,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Senior Class 2004-2A-5a Reset
Rate Notes, unless the Class A-5a Notes have been reset to bear interest at an
Auction Rate pursuant to Section 2.01(f) of Appendix A hereto, in which case the
Class A-5a Notes shall be redesignated the $200,000,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Senior Class 2004-2A-5a Auction
Rate Notes.
8
"CLASS A-5a NOTES INTEREST DISTRIBUTION AMOUNT" shall mean, for each
Quarterly Distribution Date, the sum of (a) the amount of interest accrued at
the Class A-5a Notes Interest Rate for the related Accrual Period on the
Outstanding Amount of the Class A-5a Notes immediately prior to such Quarterly
Distribution Date; and (b) the Class A-5a Notes Interest Shortfall for such
Quarterly Distribution Date, based on the appropriate Day Count Basis and
rounding the resultant figure to the fifth decimal place, as determined by the
Issuer, or by the Administrator on behalf of the Issuer; provided, however, if
the Class A-5a Notes have been reset to bear interest at an Auction Rate
pursuant to Section 2.01(f) of Appendix A hereto, "CLASS A-5A NOTES INTEREST
DISTRIBUTION AMOUNT" shall mean, for each Auction Rate Distribution Date for the
Class A-5a Notes, the sum of (i) the amount of interest accrued at the Class
A-5a Notes Interest Rate for the related Accrual Period on the Outstanding
Amount of the Class A-5a Notes immediately prior to such Auction Rate
Distribution Date for the Class A-5a Notes; and (ii) the Class A-5a Notes
Interest Shortfall for such Auction Rate Distribution Date for the Class A-5a
Notes, based on the actual number of days in such Accrual Period divided by 360
and rounding the resultant figure to the fifth decimal place, as determined by
the Issuer, or by the Administrator on behalf of the Issuer.
"CLASS A-5a NOTES INTEREST SHORTFALL" shall mean, with respect to any
Quarterly Distribution Date, the excess, if any, of (a) the Class A-5a Notes
Interest Distribution Amount on the immediately preceding Quarterly Distribution
Date over (b) the amount of interest actually distributed to the Registered
Owners of the Class A-5a Notes on such preceding Quarterly Distribution Date,
plus interest on the amount of such excess interest due to the Registered Owners
of the Class A-5a Notes, to the extent permitted by law, at the interest rate
borne by the Class A-5a Notes from such immediately preceding Quarterly
Distribution Date to the current Quarterly Distribution Date, as determined by
the Issuer, or by the Administrator on behalf of the Issuer; provided, however,
if the Class A-5a Notes have been reset to bear interest at an Auction Rate
pursuant to Section 2.01(f) of Appendix A hereto, "CLASS A-5A NOTES INTEREST
SHORTFALL" shall mean, with respect to any Auction Rate Distribution Date for
the Class A-5a Notes, the excess, if any, of (i) the Class A-5a Notes Interest
Distribution Amount on the immediately preceding Auction Rate Distribution Date
for the Class A-5a Notes over (ii) the amount of interest actually distributed
to the Registered Owners of the Class A-5a Notes on such preceding Auction Rate
Distribution Date for the Class A-5a Notes, plus interest on the amount of such
excess interest due to the Registered Owners of the Class A-5a Notes, to the
extent permitted by law, at the interest rate borne by the Class A-5a Notes from
such immediately preceding Auction Rate Distribution Date for the Class A-5a
Notes to the current Auction Rate Distribution Date for the Class A-5a Notes, as
determined by the Issuer, or by the Administrator on behalf of the Issuer.
"CLASS A-5a REDEMPTION ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-5b INTEREST ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
9
"CLASS A-5b NOTES" shall mean the $68,050,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Senior Class 2004-2A-5b Auction
Rate Notes.
"CLASS A-5b NOTES INTEREST DISTRIBUTION AMOUNT" shall mean, for each
Auction Rate Distribution Date for the Class A-5b Notes, the sum of (a) the
amount of interest accrued at the Class A-5b Notes Interest Rate for the related
Accrual Period on the Outstanding Amount of the Class A-5b Notes immediately
prior to such Auction Rate Distribution Date for the Class A-5b Notes; and (b)
the Class A-5b Notes Interest Shortfall for such Auction Rate Distribution Date
for the Class A-5b Notes, based on the actual number of days in such Accrual
Period divided by 360 and rounding the resultant figure to the fifth decimal
place, as determined by the Issuer, or by the Administrator on behalf of the
Issuer.
"CLASS A-5b NOTES INTEREST SHORTFALL" shall mean, with respect to any
Auction Rate Distribution Date for the Class A-5b Notes, the excess, if any, of
(a) the Class A-5b Notes Interest Distribution Amount on the immediately
preceding Auction Rate Distribution Date for the Class A-5b Notes over (b) the
amount of interest actually distributed to the Registered Owners of the Class
A-5b Notes on such preceding Auction Rate Distribution Date for the Class A-5b
Notes, plus interest on the amount of such excess interest due to the Registered
Owners of the Class A-5b Notes, to the extent permitted by law, at the interest
rate borne by the Class A-5b Notes from such immediately preceding Auction Rate
Distribution Date for the Class A-5b Notes to the current Auction Rate
Distribution Date for the Class A-5b Notes, as determined by the Issuer, or by
the Administrator on behalf of the Issuer.
"CLASS A-5b REDEMPTION ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-5c INTEREST ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
"CLASS A-5c NOTES" shall mean the $68,050,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Senior Class 2004-2A-5c Auction
Rate Notes.
"CLASS A-5c NOTES INTEREST DISTRIBUTION AMOUNT" shall mean, for each
Auction Rate Distribution Date for the Class A-5c Notes, the sum of (a) the
amount of interest accrued at the Class A-5c Notes Interest Rate for the related
Accrual Period on the Outstanding Amount of the Class A-5c Notes immediately
prior to such Auction Rate Distribution Date for the Class A-5c Notes; and (b)
the Class A-5c Notes Interest Shortfall for such Auction Rate Distribution Date
for the Class A-5c Notes, based on the actual number of days in such Accrual
Period divided by 360 and rounding the resultant figure to the fifth decimal
place, as determined by the Issuer, or by the Administrator on behalf of the
Issuer.
"CLASS A-5c NOTES INTEREST SHORTFALL" shall mean, with respect to any
Auction Rate Distribution Date for the Class A-5c Notes, the excess, if any, of
(a) the Class A-5c Notes Interest Distribution Amount on the immediately
preceding Auction Rate Distribution Date for the Class A-5c Notes over (b) the
amount of interest actually distributed to the Registered Owners of the Class
A-5c Notes on such preceding Auction Rate Distribution Date for the Class A-5c
10
Notes, plus interest on the amount of such excess interest due to the Registered
Owners of the Class A-5c Notes, to the extent permitted by law, at the interest
rate borne by the Class A-5c Notes from such immediately preceding Auction Rate
Distribution Date for the Class A-5c Notes to the current Auction Rate
Distribution Date for the Class A-5c Notes, as determined by the Issuer, or by
the Administrator on behalf of the Issuer.
"CLASS A-5c REDEMPTION ACCOUNT" shall mean the Account by that name
created by Section 5.01(e) hereof within the Note Payment Fund and further
described in Section 5.06 hereof, including any Subaccounts created therein.
"CLASS B NOTES" shall mean, collectively, the Class B-1 Notes and the
Class B-2 Notes.
"CLASS B REDEMPTION ACCOUNT" shall mean the Account by that name created
by Section 5.01(e) hereof within the Note Payment Fund and further described in
Section 5.06 hereof, including any Subaccounts created therein.
"CLASS B SUPPLEMENTAL RESERVE FUND" shall mean the Fund by that name
created in Section 5.01(c) hereof and further described in Section 5.04 hereof,
including any Accounts and Subaccounts created therein.
"CLASS B SUPPLEMENTAL RESERVE FUND REQUIREMENT" shall mean an amount
equal to 90 days' interest on the Outstanding Amount of the Class B Notes
calculated at the highest then current interest rate on either Class of the
Class B Notes.
"CLASS B-1 INTEREST ACCOUNT" shall mean the Account by that name created
by Section 5.01(e) hereof within the Note Payment Fund and further described in
Section 5.06 hereof, including any Subaccounts created therein.
"CLASS B-1 NOTES" shall mean the $15,300,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Subordinate Class 2004-2B-1
Auction Rate Notes.
"CLASS B-1 NOTES INTEREST DISTRIBUTION AMOUNT" shall mean, for each
Auction Rate Distribution Date for the Class B-1 Notes, the sum of (a) the
amount of interest accrued at the Class B-1 Notes Interest Rate for the related
Accrual Period on the Outstanding Amount of the Class B-1 Notes immediately
prior to such Auction Rate Distribution Date for the Class B-1 Notes; and (b)
the Class B-1 Notes Interest Shortfall for such Auction Rate Distribution Date
for the Class B-1 Notes, based on the actual number of days in such Accrual
Period divided by 360 and rounding the resultant figure to the fifth decimal
place, as determined by the Issuer, or by the Administrator on behalf of the
Issuer.
"CLASS B-1 NOTES INTEREST SHORTFALL" shall mean, with respect to any
Auction Rate Distribution Date for the Class B-1 Notes, the excess, if any, of
(a) the Class B-1 Notes Interest Distribution Amount on the immediately
preceding Auction Rate Distribution Date for the Class B-1 Notes over (b) the
amount of interest actually distributed to the Registered Owners of the Class
B-1 Notes on such preceding Auction Rate Distribution Date for the Class B-1
Notes, plus interest on the amount of such excess interest due to the Registered
Owners of the Class B-1 Notes, to the extent permitted by law, at the interest
rate borne by the Class B-1 Notes from such immediately preceding Auction Rate
11
Distribution Date for the Class B-1 Notes to the current Auction Rate
Distribution Date for the Class B-1 Notes, as determined by the Issuer, or by
the Administrator on behalf of the Issuer.
"CLASS B-2 INTEREST ACCOUNT" shall mean the Account by that name created
by Section 5.01(e) hereof within the Note Payment Fund and further described in
Section 5.06 hereof, including any Subaccounts created therein.
"CLASS B-2 NOTES" shall mean the $15,300,000 Nelnet Education Loan
Funding, Inc., Student Loan Asset-Backed Notes, Subordinate Class 2004-2B-2
Auction Rate Notes.
"CLASS B-2 NOTES INTEREST DISTRIBUTION AMOUNT" shall mean, for each
Auction Rate Distribution Date for the Class B-2 Notes, the sum of (a) the
amount of interest accrued at the Class B-2 Notes Interest Rate for the related
Accrual Period on the Outstanding Amount of the Class B-2 Notes immediately
prior to such Auction Rate Distribution Date for the Class B-2 Notes; and (b)
the Class B-2 Notes Interest Shortfall for such Auction Rate Distribution Date
for the Class B-2 Notes, based on the actual number of days in such Accrual
Period divided by 360 and rounding the resultant figure to the fifth decimal
place, as determined by the Issuer, or by the Administrator on behalf of the
Issuer.
"CLASS B-2 NOTES INTEREST SHORTFALL" shall mean, with respect to any
Auction Rate Distribution Date for the Class B-2 Notes, the excess, if any, of
(a) the Class B-2 Notes Interest Distribution Amount on the immediately
preceding Auction Rate Distribution Date for the Class B-2 Notes over (b) the
amount of interest actually distributed to the Registered Owners of the Class
B-2 Notes on such preceding Auction Rate Distribution Date for the Class B-2
Notes, plus interest on the amount of such excess interest due to the Registered
Owners of the Class B-2 Notes, to the extent permitted by law, at the interest
rate borne by the Class B-2 Notes from such immediately preceding Auction Rate
Distribution Date for the Class B-2 Notes to the current Auction Rate
Distribution Date for the Class B-2 Notes, as determined by the Issuer, or by
the Administrator on behalf of the Issuer.
"CLEARSTREAM" shall mean Clearstream Banking, societe anonyme or its
successor in interest.
"CLOSING DATE" shall mean April 29, 2004, the date of initial issuance
and delivery of the Series 2004-2 Notes hereunder.
"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
Series 2004-2 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(d) hereof and further described in Section 5.05 hereof, including any
Accounts and Subaccounts created therein.
12
"COMMERCIAL PAPER RATE TRIGGER" shall mean as of the last day of any
calendar quarter (a) the average daily 90-Day Financial Commercial Paper Rate
for such calendar quarter exceeded 6.80% per annum and (b) 5% or more of the
Financed Eligible Loans within the Trust Estate are eligible to receive Interest
Subsidy Payments pursuant to Section 438(b)(2)(B)(i) of the Higher Education
Act.
"COMMISSION" shall mean the Securities and Exchange Commission.
"CONSOLIDATION FEE" shall mean any federal origination fee, monthly
rebate fee or similar fee payable to the Department of Education relating to the
origination or ownership of Consolidation Loans.
"CONSOLIDATION LOAN" shall mean an Eligible Loan made pursuant to
Section 428C of the Higher Education 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.
"CONTRACT OF INSURANCE" shall mean the contract of insurance between the
Eligible Lender and the Secretary.
"COUNTERPARTY" shall mean any counterparty under a Derivative Product.
"COUNTERPARTY PAYMENT ACCOUNT" shall mean each Account by that name
established for a Derivative Product pursuant to Section 5.01(e) hereof within
the Note Payment Fund for the payment of Issuer Derivative Payments and further
described in Section 5.06 hereof, including any Subaccounts created therein.
"COUNTERPARTY PAYMENTS" shall mean any payment to be made to, or for the
benefit of, the Issuer under a Derivative Product.
"CUSTODIAN AGREEMENT" shall mean the Custodian Agreement, dated as of
April 1, 2004, among the Issuer, the Eligible Lender Trustee, the Indenture
Trustee and Nelnet, Inc., as custodian, and any other custodian agreements with
any Servicer, subservicer or other custodian or bailee related to Financed
Eligible Loans, each as amended and supplemented pursuant to the terms and
provisions thereof.
"DEFINITIVE CERTIFICATES" shall mean definitive, fully registered
certificates evidencing the Series 2004-2 Notes which are not registered in the
name of the nominee of a Securities Depository.
"DEPARTMENT OF EDUCATION" shall mean the United Stated Department of
Education, or any successor thereto.
"DERIVATIVE PRODUCT" shall mean any written contract or agreement
between the Issuer and a Counterparty entered into pursuant to Section 3.03
hereof for any interest rate swap, cap, floor, collar or other investment
contract, including the General Interest Rate Cap Derivative Agreement and the
LIBOR Interest Rate Cap Derivative Agreement.
13
"DERIVATIVE PRODUCT DISTRIBUTION DATE" shall mean, with respect to a
Derivative Product, any date specified in such Derivative Product on which an
Issuer Derivative Payment is due and payable under such Derivative Product.
"DERIVATIVE VALUE" shall mean, with respect to any Derivative Product,
the value of such Derivative Product 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 hereof 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.
"DISTRIBUTION DATE" shall mean (i) each Quarterly Distribution Date,
(ii) each Auction Rate Distribution Date and (iii) each Derivative Product
Distribution Date.
"DISTRIBUTION DATE CERTIFICATE" shall mean a certificate signed by the
Issuer, or by the Administrator on behalf of the Issuer, in substantially the
form attached as Exhibit K hereto.
"DTC" shall mean The Depository Trust Company or its successors in
interest.
"ELIGIBLE LENDER" shall mean any "ELIGIBLE LENDER," as defined in the
Higher Education Act, and which has received an eligible lender designation from
the Secretary with respect to Eligible Loans made under the Higher Education
Act.
"ELIGIBLE LENDER TRUSTEE" shall mean Wells Fargo Bank, National
Association, a national banking association, not in its individual capacity but
solely as Eligible Lender Trustee hereunder and under the Eligible Lender Trust
Agreement, or its successors and assigns.
"ELIGIBLE LENDER TRUSTEE FEE" shall mean the annual compensation to the
Eligible Lender Trustee for acting as eligible lender trustee hereunder and
under the Eligible Lender Trust Agreement. So long as the Indenture Trustee is
acting as Eligible Lender Trustee hereunder and under the Eligible Lender Trust
Agreement, there shall be no Eligible Lender Trustee Fee.
"ELIGIBLE LENDER TRUST AGREEMENT" shall mean the Eligible Lender Trust
Agreement, dated as of April 1, 2004, between the Issuer and the Eligible Lender
Trustee, as amended and supplemented pursuant to the terms and provisions
thereof.
"ELIGIBLE LOAN" shall mean any loan made to finance post-secondary
education that (a)(i) is made to an eligible borrower in compliance with the
requirements of the Higher Education Act (including Consolidation Loans and
Add-on Consolidation Loans), (ii) is guaranteed by a Guaranty Agency or Insured
by the Secretary, (iii) bears interest at not less than the maximum applicable
rate of interest permitted by the Higher Education Act at the time originated,
or any lesser rate of interest shown in the cash flow analyses provided to each
Rating Agency on the Closing Date; provided that such rate of interest may be
14
reduced if Rating Confirmation is obtained, based on new cash flow analyses
containing such assumptions as the Issuer shall reasonably determine, and (iv)
is eligible for Special Allowance Payments; or (b) is insured by the Secretary
of Health and Human Services pursuant to the Public Health Services Act;
provided, however, that if after any reauthorization or amendment of the Higher
Education 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 I hereto.
"ENDING BALANCE FACTOR" shall mean, for any given day, the number
calculated by dividing the unpaid principal balance of the appropriate Class of
the Outstanding LIBOR Rate Notes or Reset Rate Notes (after any Principal
Reduction Payments are made thereto) by the original principal balance of such
Class of the LIBOR Rate Notes or Reset Rate Notes, and rounding the result to
nine decimal places.
"ESCROW RESERVE AGREEMENT" shall mean the Escrow Reserve Agreement,
dated as of April 1, 2004, between the Issuer and Wells Fargo Bank, National
Association, as escrow agent, as amended and supplemented pursuant to the terms
and provisions thereof.
"EUROCLEAR" shall mean The Euroclear System or its successor in
interest.
"EVENT OF BANKRUPTCY" shall mean, with respect to any Person (a) such
Person 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 such Person 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) financed by the Issuer with balances
in the Acquisition Fund or otherwise deposited in or accounted for in the
Acquisition 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.
15
"FITCH" shall mean Fitch, Inc., also known as Fitch Ratings, 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
hereof.
"GENERAL INTEREST RATE CAP DERIVATIVE AGREEMENT" shall mean the ISDA
Master Agreement, Schedule and Confirmation, each dated April 21, 2004, between
the Issuer and Morgan Stanley Capital Services, Inc., as amended and
supplemented pursuant to the terms and provisions thereof, which General
Interest Rate Cap Derivative Agreement shall constitute a Derivative Agreement
hereunder.
"GLOBAL CERTIFICATE" shall mean any Series 2004-2 Note registered in the
name of a Securities Depository or its nominee. Each Rule 144A Certificate or
Regulation S Certificate shall constitute a "Global Certificate."
"GUARANTEE" or "GUARANTEED" shall mean, with respect to an Eligible
Loan, the insurance or guarantee by a 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 Higher
Education 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 a Guaranty Agency for
payments made by it on defaulted Eligible Loans insured or guaranteed by a
Guaranty Agency of at least the minimum reimbursement allowed by the Higher
Education Act with respect to a particular Eligible Loan.
"GUARANTEE AGREEMENTS" shall mean a guaranty or lender agreement between
the Indenture Trustee or the Eligible Lender Trustee and any Guaranty Agency,
and any amendments thereto.
"GUARANTY AGENCY" shall mean any entity authorized to guarantee student
loans under the Higher Education Act and with which the Indenture Trustee and
the Eligible Lender Trustee maintains a Guarantee Agreement.
"HIGHER EDUCATION 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.
"HIGHEST PRIORITY OBLIGATIONS" shall mean (a) at any time when Senior
Obligations are Outstanding, the Senior Obligations and (b) at any time when no
Senior Obligations are Outstanding, the Subordinate Obligations.
"INDENTURE" shall mean this Indenture of Trust, including all
supplements and amendments hereto.
"INDENTURE TRUSTEE" shall mean Wells Fargo Bank, National Association,
acting in its capacity as Indenture Trustee under this Indenture, or any
successor trustee designated pursuant to this Indenture.
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"INDENTURE TRUSTEE FEE" shall mean an amount equal to the annual amount
set in the Trustee Fee Letter dated April 23, 2004. Such fee shall be in
satisfaction of the Indenture Trustee's compensation as trustee hereunder and as
eligible lender trustee hereunder and under the Eligible Lender Trust Agreement.
"INITIAL PURCHASERS" shall mean with respect to the Class A-5a Notes,
collectively, J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated,
Barclays Capital Inc., Citigroup Global Markets Inc. and SG Cowen Securities
Corporation.
"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
Higher Education Act) under the Higher Education 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 Higher Education Act and an agreement with the
federal government, or any similar payments.
"INVESTMENT AGREEMENT" shall mean, collectively, (a) the Investment
Agreement, dated April 29, 2004, between the Indenture Trustee and Trinity Plus
Funding Company, LLC, (b) the Investment Agreement, dated April 29, 2004,
between the Indenture Trustee and FSA Capital Management Services LLC, and
acknowledged by the Issuer and (c) any other investment agreement approved by
the Rating Agencies, each as amended and supplemented pursuant to the terms and
provisions thereof.
"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 Distribution 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;
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(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, a 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 1992 ISDA Master Agreement
(Multicurrency - Cross Border), 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.
"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).
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"LIBOR DETERMINATION DATE" shall mean, for each Accrual Period, the
second Business Day before the beginning of that Accrual Period.
"LIBOR INTEREST RATE CAP DERIVATIVE AGREEMENT" shall mean the ISDA
Master Agreement, Schedule and Confirmation, each dated April 21, 2004, between
the Issuer and Morgan Stanley Capital Services, Inc., as amended and
supplemented pursuant to the terms and provisions thereof and relating
specifically to the LIBOR Rate Notes, which LIBOR Interest Rate Cap Derivative
Agreement shall constitute a Derivative Agreement hereunder.
"LIBOR RATE NOTES" shall mean, collectively, the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 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 Higher Education 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 Series 2004-2 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.
"MONTHLY SERVICING PAYMENT DATE" shall mean the twenty-fifth day of each
calendar month or, if such day is not a Business Day, the immediately following
Business Day, commencing on May 25, 2004.
"MONTHLY SERVICING PAYMENT DATE CERTIFICATE" shall mean a certificate
signed by the Issuer, or by the Administrator on behalf of the Issuer, in
substantially the form attached as Exhibit J hereto.
"MOODY'S" shall mean Moody's Investors Service, its successors and
assigns.
"90-DAY FINANCIAL COMMERCIAL PAPER RATE" shall mean the 90-Day AA
Financial Commercial Paper rate posted on the Federal Reserve Release entitled
"Commercial Paper Rates and Outstandings," which rate may be available on the
Internet at WWW.FEDERALRESERVE.GOV/RELEASES/CP.
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"NON-AMORTIZING RESET RATE NOTES" shall mean the Reset Rate Notes when
the Principal Reduction Payments on the Reset Rate Notes are to be paid only on
the Business Day succeeding its current Reset Period.
"NON-U.S. PERSON" shall mean a Person who is not a U.S. Person, as
defined in Regulation S.
"NOTE COUNSEL" shall mean Kutak Rock LLP or any other nationally
recognized law firm which is requested to deliver its approving opinion with
respect to the Series 2004-2 Notes.
"NOTE PAYMENT FUND" shall mean the Fund by that name created in Section
5.01(e) hereof and further described in Section 5.06 hereof, including any
Accounts and Subaccounts created therein.
"OBLIGATIONS" shall mean, collectively, the Senior Obligations and the
Subordinate Obligations.
"OUTSTANDING" shall mean (a) when used in connection with any Series
2004-2 Note, a Series 2004-2 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 Series 2004-2 Notes which have been replaced pursuant to
Section 2.03 hereof, and (b) when used in connection with a Derivative Product,
a Derivative Product which has not expired or been terminated, unless provision
has been made for such payment pursuant to Section 10.02 hereof.
"OUTSTANDING AMOUNT" shall mean the aggregate principal amount of all
Series 2004-2 Notes Outstanding at the date of determination or, if the context
so requires, the aggregate principal amount of one or more Classes of the Class
A Notes or Class B Notes Outstanding at the date of determination.
"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.
"POOL BALANCE" for any date means the aggregate principal balance of the
Student Loans held in the Trust Estate on that date, including accrued interest
that is expected to be capitalized, as reduced by the principal portion of:
(a) all payments received in the Trust Estate through that date
from the borrowers, the Guaranty Agencies and the Department of
Education,
(b) all amounts received in the Trust Estate through that date
from purchases of Student Loans,
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(c) all liquidation proceeds and realized losses on the Student
Loans through that date,
(d) the amount of any adjustment to balances of the student loans
that the Servicer makes under the Servicing Agreement through that date,
and
(e) the amount by which guarantor reimbursements of principal on
defaulted Student Loans through that date are reduced from 100% to 98%,
or other applicable percentage, as required by the risk sharing
provisions of the Higher Education Act.
"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 PAYMENTS" shall mean principal payments made prior
to a Stated Maturity from the Note Payment Fund on the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes or the Class A-5a
Notes (unless the Class A-5a Notes are reset to bear interest at an Auction
Rate) which reduce the principal balances of all notes within such Class, as
appropriate, on a pro rata basis.
"PRIORITY TERMINATION PAYMENT" shall mean, with respect to a Derivative
Product, any termination payment payable by or on behalf of 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) the
failure of the Issuer to make an Issuer Derivative Payment when due (after any
applicable grace periods), but only if the Issuer had sufficient moneys on
deposit in the Collection Fund (after giving effect to any required transfers
thereto) as of the due date of such Issuer Derivative Payment, (ii) the
occurrence of an Event of Default specified in Section 6.01(f) hereof, (iii) the
Indenture Trustee's taking any action hereunder to liquidate the entire Trust
Estate following an Event of Default and acceleration of the Series 2004-2 Notes
pursuant to Section 6.09 hereof or (iv) any other termination payments permitted
by the Rating Agencies with a Rating Confirmation.
"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 the
Auction Agent and any Broker-Dealer; (c) the fees and expenses of any
Remarketing Agent; (d) the fees and expenses due to any credit provider of the
Series 2004-2 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 Series 2004-2 Notes
and the Financed Eligible Loans; (g) transfer fees, 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
credit facility or liquidity facility; (i) fees and expenses associated with
(but not payments under) Derivative Products; (j) the costs of remarketing any
of the Series 2004-2 Notes and (k) expenses incurred for the Issuer's
maintenance and operation of its Program as a direct consequence of this
21
Indenture, the Series 2004-2 Notes or the Financed Eligible Loans; 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 of Directors.
"PRO RATA PORTION" shall mean a percentage determined by dividing the
Outstanding Amount of the Reset Rate Notes or Auction Rate Notes proposed to be
redeemed or paid (less, with respect to the Reset Rate Notes, an allocable
portion of the amounts in the Redemption Account of the Note Payment Fund
corresponding to the Reset Rate Notes that were deposited therein prior to the
preceding Quarterly Payment Date) by the Outstanding Amount of all of the Series
2004-2 Notes (less any amounts in the Redemption Account of the Note Payment
Fund corresponding to the Reset Rate Notes that were deposited therein prior to
the preceding Quarterly Payment Date).
"PRO RATA MINIMUM PURCHASE AMOUNT" shall have the meaning ascribed to
such term in Section 2.05(c) of Appendix A hereto with respect to the Reset Rate
Notes and Section 2.04 of Appendix B with respect to the Auction Rate Notes.
"PURCHASE OPTION" shall mean the options described in Section 2.07(a)
and (b) of Appendix A hereto and Section 2.04 of Appendix B hereto owned by
Nelnet, Inc. or one of its subsidiaries as a permitted transferee (provided,
that no such subsidiary shall possess the Purchase Option if it at any time
owned an interest in any of the Financed Eligible Loans) to purchase Financed
Eligible Loans.
"QUALIFIED INSTITUTIONAL BUYER" shall mean a "qualified institutional
buyer" within the meaning of Rule 144A.
"QUARTERLY DISTRIBUTION DATE" shall mean the twenty-fifth (25th) day of
each February, May, August and November, commencing on August 25, 2004, or, if
such day is not a Business Day, the immediately following Business Day.
"QUARTERLY FUNDING AMOUNT" shall mean, for the Reset Rate Notes for any
Quarterly Distribution Date (a)(i) the Reset Period Target Amount for that
Quarterly Distribution Date, minus (ii) the amount on deposit in the Remarketing
Fee Fund immediately prior to that Quarterly Distribution Date; divided by (b)
the number of Quarterly Distribution Dates from and excluding that Quarterly
Distribution Date through and including the next Reset Date for the Reset Rate
Notes.
"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 Series 2004-2 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 Series 2004-2 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.
22
"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 Series 2004-2 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 Series 2004-2 Notes, or cause any Rating Agency to suspend or withdraw the
Ratings then applicable to the Series 2004-2 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 (a) with respect to the LIBOR Rate Notes and
the Reset Rate Notes, the close of business on the Business Day preceding each
Quarterly Distribution Date and (b) with respect to the Auction Rate Notes, the
Business Day next preceding the applicable Auction Rate Distribution Date.
"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.
"REDEMPTION ACCOUNTS" shall mean one or more of the Class A-1 Redemption
Account, the Class A-2 Redemption Account, the Class A-3 Redemption Account, the
Class A-4 Redemption Account, the Class A-5a Redemption Account, the Class A-5b
Redemption Account, the Class A-5c Redemption Account and the Class B Redemption
Account, as the context requires.
"REGISTERED OWNER" shall mean the Person in whose name a Series 2004-2
Note is registered on the Series 2004-2 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. All references herein
to "Registered Owner" shall reflect the rights of beneficial owners of the
Series 2004-2 Notes as they may indirectly exercise such rights through a
Securities Depository and its Agent Members, except as otherwise specified
herein; provided, however, that the parties hereto shall be required to
recognize as a "Registered Owner" only the Person in whose name a Series 2004-2
Note is registered in the registration books of the Indenture Trustee.
"REGULATION S" shall mean Regulation S under the Securities Act.
23
"REGULATION S CERTIFICATE" shall have the meaning ascribed to such term
in Section 2.01(b) hereof.
REGULATIONS" shall mean the Regulations promulgated from time to time by
the Secretary or any Guaranty Agency guaranteeing Financed Eligible Loans.
"REMARKETING FEE FUND" shall mean the Fund by that name created in
Section 5.01(f) hereof and further described in Section 5.07 hereof, including
any Accounts and Subaccounts created therein.
"RESERVE FUND" shall mean the Fund by that name created in Section
5.01(g) hereof and further described in Section 5.08 hereof, including any
Accounts and Subaccounts created therein.
"RESERVE FUND REQUIREMENT" shall mean 0.25% of the Pool Balance
determined as of the close of business on the last day of the preceding calendar
month; provided, however, that so long as any Series 2004-2 Notes remain
Outstanding there shall be at least 0.15% of the Pool Balance on the Closing
Date ($2,500,017) on deposit in the Reserve Fund or such lower amount as may be
agreed to by the Rating Agencies as evidenced by a Rating Confirmation.
"RESERVE FUND SURETY BOND" shall mean 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.
"RESET PERIOD TARGET AMOUNT" shall mean (a) for any Quarterly
Distribution Date through and including the Initial Reset Date for the Class
A-5a Notes, $380,000.00; and (b) for any Quarterly Distribution Date thereafter,
the highest remarketing fee payable to the Remarketing Agents for the Class A-5a
Notes (not to exceed 0.10% per annum of the maximum Outstanding Amount of such
Class of the Reset Rate Notes that could be remarketed) on the next Reset Date,
as determined by the Issuer, or by the Administrator on behalf of the Issuer,
based on the assumed weighted average life of the Class A-5a Notes and the
maximum remarketing fee set forth in a schedule to the Remarketing Agreement, as
such schedule may be amended from time to time.
"RESET RATE NOTES" shall mean the Class A-5a Notes (unless the Class
A-5a Notes have been reset to bear interest at an Auction Rate pursuant to
Section 2.01(f) of Appendix A hereto).
"RESET RATE NOTES CARRY-OVER AMOUNT" shall have the meaning ascribed to
such term in Appendix A hereto.
"RESOLUTION" shall mean a resolution duly adopted by the Board of
Directors.
"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 and interest, including Interest Benefit Payments on any Financed
Eligible Loan and any Special Allowance Payment received by the Issuer with
24
respect to any Financed Eligible Loan) and all interest earned or gain realized
from the investment of amounts in any Fund, Account or Subaccount and all
Counterparty Payments received by the Issuer pursuant to a Derivative Product.
"RULE 144A" shall mean Rule 144A promulgated under the Securities Act.
"RULE 144A CERTIFICATE" shall have the meaning ascribed to such term in
Section 2.01(b) hereof.
"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 Higher
Education Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES DEPOSITORY" shall mean DTC, or if, (a) DTC resigns from its
functions as depository of the Series 2004-2 Notes or (b) the Issuer
discontinues use of DTC, any other securities depository which agrees to follow
the procedures required to be followed by a securities depository in connection
with the Series 2004-2 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 OBLIGATIONS" shall mean the Class A Notes and any Derivative
Product, the priority of payment of which is equal with that of interest on the
Class A Notes.
"SERIES 2004-2 NOTES" shall mean, collectively, the Class A Notes and
the Class B Notes.
"SERVICER" shall mean, collectively, Nelnet, Inc., Sallie Mae Servicing,
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.
"SERVICER'S REPORT" shall mean the servicer reports to be furnished to
the Issuer by a Servicer pursuant to its Servicing Agreement.
"SERVICING AGREEMENT" shall mean, collectively, (a) the Servicing
Agreement, dated as of April 1, 2004, between the Issuer and Nelnet, Inc., as
supplemented and amended pursuant to its terms, and (b) any other servicing
agreement or subservicing agreement entered into with a Servicer or a
subservicer.
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"SERVICING FEE" shall mean the fees and expenses due to a Servicer under
the terms of its Servicing Agreement and the fees and expenses due to any
custodian under the terms of a Custodian Agreement.
"SPECIAL ALLOWANCE PAYMENTS" shall mean the special allowance payments
authorized to be made by the Secretary by Section 438 of the Higher Education
Act, or similar allowances, if any, authorized from time to time by federal law
or regulation.
"STATE" shall mean the State of Nebraska.
"STATED MATURITY" shall mean the date specified in the Series 2004-2
Notes as the fixed date on which principal of such Series 2004-2 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 as Exhibit L hereto.
"SUBACCOUNT" shall mean any of the subaccounts which may be created and
established within any Account pursuant to this Indenture.
"SUBORDINATE INTEREST TRIGGER" shall mean, with respect to any
Distribution Date, (a) the Total Parity Ratio is less than 97% or such other
percentage that satisfies the Rating Agency Condition, determined after giving
effect to the distribution of any amounts in the Collection Fund on such
Distribution Date and (b) any Class A Notes are Outstanding.
"SUBORDINATE OBLIGATIONS" shall mean the Class B Notes and any
Derivative Product, the priority of payment of which is equal with that of
interest on the Class B Notes.
"SUPPLEMENTAL INDENTURE" shall mean an agreement supplemental hereto
executed pursuant to Article VIII hereof.
"SUPPLEMENTAL INTEREST DEPOSIT AMOUNT" shall mean, for any Quarterly
Distribution Date and the Supplemental Interest Fund, the amount that satisfies
the Rating Agency Condition obtained in connection with the remarketing of
Non-amortizing Reset Rate Notes. For any Quarterly Distribution Date on which
the balance in the Class A-5a Redemption Account is zero (after taking into
account all deposits and withdrawals to be made on such Quarterly Distribution
Date), the corresponding Supplemental Interest Deposit Amount will be zero.
"SUPPLEMENTAL INTEREST FUND" shall mean the Fund by that name created in
Section 5.01(h) hereof and further described in Section 5.10 hereof, including
any Accounts and Subaccounts created therein.
"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 after the occurrence
of a termination event or event of default specified in such Derivative Product,
including any Priority Termination Payment.
26
"TOTAL PARITY RATIO" shall mean, with respect to any date or
calculation, the percentage equivalent of a fraction of (a) aggregate Value of
the Trust Estate, less (i) amounts on deposit in the Redemption Accounts for the
Class A Notes and, if the Class A Notes are no longer Outstanding, amounts on
deposit in the Class B Redemption Account, (ii) amounts that were received under
the General Interest Rate Cap Agreement and the LIBOR Interest Rate Cap
Derivative Agreement, (iii) amounts on deposit in the Remarketing Fee Fund and
(iv) amounts on deposit in the Capitalized Interest Fund over (b) the
Outstanding Amount of the Class A Notes plus the original Outstanding Amount of
the Class B Notes (unless the Class A Notes are no longer Outstanding, in which
case the current Outstanding Amount of the Class B Notes shall be used), less
amounts on deposit in the Redemption Accounts for the Class A Notes and, if the
Class A Notes are no longer Outstanding, amounts on deposit in the Class B
Redemption Accounts. The Total Parity Ratio will be calculated on each
Distribution Date after giving affect to the deposits and distributions
described in Section 5.05(c) hereof
"TRUST ESTATE" shall mean the property described as such in the granting
clauses hereto.
"TRUST INDENTURE ACT" 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.
"UNDERWRITERS" shall mean with respect to the Series 2004-2 Notes, other
than the Class A-5a Notes, collectively, J.P. Morgan Securities Inc., Morgan
Stanley & Co. Incorporated, Barclays Capital Inc., Citigroup Global Markets Inc.
and SG Cowen Securities Corporation.
"U.S. PERSON" shall have the meaning assigned to such term in Regulation
S.
"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
clause (a) and by the Indenture Trustee with respect to clauses (b) and (c) as
follows:
(a) with respect to any Eligible Loan owned by the Issuer as of
the calculation date, the unpaid principal amount thereof plus any
accrued but unpaid interest, 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. Any other terms used in this
Indenture that are defined in the Trust Indenture Act, defined in the Trust
Indenture Act by a reference to another statute or defined by Commission rule
have the meanings assigned to tem by such definitions.
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ARTICLE II
THE SERIES 2004-2 NOTES
SECTION 2.01. SERIES 2004-2 NOTE DETAILS.
(a) The aggregate principal amount of the Series 2004-2 Notes
which may be initially authenticated and delivered pursuant to this
Indenture is limited to $1,017,700,000 except for Series 2004-2 Notes
authenticated and delivered upon transfer of, or in exchange for, or in
lieu of Series 2004-2 Notes pursuant to Sections 2.03 and 2.04 hereof.
The Series 2004-2 Notes shall be issued in nine (9) separate classes
(each a "Class") consisting of the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class A-5a Notes, the
Class A-5b Notes, the Class A-5c Notes, the Class B-1 Notes and the
Class B-2 Notes. The Series 2004-2 Notes shall be issuable only as fully
registered notes in Authorized Denominations. The Series 2004-2 Notes of
each Class shall each be lettered "R" and shall be numbered separately
from 1 upwards, respectively. The Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class A-5a Notes, the
Class A-5b Notes and the Class A-5c Notes (collectively, the "Class A
Notes") constitute Senior Obligations hereunder and the Class B-1 Notes
and the Class B-2 Notes (collectively, the "Class B Notes") constitute
Subordinate Obligations hereunder.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes (collectively, the "LIBOR Rate Notes") shall be
dated as of the Closing Date and shall bear interest from the Closing
Date, payable on each Quarterly Distribution Date, except that LIBOR
Rate Notes which are issued upon transfer, exchange or other replacement
shall bear interest from the most recent Quarterly Distribution Date to
which interest has been paid, or if no interest has been paid, from the
Closing Date. The Class A-1 Notes shall mature on the Quarterly
Distribution Date in November of 2009. The Class A-2 Notes shall mature
on the Quarterly Distribution Date in November of 2013. Class A-3 Notes
shall mature on the Quarterly Distribution Date in November of 2015. The
Class A-4 Notes shall mature on the Quarterly Distribution Date in
August of 2019. For each Accrual Period, the Class A-1 Notes shall bear
interest at the Class A-1 Notes Interest Rate, the Class A-2 Notes shall
bear interest at the Class A-2 Notes Interest Rate, the Class A-3 Notes
shall bear interest at the Class A-3 Notes Interest Rate and the Class
A-4 Notes shall bear interest at the Class A-4 Notes Interest Rate. The
determination by the Issuer, or by the Administrator on behalf of the
Issuer, of the Class A-1 Notes Interest Rate, the Class A-2 Notes
Interest Rate, the Class A-3 Notes Interest Rate, the Class A-4 Notes
Interest Rate shall (in the absence of manifest error) be final and
binding upon all parties.
The Class A-5a Notes shall be dated as of the Closing Date and
shall bear interest from the Closing Date, payable on each Quarterly
Distribution Date (unless the Class A-5a Notes have been reset to bear
interest at an Auction Rate pursuant to Section 2.01(f) of Appendix A
hereto, in which case the Class A-5a Notes shall be payable on each
Auction Rate Distribution Date for the Class A-5a Notes), except that
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Class A-5a Notes which are issued upon transfer, exchange or other
replacement shall bear interest from the most recent Quarterly
Distribution Date (or, if the Class A-5a Notes have been reset to bear
interest at an Auction Rate pursuant to Section 2.01(f) of Appendix A
hereto, the most recent corresponding Auction Rate Distribution Date) to
which interest has been paid, or if no interest has been paid, from the
Closing Date. The Class A-5a Notes shall mature on the Quarterly
Distribution Date in February of 2039. The terms of and definitions
related to the Reset Rate Notes are found in Article I hereof and
Appendix A hereto, and the terms of and definitions related to the
Auction Rate Notes are found in Article I hereof and Appendix B hereto.
The Class A-5b Notes and the Class A-5c Notes shall be dated as
of the Closing Date and shall bear interest from the Closing Date,
payable on each corresponding Auction Rate Distribution Date, except
that Class A-5b Notes and Class A-5c Notes which are issued upon
transfer, exchange or other replacement shall bear interest from the
most recent corresponding Auction Rate Distribution Date to which
interest has been paid, or if no interest has been paid, from the
Closing Date. The Class A-5b Notes and the Class A-5c Notes shall mature
on February 25, 2039. The terms of and definitions related to the
Auction Rate Notes are found in Article I hereof and Appendix B hereto.
The Class B Notes shall be dated as of the Closing Date and shall
bear interest from the Closing Date, payable on each corresponding
Auction Rate Distribution Date, except that Class B Notes which are
issued upon transfer, exchange or other replacement shall bear interest
from the most recent corresponding Auction Rate Distribution Date to
which interest has been paid, or if no interest has been paid, from the
Closing Date. The Class B Notes shall mature on February 25, 2039.
Interest on the Auction Rate Notes shall be computed based on the actual
number of days in each Accrual Period divided by 360. The terms of and
definitions related to the Auction Rate Notes are found in Article I
hereof and Appendix B hereto.
The principal of each Class of the Series 2004-2 Notes due at its
Stated Maturity or redemption in whole shall be payable at the Principal
Office of the Indenture Trustee, or such other location as directed by
the Indenture Trustee, or at the Principal Office of its successor in
trust upon presentation and surrender of such Class of Series 2004-2
Notes. Payment of interest and principal, including Principal Reduction
Payments, paid upon a partial redemption or reduction of any Series
2004-2 Note shall be made to the Registered Owner thereof by check or
draft mailed on the applicable Distribution Date by the Indenture
Trustee to the Registered Owner at his address as it last appears on the
registration books kept by the Indenture Trustee at the close of
business on the Record Date for such Distribution Date. Payment of
interest and principal to a Securities Depository or its nominee shall,
and at the written request addressed to the Indenture Trustee of any
other Registered Owner owning at least $1,000,000 principal amount of
the Series 2004-2 Notes, payments of interest shall, be paid by wire
transfer within the United States to the bank account number filed no
later than the Record Date with the Indenture Trustee for such purpose.
All payments on the Series 2004-2 Notes shall be made in lawful money of
the United States of America.
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(b) Except as otherwise provided in this Section, the LIBOR Rate
Notes and the Auction Rate Notes (other than the Class A-5a Notes if the
Class A-5a Notes are converted to bear interest at an Auction Rate
pursuant to Section 2.01(f) of Appendix A hereto) in the form of one
global note for each Stated Maturity of each Class shall be registered
in the name of the Securities Depository or its nominee and ownership
thereof shall be maintained in book-entry form by the Securities
Depository for the account of the Agent Members. Initially, each LIBOR
Rate Note and each Auction Rate Note shall be registered in the name of
CEDE & Co., as the nominee of DTC. The Class A-5a Notes may be offered
and sold only to Qualified Institutional Buyers in reliance on Rule 144A
or to a Non-U.S. Person outside the United States of America in reliance
on Regulation S, as applicable. Except as otherwise provided in this
Section, the Class A-5a Notes sold to Qualified Institutional Buyers in
reliance on Rule 144A will be represented by interests in a Rule 144A
global registered note certificate (a "Rule 144A Certificate") and the
Class A-5a Notes sold to Non-U.S. Person outside the United States of
America in reliance on Regulation S will be represented by a Regulation
S global registered note certificate (a "Regulation S Certificate") for
each Stated Maturity. The Rule 144A Certificate will be deposited on the
Closing Date with the Indenture Trustee, as custodian for DTC (the "DTC
Custodian") and registered in the name of CEDE & Co. as initial nominee
for DTC. The aggregate principal amount of the Rule 144A Certificate may
from time to time be increased or decreased by adjustments made on the
records of the Indenture Trustee or DTC or its nominee, as the case may
be, as hereinafter provided. The Regulation S Certificate will be
deposited on the Closing Date with the DTC Custodian and registered in
the name of CEDE & Co. as initial nominee for DTC for the accounts of
Morgan Guaranty Trust Company of New York, Brussels, as operator of
Euroclear, and Clearstream. The aggregate principal amount of the
Regulation S Certificate may from time to time be increased or decreased
by adjustments made on the records of the Indenture Trustee or DTC or
its nominee, as the case may be, as hereinafter provided. At all times,
there will be only one Rule 144A Certificate and one Regulation S
Certificate for the Class A-5a Notes. At all times, the entire
Outstanding Amount of the Class A-5a Notes will be allocated between the
corresponding Rule 144A Certificate and Regulation S Certificate.
Ownership of the Class A-5a Notes shall be maintained in book-entry form
by the Securities Depository for the account of the Agent Members.
Except as provided in subsection (d) of this Section, the Series 2004-2
Notes may be transferred, in whole but not in part, only to the
Securities Depository or a nominee of such Securities Depository or to a
successor Securities Depository selected or approved by the Issuer or to
a nominee of such successor Securities Depository. Each global note
shall bear a legend substantially to the following effect: "Except as
otherwise provided in the Indenture, this global note may be
transferred, in whole but not in part, only to another nominee of the
Securities Depository or to a successor Securities Depository or to a
nominee of a successor Securities Depository."
(c) Except as otherwise provided herein, the Issuer and the
Indenture Trustee shall have no responsibility or obligation with
respect to (i) the accuracy of the records of any Securities Depository
or any Agent Member with respect to any beneficial ownership interest in
the Series 2004-2 Notes, (ii) the delivery to any Agent Member,
beneficial owner of the Series 2004-2 Notes or other Person, other than
the Securities Depository, of any notice with respect to the Series
30
2004-2 Notes or (iii) the payment to any Agent Member, beneficial owner
of the Series 2004-2 Notes or other Person, other than the Securities
Depository, of any amount with respect to the principal of or interest
on the Series 2004-2 Notes. So long as the certificates for the Series
2004-2 Notes issued under this Indenture are not issued pursuant to
subsection (d) of this Section, the Issuer and the Indenture Trustee may
treat the Securities Depository as, and deem the Securities Depository
to be, the absolute owner of the Series 2004-2 Notes for all purposes
whatsoever, including, without limitation, (A) the payment of principal
of and interest on such Series 2004-2 Notes, (B) giving notices of
redemption and other matters with respect to such Series 2004-2 Notes
and (C) registering transfers with respect to such Series 2004-2 Notes.
In connection with any notice or other communication to be provided to
the Registered Owners pursuant to this Indenture by the Issuer or the
Indenture Trustee with respect to any consent or other action to be
taken by the Registered Owners, the Issuer or the Indenture Trustee, as
the case may be, shall establish a record date for such consent or other
action and, if the Securities Depository shall hold all of the Series
2004-2 Notes, give the Securities Depository notice of such record date
not less than 15 calendar days in advance of such record date to the
extent possible. Such notice to the Securities Depository shall be given
only when the Securities Depository is the sole Registered Owner.
(d) If at any time the Securities Depository notifies the Issuer
and the Indenture Trustee that it is unwilling or unable to continue as
Securities Depository with respect to any or all of the Series 2004-2
Notes or if at any time the Securities Depository shall no longer be
registered or in good standing under the Securities Exchange Act or
other applicable statute or regulation and a successor Securities
Depository is not appointed by the Issuer within 90 days after the
Issuer receives notice or becomes aware of such condition, as the case
may be, subsections (b) and (c) of this Section shall no longer be
applicable and the Issuer shall execute and the Indenture Trustee shall
authenticate and deliver certificates representing the Series 2004-2
Notes as provided below. In addition, the Issuer may determine at any
time that the Series 2004-2 Notes shall no longer be represented by
Global Certificates and that the provisions of subsections (b) and (c)
of this Section shall no longer apply to the Series 2004-2 Notes. In
such event, the Issuer shall execute and the Indenture Trustee shall
authenticate and deliver certificates representing the Series 2004-2
Notes as provided below. Certificates for the Series 2004-2 Notes issued
in exchange for a Global Certificate pursuant to this subsection (d)
shall be registered in such names and Authorized Denominations as the
Securities Depository, pursuant to instructions from the Agent Members
or otherwise, shall instruct in writing to the Issuer and the Indenture
Trustee, and upon which written instructions the Indenture Trustee may
rely without investigation. The Indenture Trustee shall promptly deliver
such certificates representing the Series 2004-2 Notes to the Persons in
whose names such Series 2004-2 Notes are so registered.
(e) Any Class A-5a Notes issued to Qualified Institutional
Buyers who are U.S. Persons and are not affiliates of the Issuer
pursuant to Rule 144A will be issued as Rule 144A Certificates. Any
Class A-5a Notes issued to Non-U.S. Persons pursuant to Regulation S
will be issued as Regulation S Certificates.
SECTION 2.02. EXECUTION OF SERIES 2004-2 NOTES. The Series 2004-2 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 Series 2004-2 Note
may be signed manually or by facsimile or attested on behalf of the Issuer by
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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. The Indenture Trustee shall upon
Issuer Order authenticate and deliver the Series 2004-2 Notes for original issue
in an aggregate principal amount of $1,017,700,000. The aggregate principal
amount of the Series 2004-2 Notes Outstanding at any time may not exceed such
amount. Each Series 2004-2 Note shall be dated the date of its authentication.
On each Spread Determination Date, upon receipt of an Issuer Order, the
Indenture Trustee shall deliver a revised Annex 1 for the Class A-5a Notes to
the DTC Custodian.
SECTION 2.03. REGISTRATION, TRANSFER AND EXCHANGE OF SERIES 2004-2
NOTES; PERSONS TREATED AS REGISTERED OWNERS.
(a) The Issuer shall cause books for the registration and for
the transfer of the Series 2004-2 Notes as provided in this Indenture to
be kept by the Indenture Trustee which is hereby appointed the registrar
and transfer agent of the Issuer for the Series 2004-2 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
registrar and transfer agent for the Series 2004-2 Notes. Upon surrender
for transfer of any Series 2004-2 Note at the Principal 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 Series 2004-2 Note or Series 2004-2
Notes of the same interest rate and for a like Class and aggregate
principal amount of the same Stated Maturity. The transfer of each Class
A-5a Note shall be subject to the restrictions set forth in Appendix C
hereto.
Series 2004-2 Notes may be exchanged at the Principal Office of
the Indenture Trustee for a like aggregate principal amount of fully
registered Series 2004-2 Notes of the same Class, interest rate and
Stated Maturity in Authorized Denominations. The Issuer shall execute
and the Indenture Trustee shall authenticate and deliver Series 2004-2
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 Series 2004-2 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 Series
2004-2 Note.
The Indenture Trustee shall not be required to transfer or
exchange any Series 2004-2 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 Series 2004-2 Note,
which Series 2004-2 Note or portion thereof has been called for
redemption.
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As to any Series 2004-2 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 Series 2004-2 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 Series 2004-2 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.
For so long as the Class A-5a Notes are "restricted securities"
within the meaning of Rule 144(a)(3) of the Securities Act, (i) the
Issuer will provide or cause to be provided to any holder of such Class
A-5a Notes and any prospective purchaser thereof designated by such a
holder, upon the request of such holder or prospective purchaser, the
information required to be provided to such holder or prospective
purchaser by Rule 144A(d)(4) under the Securities Act; and (ii) the
Issuer shall update such information from time to time in order to
prevent such information from becoming false and misleading and will
take such other actions as are necessary to ensure that the safe harbor
exemption from the registration requirements of the Securities Act under
Rule 144A is and will be available for resales of such Class A-5a Notes
conducted in accordance with Rule 144A.
(b) Notwithstanding any provision to the contrary herein, so
long as a Global Certificate is held by or on behalf of DTC, transfers
of a Global Certificate, in whole or in part, shall only be made in
accordance with Section 2.01(b) and this subsection (b).
(i) GLOBAL CERTIFICATES. Subject to clauses (ii), (iii)
and (iv) of this subsection (b), transfers of a Global
Certificate shall be limited to transfers of such Global Note in
whole, but not in part, to nominees of DTC or to a successor of
DTC or such successor's nominee.
(ii) RULE 144A CERTIFICATE TO REGULATION S CERTIFICATE.
If a holder of a beneficial interest in a Rule 144A Certificate
wishes at any time to exchange its interest in such Rule 144A
Certificate for an interest in the corresponding Regulation S
Certificate, or to transfer its interest in such Rule 144A
Certificate to a Person who wishes to take delivery thereof in
the form of an interest in the corresponding Regulation S
Certificate, such holder may, subject to the immediately
succeeding sentence and the rules and procedures of Euroclear,
Clearstream or DTC, as the case may be, exchange or transfer or
cause the exchange or transfer of such interest for an
equivalent beneficial interest in the Regulation S Certificate.
Upon receipt by the Indenture Trustee, as registrar, of:
33
(A) instructions given in accordance with
Euroclear, Clearstream or DTC's procedures, as the case
may be, from an Agent Member to instruct DTC to cause to
be credited a beneficial interest in the Regulation S
Certificate in an amount equal to the beneficial
interest in the Rule 144A Certificate to be exchanged or
transferred; and
(B) a written order given in accordance with
DTC's procedures containing information regarding the
participant account of DTC and the Euroclear and
Clearstream account to be credited with such increase,
then the Indenture Trustee, as registrar, will instruct DTC to
(1) reduce the principal amount of the Rule 144A Certificate and
increase the principal amount of the Regulation S Certificate by
the aggregate principal amount of the beneficial interest in the
Rule 144A Certificate to be exchanged or transferred, and (2)
credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the
Regulation S Certificate equal to the reduction in the principal
amount of the Rule 144A Certificate.
(iii) REGULATION S CERTIFICATE TO RULE 144A CERTIFICATE.
If a holder of a beneficial interest in a Regulation S
Certificate wishes at any time to exchange its interest in such
Regulation S Certificate for an interest in a Rule 144A
Certificate or to transfer its interest in such Regulation S
Certificate to a Person who wishes to take delivery thereof in
the form of an interest in the corresponding Rule 144A
Certificate, such holder may, subject to the immediately
succeeding sentence and the rules and procedures of Euroclear
and Clearstream or DTC, as the case may be, exchange or transfer
or cause the exchange or transfer of such interest for an
equivalent beneficial interest in the Rule 144A Certificate.
Upon receipt by the Indenture Trustee, as registrar, of:
(A) instructions given in accordance with DTC's
procedure from an Agent Member to instruct Euroclear or
Clearstream to cause to be credited a beneficial
interest in the Rule 144A Certificate equal to the
beneficial interest in the Regulation S Certificate to
be exchanged or transferred, and
(B) a written order given in accordance with
DTC's procedures containing information regarding the
participant account with DTC to be credited with such
increase,
then Euroclear or Clearstream or the Indenture Trustee, as
registrar, as the case may be, will instruct DTC to (i) reduce
the Regulation S Certificate and increase the principal amount of
the Rule 144A Certificate by the aggregate principal amount of
the beneficial interest in the Regulation S Certificate to be
transferred or exchanged, and (ii) credit or cause to be credited
to the account of the Person specified in such instructions a
beneficial interest in the Rule 144A Certificate equal to the
reduction in the principal amount of the Regulation S
Certificate.
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(iv) CERTIFICATED SECURITIES. In the event that a Global
Certificate is exchanged for the Class A-5a Notes in definitive
registered form without interest coupons, pursuant to Section
2.01(d) hereof such Class A-5a Notes may be exchanged for one
another only in accordance with such procedures and restrictions
as are substantially consistent as determined by the Issuer and
the Indenture Trustee to insure that such transfers comply with
Rule 144A, or are to Non-U.S. Persons and non-U.S. residents (as
determined for purposes of the Investment Company Act), or
otherwise comply with Regulation S, as the case may be.
(v) TRANSFER OF INTERESTS IN THE GLOBAL CERTIFICATE.
Notwithstanding anything herein to the contrary, transfers of
interests in a Global Certificate may be made (A) by book-entry
transfer of beneficial interests within the relevant Securities
Depository or (B)(1) in the case of transfers of interests in a
Rule 144A Certificate, in accordance with subsection (b)(ii) of
this Section or (2) in the case of transfers of interest in a
Regulation S Certificate, in accordance with subsection
(b)(iii); provided that in the case of any such transfer of
interests pursuant to clause (A) or (B) above, such transfer is
made in accordance with subsection (vi) below.
(vi) RESTRICTIONS ON TRANSFERS.
(A) Transfers of interests in a Regulation S
Certificate to a U.S. Person or a U.S. resident (as
determined for purposes of the Investment Company Act)
shall be made by delivery of an interest in a Rule 144A
Certificate and shall be limited to transfers made
pursuant to the provisions of subsection (b)(iii) of
this Section. Beneficial interests in a Regulation S
Certificate may only be held through Euroclear and
Clearstream.
(B) Any transfer of an interest in a Rule 144A
Certificate to a U.S. Person or a U.S. resident (as
determined for purposes of the Investment Company Act)
that is not a Qualified Institutional Buyer shall be
null and void and shall not be given effect for any
purpose hereunder, and the Indenture Trustee shall hold
any funds conveyed by the intended transferee of such
interest in such Rule 144A Certificate in trust for the
transferor and shall promptly reconvey such funds to
such Person in accordance with the written instructions
thereof delivered to the Indenture Trustee at its
address listed in Section 9.01 hereof
SECTION 2.04. LOST, STOLEN, DESTROYED AND MUTILATED SERIES 2004-2 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 Series 2004-2
Note and, in the case of a lost, stolen or destroyed Series 2004-2 Note, of
indemnity satisfactory to it, and upon surrender and cancellation of the Series
2004-2 Note, if mutilated, (a) the Issuer shall execute, and the Indenture
Trustee shall authenticate and deliver, a new Series 2004-2 Note of the same
Class, interest rate, Stated Maturity and Authorized Denomination in lieu of
35
such lost, stolen, destroyed or mutilated Series 2004-2 Note or (b) if such
lost, stolen, destroyed or mutilated Series 2004-2 Note shall have matured or
have been called for redemption, in lieu of executing and delivering a new
Series 2004-2 Note as aforesaid, the Issuer may pay such Series 2004-2 Note. Any
such new Series 2004-2 Note shall bear a number not contemporaneously
outstanding. The Registered Owner for any such new Series 2004-2 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 Series 2004-2 Note. All Series 2004-2 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 Series 2004-2 Notes, negotiable instruments
or other securities.
SECTION 2.05. FORMS OF SERIES 2004-2 NOTES. The LIBOR Rate Notes shall
be in substantially the form set forth in Exhibit A hereto, each with such
variations, omissions and insertions as may be necessary. The Reset Rate Notes
shall be in substantially the form set forth in Exhibit B hereto, each with such
variations, omissions and insertions as may be necessary. The Auction Rate Notes
shall be in substantially the form set forth in Exhibit C hereto, with such
variations, omissions and insertions as may be necessary.
SECTION 2.06. INDENTURE TRUSTEE'S AUTHENTICATION CERTIFICATE. The
Indenture Trustee's authentication certificate upon the Series 2004-2 Notes
shall be substantially in the forms provided in Exhibits A, B and C hereto,
respectively. No Series 2004-2 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 Series 2004-2 Note shall be conclusive evidence and the only competent
evidence that such Series 2004-2 Note has been authenticated and delivered
hereunder. The Indenture Trustee's certificate of authentication shall be deemed
to have been duly executed by it if manually signed by an authorized officer of
the Indenture Trustee, but it shall not be necessary that the same person sign
the certificate of authentication on all of the Series 2004-2 Notes issued
hereunder.
SECTION 2.07. CANCELLATION AND DESTRUCTION OF SERIES 2004-2 NOTES BY THE
INDENTURE TRUSTEE. Whenever any Outstanding Series 2004-2 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 Series 2004-2
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 2.08. TEMPORARY SERIES 2004-2 NOTES. Pending the preparation of
definitive Series 2004-2 Notes, the Issuer may execute and the Indenture Trustee
shall authenticate and deliver temporary Series 2004-2 Notes. Temporary Series
2004-2 Notes shall be issuable as fully registered notes without coupons, of any
denomination, and substantially in the form of the definitive Series 2004-2
Notes but with such omissions, insertions and variations as may be appropriate
for temporary Series 2004-2 Notes, all as may be determined by the Issuer. Every
temporary Series 2004-2 Note shall be executed by the Issuer and be
authenticated by the Indenture Trustee upon the same conditions and in
36
substantially the same manner, and with like effect, as the definitive Series
2004-2 Notes. As promptly as practicable the Issuer shall execute and shall
furnish definitive Series 2004-2 Notes and thereupon temporary Series 2004-2
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 Series 2004-2 Notes a
like aggregate principal amount of definitive Series 2004-2 Notes. Until so
exchanged the temporary Series 2004-2 Notes shall be entitled to the same
benefits under this Indenture as definitive Series 2004-2 Notes.
SECTION 2.09. REDEMPTION OF AND PRINCIPAL REDUCTION PAYMENTS ON THE SERIES
2004-2 NOTES.
(a) OPTIONAL REDEMPTION OF THE RESET RATE NOTES. The Reset Rate
Notes are subject to optional redemption, in whole only, at the option
of the Issuer, from any source of funds (other than from a sale of a Pro
rata Portion of the Financed Eligible Loans as provided in Section
2.05(c) or 2.07(a) of Appendix A hereto) on any Reset Date on or after
November 1, 2005, at a redemption price equal to the principal amount
thereof being redeemed, plus accrued interest, if any, and any Reset
Rate Notes Carry-over Amounts (and any accrued interest thereon) due and
payable on such Class of the Reset Rate Notes (as described in Appendix
A hereto) to such Reset Date.
(b) OPTIONAL REDEMPTION OF RESET RATE NOTES FROM THE SALE OF
FINANCED ELIGIBLE LOANS. If the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes are no longer Outstanding, upon
a sale of a Pro rata Portion of the Financed Eligible Loans as provided
in Section 2.05(c) or 2.07(a) of Appendix A hereto, the Reset Rate Notes
are subject to redemption, in whole only, on any Reset Date on or after
November 1, 2005 from the proceeds of such sale of a Pro rata Portion of
the Financed Eligible Loans, at a redemption price equal to the
principal amount thereof being redeemed, plus accrued interest, if any,
and any Reset Rate Notes Carry-over Amounts (and any accrued interest
thereon) due and payable on such Class of the Reset Rate Notes (as
described in Appendix A hereto) to such Reset Date.
(c) OPTIONAL REDEMPTION OF AUCTION RATE NOTES. Subject to the
provisions of subsection (k) of this Section, each Class of the Auction
Rate Notes is subject to redemption at the option of the Issuer, from
any source of funds (other than from a sale of a Pro rata Portion of the
Financed Eligible Loans pursuant to Section 2.04 of Appendix B hereto),
in whole or in part, on any Auction Rate Distribution Date for such
Class of the Auction Rate Notes, at a redemption price equal to the
principal amount thereof being redeemed, plus accrued interest, if any,
and any Auction Rate Notes Carry-over Amounts (and any accrued interest
thereon) due and payable on such Class of the Auction Rate Notes (as
described in Appendix B hereto) to such Auction Rate Distribution Date.
(d) OPTIONAL REDEMPTION OF AUCTION RATE NOTES FROM THE SALE OF
FINANCED ELIGIBLE LOANS. If the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes are no longer Outstanding and
subject to the provisions of subsection (k) of this Section, upon a sale
of a Pro rata Portion of the Financed Eligible Loans as provided in
Section 2.04 of Appendix B hereto, each Class of the Auction Rate Notes
is subject to redemption, in whole or in part, on any Auction Rate
37
Distribution Date for such Class of the Auction Rate Notes from the
proceeds of such sale of a Pro rata Portion of the Financed Eligible
Loans, at a redemption price equal to the principal amount thereof being
redeemed, plus accrued interest, if any, and any Auction Rate Notes
Carry-over Amounts (and any accrued interest thereon) due and payable on
such Class of the Auction Rate Notes (as described in Appendix B hereto)
to such Auction Rate Distribution Date.
(e) MANDATORY PRINCIPAL REDUCTION PAYMENTS ON THE LIBOR RATE
NOTES AND THE RESET RATE NOTES. The Registered Owners of the Class A-1
Notes shall receive pro rata reductions of principal pursuant to
Principal Reduction Payments to be made on Quarterly Distribution Dates
from amounts on deposit in the Class A-1 Redemption Account of the Note
Payment Fund for such purpose, the Registered Owners of the Class A-2
Notes shall receive pro rata reductions of principal pursuant to
Principal Reduction Payments to be made on Quarterly Distribution Dates
from amounts on deposit in the Class A-2 Redemption Account of the Note
Payment Fund for such purpose, the Registered Owners of the Class A-3
Notes shall receive pro rata reductions of principal pursuant to
Principal Reduction Payments to be made on Quarterly Distribution Dates
from amounts on deposit in the Class A-3 Redemption Account of the Note
Payment Fund for such purpose, the Registered Owners of the Class A-4
Notes shall receive pro rata reductions of principal pursuant to
Principal Reduction Payments to be made on Quarterly Distribution Dates
from amounts on deposit in the Class A-4 Redemption Account of the Note
Payment Fund for such purpose and the Registered Owners of the Class
A-5a Notes shall receive pro rata reductions of principal pursuant to
Principal Reduction Payments to be made on Quarterly Distribution Dates
(or on Reset Dates as provided in Section 5.06(b) hereof) from amounts
on deposit in the Class A-5a Redemption Account of the Note Payment Fund
for such purpose, on any Quarterly Distribution Date (or on any Reset
Dates as provided in Section 5.06(b) hereof) from amounts transferred to
the Note Payment Fund representing Recoveries of Principal (other than
Recoveries of Principal as a result of the voluntary sale of Financed
Eligible Loans) or representing amounts transferred from the Collection
Fund pursuant to Section 5.05(c)(xix) hereof. Such amounts are allocated
to the Class A-1 Redemption Account, the Class A-2 Redemption Account,
the Class A-3 Redemption Account, the Class A-4 Redemption Account and
the Class A-5a Redemption Account pursuant to Section 5.06(a) hereof.
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(f) MANDATORY REDEMPTION OF THE LIBOR RATE NOTES AND THE RESET
RATE NOTES. Upon a sale of the Financed Eligible Loans after the
Commercial Paper Rate Trigger has occurred as provided in Section
2.07(b) or 2.13 of Appendix A hereto, the LIBOR Rate Notes and the Reset
Rate Notes are subject to mandatory redemption, in whole only, on any
Quarterly Distribution Date on or after November 1, 2005, at a
redemption price equal to the principal amount thereof being redeemed,
plus accrued interest, if any (but not, with respect to the Reset Rate
Notes, including any Reset Rate Notes Carry-over Amounts, if any, except
to the extent such Reset Rate Notes Carry-over Amounts is payable on
such Quarterly Distribution Date pursuant to Section 5.05(c) hereof), to
such Quarterly Distribution Date.
(g) MANDATORY REDEMPTION OF AUCTION RATE NOTES.
(i) Subject to the provisions of subsection (k) of this
Section, the Class A-5a Notes (but only if the Class A-5a Notes
have been reset to bear interest at an Auction Rate pursuant to
Section 2.01(f) of Appendix A hereto) are subject to mandatory
redemption, in whole or in part, from amounts on deposit in the
Class A-5a Redemption Account of the Note Payment Fund for such
purpose, the Class A-5b Notes are subject to mandatory
redemption, in whole or in part, from amounts on deposit in the
Class A-5b Redemption Account of the Note Payment Fund for such
purpose, the Class A-5c Notes are subject to mandatory
redemption, in whole or in part, from amounts on deposit in the
Class A-5c Redemption Account of the Note Payment Fund for such
purpose, the Class B-1 Notes are subject to mandatory
redemption, in whole or in part, from amounts on deposit in the
Class B Redemption Account of the Note Payment Fund for such
purpose and the Class B-2 Notes are subject to mandatory
redemption, in whole or in part, from amounts on deposit in the
Class B Redemption Account of the Note Payment Fund for such
purpose, on any Auction Rate Distribution Date for such Class of
the Auction Rate Notes and for which notice can be given
pursuant to subsection (h) of this Section, each at a redemption
price equal to the principal balance being redeemed plus accrued
interest, if any (but not including any Auction Rate Notes
Carry-over Amounts, if any, except to the extent such Auction
Rate Notes Carry-over Amounts is payable on such Auction Rate
Distribution Date pursuant to Section 5.05(c) hereof), to such
Auction Rate Distribution Date from amounts transferred to the
Class A-5a Redemption Account (but only if the Class A-5a Notes
have been reset to bear interest at an Auction Rate pursuant to
Section 2.01(f) of Appendix A hereto), the Class A-5b Redemption
Account, the Class A-5c Redemption Account and the Class B
Redemption Account of the Note Payment Fund, as appropriate,
representing Recoveries of Principal (other than Recoveries of
Principal as a result of the voluntary sale of Financed Eligible
Loans) or representing amounts transferred from the Collection
Fund pursuant to Section 5.05(c)(xix) hereof. Recoveries of
Principal generated as a result of the voluntary sale of
Financed Eligible Loans shall be used to redeem Auction Rate
Notes pursuant to subsection (d) of this Section. Redemptions of
the Auction Rate Notes which constitute Class A Notes made
pursuant to this subsection (g)(i) shall be made on a pro rata
basis (based upon Outstanding Amounts) between the Classes of
39
such Auction Rate Notes, and redemptions of the Auction Rate
Notes which constitute Class B Notes made pursuant to this
subsection (g)(i) shall be made on a pro rata basis (based upon
Outstanding Amounts) between the Classes of such Auction Rate
Notes.
(ii) Upon a sale of the Financed Eligible Loans after
the Commercial Paper Rate Trigger has occurred as provided in
Section 2.07(b) or 2.13 of Appendix A hereto, the Auction Rate
Notes are subject to mandatory redemption, in whole only, on any
Auction Rate Distribution Date for such Auction Rate Notes and
for which notice can be given pursuant to subsection (h) of this
Section, at a redemption price equal to the principal amount
thereof being redeemed, plus accrued interest, if any (but not
including any Auction Rate Notes Carry-over Amounts, if any,
except to the extent such Auction Rate Notes Carry-over Amounts
is payable on such Auction Rate Distribution Date pursuant to
Section 5.05(c) hereof), to such Auction Rate Distribution Date.
(h) NOTICE OF REDEMPTION AND PRINCIPAL REDUCTION PAYMENTS. The
Indenture Trustee shall cause notice of any redemption of Auction Rate
Notes to be given by mailing a copy of the notice by first-class mail or
by electronic means to the Auction Agent and to the Registered Owner of
the Auction Rate Notes designated for redemption in whole or in part, at
their address as the same shall last appear upon the registration books,
in each case not less than 10 days prior to the redemption date;
provided, however, that failure to give such notice, or any defect
therein, shall not affect the validity of any proceedings for the
redemption of such Auction Rate Notes for which no such failure or
defect occurs. Preferably five, but not less than two Business Days
prior to each Quarterly Distribution Date on which Principal Reduction
Payments will be made on the LIBOR Rate Notes and the Reset Rate Notes
or on which the LIBOR Rate Notes and Reset Rate Notes are to be
redeemed, the Indenture Trustee shall cause notice of any reduction
pursuant to subsection (e) of this Section or any redemption pursuant to
subsection (a), (b), (f) or (j) of this Section to be given by mailing a
copy of the notice by first class mail to the Administrator and
Registered Owners of the Class of the LIBOR Rate Notes or the Reset Rate
Notes designated for reduction, in whole or in part, or redemption at
their address as the same shall last appear upon the registration books
on such date; provided, however, that failure to give such notice, or
any defect therein, shall not affect the validity of any proceedings for
the reduction or redemption of such LIBOR Rate Notes or Reset Rate
Notes.
In addition, preferably five, but not less than two Business Days
prior to each Quarterly Distribution Date, the Indenture Trustee shall
send the Securities Depository written notice with respect to the dollar
amount per $1,000 original principal amount of the Class of the LIBOR
Rate Notes or Reset Rate Notes that the Indenture Trustee will be paying
to the Securities Depository on the Quarterly Distribution Date. The
Indenture Trustee may, to the extent necessary to avoid payments of
fractional cents, reduce scheduled payments by up to $1,000 for each
Class. Such notices, which shall clearly indicate that they relate to a
pro rata reduction of principal on the notes of such Class of the LIBOR
Rate Notes and the Reset Rate Notes, shall contain the Ending Balance
Factor and the Indenture Trustee contact's name and telephone number,
shall be sent by facsimile (or such other method designated by the
Securities Depository) to the Securities Depository's Dividend
Department at (212) 855-4555.
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(i) PARTIAL REDEMPTION.
(i) If less than all of a Class of the Auction Rate
Notes are to be redeemed pursuant to subsection (c), (d) or (g)
of this Section, such Auction Rate Notes to be redeemed shall be
selected by a random method in Authorized Denominations in such
manner as the Indenture Trustee shall determine.
(ii) In case an Auction Rate Note is of a denomination
larger than an Authorized Denomination, a portion of such
Auction Rate Note (in an Authorized Denomination) may be
redeemed. Upon surrender of any Auction Rate Note for redemption
in part only, the Issuer shall execute and the Indenture Trustee
shall authenticate and deliver to the Registered Owner thereof,
the cost of which shall be paid by the Issuer, a new Auction
Rate Note or Auction Rate Notes of the same Class in Authorized
Denominations in an aggregate principal amount equal to the
unredeemed portion of the Auction Rate Note surrendered.
(j) EXTRAORDINARY OPTIONAL REDEMPTION OF SERIES 2004-2 NOTES.
The Series 2004-2 Notes are subject to redemption at the option of the
Issuer exercised by an Issuer Order (which Issuer Order shall be
received by the Indenture Trustee not less than 16 days prior to such
redemption or such lesser period agreed to by the Indenture Trustee), in
whole only, on any Auction Rate Distribution Date with respect to the
Auction Rate Notes, any Quarterly Distribution Date with respect to the
LIBOR Rate Notes and any Reset Date with respect to the Reset Rate Notes
after the Distribution Date on which the aggregate current principal
balance of the Series 2004-2 Notes is less than or equal to 10% of the
initial Pool Balance on the Closing Date, at a redemption price equal to
(A) the principal balance plus accrued interest to the date fixed for
redemption and (B) any applicable Reset Rate Notes Carry-over Amount,
Auction Rate Notes Carry-over Amount and interest accrued on such Reset
Rate Notes Carry-over Amount and Auction Rate Notes Carry-over Amount to
the date fixed for redemption, from the proceeds of funds received by
the Indenture Trustee and deposited in the appropriate Accounts of the
Note Payment Fund and the Reserve Fund, and the Issuer shall deposit or
cause to be deposited in or transferred to the Note Payment Fund an
amount sufficient to redeem all of the Series 2004-2 Notes, less amounts
on deposit in the Reserve Fund. Upon such deposit of funds by the
Issuer, the Indenture Trustee shall transfer amounts in the Reserve Fund
to the Accounts of the Note Payment Fund and effect the redemptions of
all the Series 2004-2 Notes.
(k) RESTRICTIONS ON THE REDEMPTION OF CLASS B NOTES. Class B
Notes may not be redeemed until all of the Class A Notes are no longer
Outstanding hereunder; provided, however, Class B Notes may be redeemed
at any time when any Class A Notes are Outstanding hereunder if the
Issuer provides Indenture Trustee with an Issuer Order directing such
redemption together with funds sufficient to redeem such Class B Notes
pursuant to subsection (c) of this Section for deposit to Class B
Redemption Account of the Note Payment Fund.
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SECTION 2.10. DELIVERY OF SERIES 2004-2 NOTES. Upon the execution and
delivery of this Indenture, the Issuer shall execute and deliver to the
Indenture Trustee and the Indenture Trustee shall authenticate the Series 2004-2
Notes and deliver them to appropriate Securities Depositories and as hereinafter
in this Section provided.
Prior to the delivery by the Indenture Trustee of any of the Series
2004-2 Notes, there shall have been filed with or delivered to the Indenture
Trustee the following:
(a) A resolution duly adopted by the Issuer, certified by the
Secretary or other Authorized Officer thereof, authorizing the execution
and delivery of this Indenture, the Assignment Agreement, the Escrow
Reserve Agreement, the Eligible Lender Trust Agreement, the Auction
Agent Agreement, each Broker-Dealer Agreement, the Remarketing
Agreement, the initial Custodian Agreement, the initial Servicing
Agreement, the Administration Agreement, the initial Investment
Agreement and the issuance of the Series 2004-2 Notes.
(b) Duly executed copies of the documents listed in subsection
(a) of this Section.
(c) Rating letters from each Rating Agency stating (i) that the
Class A Notes have been rated "AAA" by Fitch and S&P and "Aaa" by
Moody's; and (ii) that the Class B Notes have been rated "AA" by Fitch
"AA-" by S&P and "A2" by Moody's.
(d) Upon the issuance of the Series 2004-2 Notes, an amount
equal to the Reserve Fund Requirement shall be deposited in the Reserve
Fund.
(e) The Indenture Trustee shall have received a written order
from the Issuer to authenticate and deliver the Series 2004-2 Notes.
SECTION 2.11. DEPOSIT OF SERIES 2004-2 NOTE PROCEEDS. Upon the issuance
and delivery of the Series 2004-2 Notes, the Indenture Trustee shall deposit the
net proceeds thereof ($1,017,700,000) as follows:
(a) an amount equal to $16,000,000 shall be deposited to the
Capitalized Interest Fund;
(b) an amount equal to $2,500,017 shall be deposited to the
Reserve Fund; and
(c) the remainder ($999,199,983) shall be deposited to the
Acquisition Fund.
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
42
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 investments 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
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; 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 and the Subordinate Obligations) shall be entitled to no
43
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
Series 2004-2 Notes.
ARTICLE IV
PROVISIONS APPLICABLE TO THE SERIES 2004-2 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 Series 2004-2 Notes and to execute and deliver this
Indenture and any Derivative Product and to make the pledge to the payment of
Series 2004-2 Notes and any Issuer Derivative Payments hereunder, that all
necessary action on the part of the Issuer and the Board of Directors for the
creation and issuance of the Series 2004-2 Notes and the execution and delivery
of this Indenture and any Derivative Product has been duly and effectively
taken; and that the Series 2004-2 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.
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.
44
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 Series 2004-2 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 Series 2004-2 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 a
Servicing Agreement or a Custodian Agreement.
(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
45
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 each 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, including
the prompt payment of all amounts due the Issuer thereunder, including,
without limitation, all principal and interest payments, and Guarantee
payments which relate to any Financed Eligible Loans and cause each
Servicer to specify whether payments received by it represent principal
or interest;
(b) not permit the release of the obligations of any Servicer
under any Servicing Agreement except in conjunction with amendments or
modifications permitted by subsection (h) of this Section;
(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 each Servicer under its
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 a Servicer of its
obligations under its Servicing Agreement coming to the Issuer's
attention;
(f) the Issuer shall not waive any default by a Servicer under
its Servicing Agreement without the written consent of the Indenture
Trustee;
(g) the Issuer shall cause each Servicer to deliver to the
Indenture Trustee and the Issuer, on or before April 30 of each year,
beginning with April 30, 2005, a certificate stating that (i) a review
of the activities of such Servicer during the preceding calendar year
and of its performance under its 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, such Servicer
46
has fulfilled all its obligations under its 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 HIGHER EDUCATION
ACT. The Issuer covenants that it will cause each of the Indenture Trustee and
the Eligible Lender Trustee to be, or replace the Indenture Trustee and the
Eligible Lender Trustee with, an Eligible Lender under the Higher Education 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 Higher Education
Act or Regulations adopted thereunder require an Eligible Lender to be the owner
or holder of such Eligible Loans; provided, however, that nothing above shall
prevent the Issuer from delivering the Eligible Loans to a Servicer or a
Guaranty Agency. The Registered Owners of the Series 2004-2 Notes shall not in
any circumstances be deemed to be the owner or holder of the Eligible Loans.
The Issuer, or its designated agent, shall be responsible for each of
the following actions with respect to the Higher Education 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 one or
more Servicing Agreements or other agreement with a 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 Higher Education 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 Purchase 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 one or more Servicers, 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
Payments which relate to such Financed Eligible Loans. The Issuer shall cause
48
the filing and assignment of such claims (prior to the timely filing deadline
for such claims under the Regulations) by the appropriate Servicer. The Issuer
will comply with the Higher Education 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 of Directors, neither singly nor 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. 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 clauses (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, the provisions of
this Section shall continue in full force and effect and no further transfer
shall be made except in compliance with the provisions of this Section.
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 Higher Education 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 Series 2004-2 Notes and on which the
Registered Owners have relied in purchasing the Series 2004-2 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,
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
50
issuance of any Series 2004-2 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 201,
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 thereof for federal
income tax and financial accounting purposes and the Issuer
(through the Eligible Lender Trustee) will be treated as the
owner of the Financed Eligible Loans for all purposes. The
Issuer further intends to treat the Series 2004-2 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
National Education Loan Network, Inc. and such returns will be
filed for all taxable years in which the Series 2004-2 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 L 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.
51
(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 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 ANY SELLER. The Issuer
is not and will not be involved in the day-to-day management of
any Seller or the Issuer's parent or any affiliate.
(xvi) NO INTERCORPORATE TRANSFERS WITH ANY SELLER OR
AFFILIATES. Other than the transfer of assets and the transfer
of any Series 2004-2 Notes pursuant to this Indenture, the
Issuer does not engage in and will not engage in any
intercorporate transactions with any Seller or its affiliates,
except as provided herein with respect to Program Expenses and
the Administration 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 Sellers.
52
(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 Series 2004-2 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 Series
2004-2 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 Series 2004-2
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 a 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
53
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
financed 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
54
this Indenture is not subject to the bulk transfer act or any
similar statutory provisions in effect in any applicable
jurisdiction.
(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 the Investment Company Act of 1940, as amended.
(viii) BINDING OBLIGATIONS. This Indenture, the Series
2004-2 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 Series 2004-2
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.
55
(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.
(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 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 each Seller, the Issuer's parent or any affiliate thereof,
and funds or other assets of the Issuer will not be commingled with
those of any Seller, the Issuer's parent or any other affiliate thereof.
The Issuer shall not maintain joint bank accounts or other depository
accounts to which any 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 any Seller, the Issuer's parent or any other
affiliate.
(l) The Issuer will maintain an arm's length relationship with
each 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 Administration Agreement or a Servicing Agreement, the Issuer will
not hold itself out to be responsible for the debts of any Seller, the
parent or the decisions or actions respecting the daily business and
affairs of any 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 a
Student Loan Purchase Agreements, or of any failure on the part of a Seller to
observe or perform in any material respect any covenant, representation or
warranty of a Seller set forth in its Student Loan Purchase Agreement, shall
promptly notify the Indenture Trustee, the appropriate Servicer and each Rating
Agency of such failure.
56
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 Section 313(c) of the Trust
Indenture Act, 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 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 Section 313(a) of the Trust Indenture Act if
required by said section. The Indenture Trustee shall also comply with
Section 313(b) of the Trust Indenture Act. A copy of each such report,
when and if required pursuant to Section 313(a) or (b) of the Trust
Indenture Act, 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 Series 2004-2 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, 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, 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 Series 2004-2 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 Series 2004-2 Notes at its 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 Series 2004-2 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 Series 2004-2 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 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 Series 2004-2
Notes of such Class 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 Series 2004-2 Notes, wherever situated.
If an Event of Default with respect to the Series 2004-2 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 Series 2004-2 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 Registered Owners 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.
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(b) The Higher Education 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.
(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 a custodian pursuant to a Custodian Agreement.
(f) The Issuer has received a written acknowledgment from each
custodian pursuant to a Custodian Agreement 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 Registered Owners as follows:
(a) The representations and warranties set forth in Section 4.19
hereof 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 hereof.
(c) The Issuer shall take all steps necessary, and shall cause
each Servicer 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 Series 2004-2 Notes will be issued, with the intention that, for
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federal, state and local income, business and franchise tax purposes, the Series
2004-2 Notes will qualify as indebtedness of the Issuer. The Issuer, by entering
into this Indenture, and each Registered Owner, by its acceptance of its Series
2004-2 Note, agrees to treat the Series 2004-2 Notes for federal, state and
local income, business and franchise tax purposes as indebtedness of the Issuer.
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, 2005, 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. There are
hereby created and established the following Funds and Accounts to be held and
maintained by the Indenture Trustee for the benefit of the Registered Owners
(and the Remarketing Agents with respect to the Remarketing Fee Fund):
(a) Acquisition Fund;
(b) Capitalized Interest Fund;
(c) Class B Supplemental Reserve Fund;
(d) Collection Fund;
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(e) Note Payment Fund, including a Class A-1 Interest Account, a
Class A-1 Redemption Account, a Class A-2 Interest Account, a Class A-2
Redemption Account, a Class A-3 Interest Account, a Class A-3 Redemption
Account, a Class A-4 Interest Account, a Class A-4 Redemption Account, a
Class A-5a Interest Account, a Class A-5a Redemption Account, a Class
A-5b Interest Account, a Class A-5b Redemption Account, a Class A-5c
Interest Account, a Class A-5c Redemption Account, a Class B-1 Interest
Account, a Class B-2 Interest Account, a Class B Redemption Account and
a Counterparty Payment Account for each Derivative Product (if Issuer
Derivative Payments are required to be paid thereunder) therein;
(f) Remarketing Fee Fund;
(g) Reserve Fund; and
(h) Supplemental Interest Fund.
The Indenture Trustee is hereby authorized for the purpose of
facilitating the administration of the Trust Estate and for the administration
of any Series 2004-2 Notes issued hereunder to create further Accounts or
Subaccounts in any of the various Funds and Accounts established hereunder or as
are otherwise deemed necessary or desirable.
SECTION 5.02. ACQUISITION FUND.
(a) DEPOSITS TO THE ACQUISITION FUND. There shall be deposited
into the Acquisition Fund the proceeds of the Series 2004-2 Notes set
forth in Section 2.11(c) hereof. Financed Eligible Loans shall be held
by the Indenture Trustee or its agent or bailee (including a Servicer)
and shall be pledged to the Trust Estate and accounted for as a part of
the Acquisition Fund.
(b) USES OF MONEYS IN THE ACQUISITION FUND. Moneys on deposit in
the Acquisition Fund shall be used, upon Issuer Order, (i) to pay costs
of issuing the Series 2004-2 Notes and (ii) upon receipt by the
Indenture Trustee of an Eligible Loan Acquisition Certificate in the
form of Exhibit I hereto, to acquire Eligible Loans (including serial
loans and Add-on Consolidation Loans) at a price of not greater than the
par amount of the Eligible Loan, plus accrued interest thereon, and
which would permit the results of cash flow analyses provided to each
Rating Agency on the Closing Date to be sustained as certified to the
Indenture Trustee on the Eligible Loan Acquisition Certificate. Any such
Issuer Order or Eligible Loan Acquisition Certificate shall state that
such proposed use of moneys in the Acquisition Fund is in compliance
with the provisions of this Indenture.
(c) OWNERSHIP AND SALE OF FINANCED ELIGIBLE LOANS. 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 and
for the benefit of the Registered Owners.
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Financed Eligible Loans shall be sold, transferred or otherwise
disposed of (other than for consolidation, serialization or transfer to
a Guaranty Agency or a Servicer, which sales or transfers may be made
without limitation) 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:
(i) an Issuer Order stating the sale price and directing
that Financed Eligible Loans be sold, transferred or otherwise
disposed of and delivered to:
(A) if the Eligible Loan is originated under the
Higher Education Act and the Higher Education Act
requires any such Eligible Loan to be held only by an
Eligible Lender, an Eligible Lender under the Higher
Education Act whose name shall be specified; or
(B) the trustee under another indenture securing
notes issued by the Issuer; and
(ii) an Issuer Order stating to the effect:
(A) that the disposition price is (x) 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
plus a pro rata share of such Financed Eligible Loan's
cost of issuance) and (y) reasonably equal to the fair
market value of such Financed Eligible Loan; or
(B) 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 plus a pro
rata share of such Financed Eligible Loan's cost of
issuance), and (I) 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 (II) the Issuer shall remain
able to pay debt service on the Series 2004-2 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 (III) the Aggregate 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.
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Notwithstanding the foregoing, if the proposed sale, transfer or other
disposition of such Eligible Loans shall cause the aggregate principal
amount of all Financed Eligible Loans sold, transferred or otherwise
disposed of (other than for consolidation, serialization or transfer to
a Guaranty Agency or a Servicer, which sales or transfers may be made
without limitation) since the Closing Date to exceed five percent (5%)
of the principal amount of the Financed Eligible Loans within the Trust
Estate on the Closing Date, or the principal amount of the Financed
Eligible Loans proposed to be sold, transferred or otherwise disposed of
(other than for consolidation, serialization or transfer to a Guaranty
Agency or a Servicer, which sales or transfers may be made without
limitation) exceeds ten percent (10%) of the then current principal
amount of the Financed Eligible Loans within the Trust Estate, the
Issuer shall provide the Indenture Trustee with a Rating Confirmation.
In connection with providing such Rating Confirmation, any Rating Agency
may request a new cash flow analysis of the Trust Estate be prepared,
and the Issuer shall cause such new cash flow analysis to be prepared
and provided to such Rating Agency.
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) 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 (i) of this subsection (c), 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.
The selection and sale of Financed Eligible Loans which are to be
sold for the purpose of optionally redeeming Reset Rate Notes pursuant
to Section 2.09(b) hereof or optionally redeeming Auction Rate Notes
pursuant to Section 2.09(d) hereof shall be performed solely on a pro
rata basis in the manner described in Section 2.07(a) of Appendix A
hereto or Section 2.04 of Appendix B hereto, as applicable.
SECTION 5.03. CAPITALIZED INTEREST FUND.
(a) DEPOSITS TO THE CAPITALIZED INTEREST FUND. There shall be
deposited into the Capitalized Interest Fund the proceeds of the Series
2004-1 Notes set forth in Section 2.11(a) hereof.
(b) USE OF MONEYS IN THE CAPITALIZED INTEREST FUND. If on any
Distribution Date there are not sufficient moneys on deposit in the
Collection Fund to make the transfers required by Section 5.05(c)(i),
(ii), (iii), (v), (viii) and (ix) hereof, then, an amount equal to any
such deficiency shall be transferred directly from the Capitalized
Interest Fund to the Collection Fund to the extent such deficiency has
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not been paid from the Note Payment Fund. On the first Quarterly
Distribution Date on or after March 25, 2006, the Indenture Trustee
shall transfer any remaining amounts on deposit in the Capitalized
Interest Account to the Note Payment Fund to pay principal (and not
interest) on the Series 2004-2 Notes.
SECTION 5.04. CLASS B SUPPLEMENTAL RESERVE FUND.
(a) DEPOSITS TO THE CLASS B SUPPLEMENTAL RESERVE FUND. On the
first Distribution Date on which the Total Parity Ratio is equal to or
greater than 100.5%, or such other percentage that satisfies the Rating
Agency Condition, the Indenture Trustee shall transfer an amount equal
to the Class B Supplemental Reserve Fund Requirement to the Class B
Supplemental Reserve Fund pursuant to Section 5.05(c)(xvii) hereof. If,
on any Distribution Date, the amount on deposit in the Class B
Supplemental Reserve Fund is less than the Class B Supplemental Reserve
Fund Requirement, the Indenture Trustee shall restore the Class B
Supplemental Reserve Fund to the Class B Supplemental Reserve Fund
Requirement by transfers from the Collection Fund on the next
Distribution Date pursuant to Section 5.05(c)(xvii) hereof; provided,
that such transfer shall only be made if the Total Parity Ratio on such
Distribution Date is equal to or greater than 100.5%, or such other
percentage that satisfies the Rating Agency Condition. If the full
amount required to initially fund or restore the Class B Supplemental
Reserve Fund to the Class B Supplemental Reserve Fund Requirement is not
available in the Collection Fund on such next succeeding Distribution
Date on which the Total Parity Ratio is equal to or greater than 100.5%,
the Indenture Trustee shall continue to transfer funds from the
Collection Fund as they become available pursuant to Section
5.05(c)(xvii) hereof and in accordance with the restriction contained in
this subsection (a) until the deficiency in the Class B Supplemental
Reserve Fund has been eliminated.
(b) USE OF MONEYS IN THE CLASS B SUPPLEMENTAL RESERVE FUND. If
on any Distribution Date there are not sufficient moneys on deposit in
the Collection Fund to make the transfers required by Section 5.05(c)(v)
or (vi) hereof, then, an amount equal to any such deficiency shall be
transferred directly from the Class B Supplemental Reserve Fund to the
Collection Fund to make the transfers required by Section 5.05(c)(v) or
(vi) hereof to the extent such deficiency has not been paid from the
Capitalized Interest Fund, the Note Payment Fund or the Reserve Fund. If
on any Distribution Date there are sufficient moneys on deposit in the
Collection Fund to make the transfers required by Section 5.05(c)(v)
hereof, but the Issuer is prohibited from making such transfers due to
the occurrence or continuation of the Subordinate Interest Trigger on
such Distribution Date, then, an amount equal to any such deficiency
shall be transferred directly from the Class B Supplemental Reserve Fund
to the Collection Fund to make the transfers required by Section
5.05(c)(v) hereof. On the date of redemption of all of the Class B
Notes, the Indenture Trustee shall transfer all amounts in the Class B
Supplemental Reserve Fund to the Note Payment Fund for the redemption of
the Class B Notes. On any Distribution Date that the amount in the Class
B Supplemental Reserve Fund exceeds the Class B Supplemental Reserve
Fund Requirement with respect thereto, the Indenture Trustee, at the
direction of the Issuer, shall transfer the excess to the Collection
Fund. Upon an Event of Default and liquidation of the Trust Estate,
amount on deposit in the Class B Supplemental Reserve Fund shall be
disbursed pursuant to Section 6.02 hereof.
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SECTION 5.05. COLLECTION FUND.
(a) DEPOSITS TO THE COLLECTION FUND. The Indenture Trustee shall
deposit into the Collection Fund all Revenues derived from Financed
Eligible Loans financed by the Issuer, all other Revenue derived from
moneys or assets on deposit in the Funds and Accounts established
hereunder (including any amounts received pursuant to an Investment
Agreement), all amounts transferred to the Collection Fund from the
Capitalized Interest Fund, Class B Supplemental Reserve Fund, the Note
Payment Fund, the Reserve Fund and the Supplemental Interest Fund
pursuant to the terms hereof, all Counterparty Payments, any amounts
deposited thereto pursuant to Section 4.23 hereof and any other amounts
deposited thereto upon receipt of an Issuer Order. Notwithstanding the
foregoing, any Counterparty Payments received pursuant to the LIBOR
Interest Rate Cap Derivative Agreement shall be deposited, on a pro rata
basis based upon the Outstanding Amount of the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, to the
Class A-1 Interest Account, the Class A-2 Interest Account, the Class
A-3 Interest Account and the Class A-4 Interest Account of the Note
Payment Fund. 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 Note Payment Fund.
(b) PAYMENTS ON MONTHLY SERVICING PAYMENT DATES. The Issuer, or
the Administrator on behalf of the Issuer, shall instruct the Indenture
Trustee in writing no later than the second Business Day preceding each
Monthly Servicing Payment Date that is not a Distribution Date (based on
the information contained in the Monthly Servicing Payment Date
Certificate and the related Servicer's Report) to distribute to the
appropriate Servicer, on such Monthly Servicing Payment Date, from and
to the extent of the Revenues on deposit in the Collection Fund, the
Servicing Fee due such Servicer with respect to the preceding calendar
month, and the Indenture Trustee shall comply with such instructions.
(c) PAYMENTS ON DISTRIBUTION DATES. The Issuer shall provide the
Indenture Trustee with an Issuer Order with respect to all Issuer
Derivative Payments, Reset Rate Notes Carry-over Amounts (including any
interest thereon) and Auction Rate Notes Carry-over Amounts (including
any interest thereon), which Issuer Order the Indenture Trustee may
conclusively rely on. The Issuer, or the Administrator on behalf of the
Issuer, shall instruct the Indenture Trustee in writing no later than
the second Business Day preceding each Distribution Date (based on the
information contained in the Distribution Date Certificate and the
related Servicer's Report) to make the following deposits and
distributions from the Collection Fund to the Persons or to the Fund or
Account specified below on such Distribution Date, in the following
order of priority, and the Indenture Trustee shall comply with such
instructions (any money not so transferred or paid to remain in the
Collection Fund until subsequently applied pursuant to this subsection
(c)):
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(i) on each Quarterly Distribution Date (and on each
Auction Rate Distribution Date with respect to the Auction Agent
and each Broker-Dealer), to pay to each Servicer, the Indenture
Trustee, the Auction Agent, each Broker-Dealer, each Remarketing
Agent (to the extent not paid from the Remarketing Fee Fund) and
any other Person that is due Program Expenses hereunder and to
make a deposit to the Remarketing Fee Fund as provided in
Section 5.07 hereof, pro rata, based on amounts owed to each
such party or required to be deposited to the Remarketing Fee
Fund, without preference or priority of any kind, the Servicing
Fee (to the extent remaining unpaid following the Monthly
Servicing Payment Date), the Indenture Trustee Fee, the Eligible
Lender Trustee Fee, the Auction Agent Fee, the Broker-Dealer
Fees, the Remarketing Fees (to the extent not paid from the
Remarketing Fee Fund), such other Program Expenses that are due
and payable and the Quarterly Funding Amount, respectively, due
on such Quarterly Distribution Date, in each case, together with
such fees remaining unpaid from prior Quarterly Distribution
Dates (and, in the case of the Servicing Fee, prior Monthly
Servicing Payment Dates and in the case of the Auction Agent Fee
and the Broker-Dealer Fees, prior Auction Rate Distribution
Dates);
(ii) on each Quarterly Distribution Date, to pay to the
Administrator, the Administration Fee due on such Quarterly
Distribution Date and all unpaid Administration Fees from prior
Quarterly Distribution Dates;
(iii) to (A) transfer to the Class A-1 Interest Account,
an amount equal to the Class A-1 Notes Interest Distribution
Amount which has accrued since the prior Distribution Date, (B)
transfer to the Class A-2 Interest Account, an amount equal to
the Class A-2 Notes Interest Distribution Amount which has
accrued since the prior Distribution Date, (C) transfer to the
Class A-3 Interest Account, an amount equal to the Class A-3
Interest Distribution Amount which has accrued since the prior
Distribution Date, (D) transfer to the Class A-4 Interest
Account, an amount equal to the Class A-4 Interest Distribution
Amount which has accrued since the prior Distribution Date, (E)
transfer to the Class A-5a Interest Account, an amount equal to
the Class A-5a Interest Distribution Amount which has accrued
since the prior Distribution Date, (F) transfer to the Class
A-5b Interest Account, an amount equal to the Class A-5b
Interest Distribution Amount which has accrued since the prior
Distribution Date, (G) transfer to the Class A-5c Interest
Account, an amount equal to the Class A-5c Interest Distribution
Amount which has accrued since the prior Distribution Date and
(H) transfer to each Counterparty Payment Account, any Issuer
Derivative Payments which are paid on a parity with interest on
the Class A Notes owed to such Counterparty which have accrued
on such Counterparty's Derivative Product since the prior
Distribution Date, pro rata, based on amounts required to be
transferred to each Account, without preference or priority of
any kind;
(iv) to (A) transfer to the Class A-1 Redemption
Account, on the Stated Maturity of the Class A-1 Notes, an
amount equal to the Outstanding Amount of the Class A-1 Notes,
less any amounts already on deposit in the Class A-1 Redemption
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Account, (B) transfer to the Class A-2 Redemption Account, on
the Stated Maturity of the Class A-2 Notes, an amount equal to
the Outstanding Amount of the Class A-2 Notes, less any amounts
already on deposit in the Class A-2 Redemption Account, (C)
transfer to the Class A-3 Redemption Account, on the Stated
Maturity of the Class A-3 Notes, an amount equal to the
Outstanding Amount of the Class A-3 Notes, less any amounts
already on deposit in the Class A-3 Redemption Account, (D)
transfer to the Class A-4 Redemption Account, on the Stated
Maturity of the Class A-4 Notes, an amount equal to the
Outstanding Amount of the Class A-4 Notes, less any amounts
already on deposit in the Class A-4 Redemption Account, (E)
transfer to the Class A-5a Redemption Account, on the Stated
Maturity of the Class A-5a Notes, an amount equal to the
Outstanding Amount of the Class A-5a Notes, less any amounts
already on deposit in the Class A-5a Redemption Account, (F)
transfer to the Class A-5b Redemption Account, on the Stated
Maturity of the Class A-5b Notes, an amount equal to the
Outstanding Amount of the Class A-5b Notes, less any amounts
already on deposit in the Class A-5b Redemption Account, and (G)
transfer to the Class A-5c Redemption Account, on the Stated
Maturity of the Class A-5c Notes, an amount equal to the
Outstanding Amount of the Class A-5c Notes, less any amounts
already on deposit in the Class A-5c Redemption Account, pro
rata, based on amounts required to be transferred to each
Account, without preference or priority of any kind; (v) Unless
the Subordinate Interest Trigger has occurred and is continuing
on such Distribution Date, to (A) transfer to the Class B-1
Interest Account, an amount equal to the Class B-1 Notes
Interest Distribution Amount which has accrued since the prior
Distribution Date, (B) transfer to the Class B-2 Interest
Account, an amount equal to the Class B-2 Notes Interest
Distribution Amount which has accrued since the prior
Distribution Date, and (C) transfer to each Counterparty Payment
Account, any Issuer Derivative Payments which are paid on a
parity with interest on the Class B Notes owed to such
Counterparty which have accrued on such Counterparty's
Derivative Product since the prior Distribution Date, pro rata,
based on amounts required to be transferred to each Account,
without preference or priority of any kind;
(vi) to transfer to the Class B Redemption Account, on
the Stated Maturity of the Class B Notes, an amount equal to the
Outstanding Amount of the Class B Notes, less any amounts
already on deposit in the Class B Redemption Account;
(vii) to the Administrator for transfer to the
appropriate Seller or trust estate from which the Eligible Loan
was purchased or transferred, an amount equal to the unpaid
interest accrued on the Eligible Loans Financed with the
proceeds of the Series 2004-2 Notes subsequent to the cut-off
date for such Eligible Loans but prior to the Closing Date,
until such amount has been paid in full;
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(viii) on each Quarterly Distribution Date to transfer
to the Supplemental Interest Fund, an amount equal to the
Supplemental Interest Deposit Amount;
(ix) to the Reserve Fund the amount, if any, required by
Section 5.08(a) hereof;
(x) if the Total Parity Ratio is less than 100.5% or
such other percentage that satisfies the Rating Agency
Condition, all remaining amounts to the Note Payment Fund;
(xi) upon receipt of an Issuer Order, to (A) transfer to
the Class A-5a Interest Account, an amount equal to any Reset
Rate Notes Carry-over Amount (or, if the Class A-5a Notes have
been reset to bear interest at an Auction Rate pursuant to
Section 2.01(f) of Appendix A hereto, an amount equal to any
Auction Rate Notes Carry-over Amount) (and any accrued interest
thereon) due and payable on the Class A-5a Notes (as provided in
Appendix A or Appendix B hereto, as applicable); (B) transfer to
the Class A-5b Interest Account, an amount equal to any Auction
Rate Notes Carry-over Amount (and any accrued interest thereon)
due and payable on the Class A-5b Notes (as provided in Appendix
B hereto) and (C) transfer to the Class A-5c Interest Account,
an amount equal to any Auction Rate Notes Carry-over Amount (and
any accrued interest thereon) due and payable on the Class A-5c
Notes (as provided in Appendix B hereto), pro rata, based on the
amounts required to be transferred to each Account, without
preference or priority of any kind;
(xii) upon receipt of an Issuer Order, to (A) transfer
to the Class B-1 Interest Account, an amount equal to any
Auction Rate Notes Carry-over Amount (and any accrued interest
thereon) due and payable on the Class B-1 Notes (as provided in
Appendix B hereto) and (B) transfer to the Class B-2 Interest
Account, an amount equal to any Auction Rate Notes Carry-over
Amount (and any accrued interest thereon) due and payable on the
Class B-2 Notes (as provided in Appendix B hereto), pro rata,
based on the amounts required to be transferred to each Account,
without preference or priority of any kind;
(xiii) upon receipt of an Issuer Order, to transfer to
the corresponding Counterparty Payment Account, an amount equal
to any unpaid amounts (including any unpaid Termination
Payments) due on the Derivative Product Distribution Date with
respect to a Derivative Product on which Issuer Derivative
Payments are paid on a parity with interest on the Class A
Notes, pro rata, based on the amounts required to be transferred
to each Account, without preference or priority of any kind;
(xiv) upon receipt of an Issuer Order, to transfer to
the corresponding Counterparty Payment Account, an amount equal
to any unpaid amounts (including any unpaid Termination
Payments) due on the Derivative Product Distribution Date with
respect to a Derivative Product on which Issuer Derivative
Payments on which the Issuer Derivative Payments thereunder are
paid on a parity with interest on the Class B Notes, pro rata,
based on the amounts required to be transferred to each Account,
without preference or priority of any kind;
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(xv) on any Quarterly Distribution Date, to Nelnet, Inc.
to reimburse it for any payments made by it to the Remarketing
Agents for remarketing fees and expenses;
(xvi) to the Servicer, to repurchase Eligible Loans that
the Issuer is required to repurchase from the Servicer in
accordance with the terms of the Servicing Agreement;
(xvii) to the Class B Supplemental Reserve Fund, the
amount, if any, required by Section 5.04(a) hereof;
(xviii) on any Quarterly Distribution Date, unless the
Commercial Paper Rate Trigger has occurred, to the extent the
Indenture permits payments to the Issuer free from the lien of
the Indenture pursuant to Section 5.10 hereof, at the option of
the Issuer and upon Issuer Order to exercise such option, the
amount permitted to be paid to the Issuer from the Collection
Fund on such Quarterly Distribution Date may be paid to the
Issuer; and
(xix) on any Quarterly Distribution Date, any amounts
remaining in the Collection Fund shall be transferred to the
Note Payment Fund.
If a Derivative Product has been entered into with respect to any Class
of the Series 2004-2 Notes, the Indenture Trustee, the Issuer and the
Administrator may assume for purposes of making the deposits and
transfers with respect to such Class of the Series 2004-2 Notes required
by this subsection (c) that the Counterparty Payment with respect to
such Derivative Product will be timely received and therefore any
amounts expected to be paid from such Counterparty Payment need not be
deposited to the appropriate Funds and Accounts until such Counterparty
Payment has been received. If such Counterparty Payment is not timely
received, the Funds and Accounts which were expected to be funded by
such Counterparty Payment shall be funded in an amount equal to the
expected Counterparty Payment on the Distribution Date on which such
Counterparty Payment was due and payable pursuant to this subsection
(c).
(d) OTHER PAYMENTS FROM THE COLLECTION FUND. Upon receipt of an
Issuer Order directing the same, moneys in the Collection Fund shall be
used on any date to pay, when due, fees and expenses insofar as the same
relate to Financed Eligible Loans and other fees and expenses with
respect to the Trust Estate the payment of which is not otherwise
provided for in subsection (c) of this Section, including amounts
required by the Higher Education Act to be paid to the Department of
Education (including, but not limited to, rebate fees owed with respect
to consolidation loans) or to be repaid to borrowers (whether or not in
the form of a principal reduction of the applicable Financed Eligible
Loan), with respect to the Financed Eligible Loans. 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 Loans which
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constitute serial loans, to the extent moneys are not otherwise
available therefor in the Acquisition Fund, subject to the restrictions
of Section 5.02(b) hereof.
SECTION 5.06. NOTE PAYMENT FUND.
(a) DEPOSITS TO THE NOTE PAYMENT FUND. There shall be deposited
into the Note Payment Fund, all Recoveries of Principal received by the
Indenture Trustee and any moneys transferred thereto from the Collection
Fund pursuant to Section 5.05 hereof, from the Capitalized Interest Fund
pursuant to Section 5.03 hereof and from the Reserve Fund pursuant to
Section 5.08 hereof. Amounts transferred to the Note Payment Fund (i)
representing any Class A-1 Notes Interest Distribution Amount on the
Class A-1 Notes or any Counterparty Payments on a Derivative Product
corresponding to the Class A-1 Notes, including the LIBOR Interest Rate
Cap Derivative Agreement, to be deposited to the Class A-1 Interest
Account shall be deposited to the Class A-1 Interest Account, (ii)
representing any Class A-2 Notes Interest Distribution Amount on the
Class A-2 Notes or any Counterparty Payments on a Derivative Product
corresponding to the Class A-2 Notes, including the LIBOR Interest Rate
Cap Derivative Agreement, to be deposited to the Class A-2 Interest
Account shall be deposited to the Class A-2 Interest Account, (iii)
representing any Class A-3 Notes Interest Distribution Amount on the
Class A-3 Notes or any Counterparty Payments on a Derivative Product
corresponding to the Class A-3 Notes, including the LIBOR Interest Rate
Cap Derivative Agreement, to be deposited to the Class A-3 Interest
Account shall be deposited to the Class A-3 Interest Account, (iv)
representing any Class A-4 Notes Interest Distribution Amount on the
Class A-4 Notes or any Counterparty Payments on a Derivative Product
corresponding to the Class A-4 Notes, including the LIBOR Interest Rate
Cap Derivative Agreement, to be deposited to the Class A-4 Interest
Account shall be deposited to the Class A-4 Interest Account, (v)
representing any Class A-5a Notes Interest Distribution Amount and any
Reset Rate Notes Carry-over Amount (or, if the Class A-5a Notes have
been reset to bear interest at an Auction Rate pursuant to Section
2.01(f) of Appendix A hereto, an amount equal to any Auction Rate Notes
Carry-over Amount) (and any accrued interest thereon) on the Class A-5a
Notes or any Counterparty Payments on a Derivative Product corresponding
to the Class A-5a Notes shall be deposited to the Class A-5a Interest
Account, (vi) representing any Class A-5b Notes Interest Distribution
Amount and any Auction Rate Notes Carry-over Amount (and interest
thereon) on the Class A-5b Notes or any Counterparty Payments on a
Derivative Product corresponding to the Class A-5b Notes shall be
deposited to the Class A-5b Interest Account, (vii) representing any
Class A-5c Notes Interest Distribution Amount and any Auction Rate Notes
Carry-over Amount (and any accrued interest thereon) on the Class A-5c
Notes or any Counterparty Payments on a Derivative Product corresponding
to the Class A-5c Notes shall be deposited to the Class A-5c Interest
Account, (viii) representing any Class B-1 Notes Interest Distribution
Amount and any Auction Rate Notes Carry-over Amount (and any accrued
interest thereon) on the Class B-1 Notes or any Counterparty Payments on
a Derivative Product corresponding to the Class B-1 Notes shall be
deposited to the Class B-1 Interest Account and (ix) representing any
Class B-2 Notes Interest Distribution Amount and any Auction Rate Notes
Carry-over Amount (and any accrued interest thereon) on the Class B-2
Notes or any Counterparty Payments on a Derivative Product corresponding
to the Class B-2 Notes shall be deposited to the Class B-2 Interest
70
Account. Amounts transferred to the Note Payment Fund representing
Recoveries of Principal, excess Revenues transferred from the Collection
Fund pursuant to Sections 5.05(c)(x) or 5.05(c)(xix) hereof, amounts
transferred from the Collection Fund on the first Quarterly Distribution
Date on or after March 25, 2006 and any other amount to be used to pay
the principal of the Series 2004-2 Notes shall be deposited, FIRST, to
the Class A-1 Redemption Account until the amount on deposit in the
respective Redemption Accounts equals the Outstanding Amount of the
Class A-1 Notes, SECOND, to the Class A-2 Redemption Account until the
amount on deposit therein equals the Outstanding Amount of the Class A-2
Notes, THIRD, to the Class A-3 Redemption Account until the amount on
deposit therein equals the Outstanding Amount of the Class A-3 Notes,
FOURTH, to the Class A-4 Redemption Account until the amount on deposit
therein equals the Outstanding Amount of the Class A-4 Notes and, FIFTH,
on a pro rata basis (based upon Outstanding Amounts), to the Class A-5a
Redemption Account, the Class A-5b Redemption Account and the Class A-5c
Redemption Account until the amount on deposit in the respective
Redemption Accounts equals the Outstanding Amount of the Class A-5a
Notes, the Class A-5b Notes and the Class A-5c Notes. Once the Class A
Notes are no longer Outstanding hereunder, amounts transferred to the
Note Payment Fund representing Recoveries of Principal, excess Revenues
transferred from the Collection Fund pursuant to Sections 5.05(c)(x) or
5.05(c)(xix) hereof and any other amount to be used to pay the principal
of the Series 2004-2 Notes shall be deposited to the Class B Redemption
Account to redeem Class B-1 Notes and Class B-2 Notes.
(b) USE OF MONEYS IN THE NOTE PAYMENT FUND. Amounts on deposit
(i) in the Class A-1 Interest Account shall be used to pay the Class A-1
Notes Interest Distribution Amount due and payable on the Class A-1
Notes on each Quarterly Distribution Date, (ii) in the Class A-2
Interest Account shall be used to pay the Class A-2 Notes Interest
Distribution Amount due and payable on the Class A-2 Notes on each
Quarterly Distribution Date, (iii) in the Class A-3 Interest Account
shall be used to pay the Class A-3 Notes Interest Distribution Amount
due and payable on the Class A-3 Notes on each Quarterly Distribution
Date, (iv) in the Class A-4 Interest Account shall be used to pay the
Class A-4 Notes Interest Distribution Amount due and payable on the
Class A-4 Notes on each Quarterly Distribution Date, (v) in the Class
A-5a Interest Account shall be used to pay the Class A-5a Notes Interest
Distribution Amount and any Reset Rate Notes Carry-over Amount (or, if
the Class A-5a Notes have been reset to bear interest at an Auction Rate
pursuant to Section 2.01(f) of Appendix A hereto, an amount equal to any
Auction Rate Notes Carry-over Amount) (and any accrued interest thereon)
due and payable on the Class A-5a Notes on each Quarterly Distribution
Date (or, if the Class A-5a Notes have been reset to bear interest at an
Auction Rate pursuant to Section 2.01(f) of Appendix A hereto, on each
corresponding Auction Rate Distribution Date), (vi) in the Class A-5b
Interest Account shall be used to pay the Class A-5b Notes Interest
Distribution Amount and any Auction Rate Notes Carry-over Amount (and
any accrued interest thereon) due and payable on the Class A-5b Notes on
each corresponding Auction Rate Distribution Date, (vii) in the Class
A-5c Interest Account shall be used to pay the Class A-5c Notes Interest
Distribution Amount and any Auction Rate Notes Carry-over Amount (and
any accrued interest thereon) due and payable on the Class A-5c Notes on
each corresponding Auction Rate Distribution Date, (viii) in the Class
B-1 Interest Account shall be used to pay the Class B-1 Notes Interest
Distribution Amount and any Auction Rate Notes Carry-over Amount (and
any accrued interest thereon) due and payable on the Class B-1 Notes on
each corresponding Auction Rate Distribution Date and (ix) in the Class
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B-2 Interest Account shall be used to pay the Class B-2 Notes Interest
Distribution Amount and any Auction Rate Notes Carry-over Amount (and
any accrued interest thereon) due and payable on the Class B-2 Notes on
each corresponding Auction Rate Distribution Date. Amounts on deposit in
the Class A-1 Redemption Account shall be used to make Principal
Reduction Payments on the Class A-1 Notes on the next succeeding
Quarterly Distribution Date and to pay the principal amount of the Class
A-1 Notes upon their Stated Maturity or upon their redemption in full.
Amounts on deposit in the Class A-2 Redemption Account shall be used to
make Principal Reduction Payments on the Class A-2 Notes on the next
succeeding Quarterly Distribution Date and to pay the principal amount
of the Class A-2 Notes upon their Stated Maturity or upon their
redemption in full. Amounts on deposit in the Class A-3 Redemption
Account shall be used to make Principal Reduction Payments on the Class
A-3 Notes on the next succeeding Quarterly Distribution Date and to pay
the principal amount of the Class A-3 Notes upon their Stated Maturity
or upon their redemption in full. Amounts on deposit in the Class A-4
Redemption Account shall be used to make Principal Reduction Payments on
the Class A-4 Notes on the next succeeding Quarterly Distribution Date
and to pay the principal amount of the Class A-4 Notes upon their Stated
Maturity or upon their redemption in full. Amounts on deposit in the
Class A-5a Redemption Account shall be used to make Principal Reduction
Payments on the Class A-5a Notes on the next succeeding Quarterly
Distribution Date and to pay the principal amount of the Class A-5a
Notes upon their Stated Maturity or upon their redemption, in whole or
in part; provided, however, that if the Class A-5a Notes constitute
Non-Amortizing Reset Rate Notes, then the amounts deposited to the Class
A-5a Redemption Account shall be retained therein and used to make
Principal Reduction Payments on the next succeeding Reset Date for the
Class A-5a Notes. Amounts on deposit in the Class A-5b Redemption
Account shall be used to make principal payments on the Class A-5b Notes
upon their Stated Maturity or upon redemption, in whole or in part.
Amounts on deposit in the Class A-5c Redemption Account shall be used to
make principal payments on the Class A-5c Notes upon their Stated
Maturity or upon redemption, in whole or in part. Amounts on deposit in
the Class B Redemption Account shall be used to make principal payments
on the Class B-1 Notes and/or the Class B-2 Notes upon their Stated
Maturity or upon redemption, in whole or in part.
Notwithstanding the foregoing, if on any Distribution Date there
are not sufficient moneys on deposit in the Collection Fund to make the
transfers required by Section 5.05(c)(i), (ii), (iii), (iv), (v), (vi),
(viii) and (ix) hereof, then, any cash or Investment Securities in an
amount equal to any such deficiency shall be transferred directly from
the Accounts in the Note Payment Fund to the Collection Fund. Any cash
or Investment Securities required to be transferred from the Note
Payment Fund shall be transferred from the Accounts established therein
in the following order of preference: FIRST, from the Class B Redemption
Account, SECOND, on a pro rata basis, from the Class B-1 Interest
Account and the Class B-2 Interest Account; THIRD, on a pro rata basis,
from the Class A-5a Redemption Account (but solely from amounts
deposited therein since the preceding Quarterly Distribution Date unless
the Class A-5a Notes have been reset to bear interest at an Auction Rate
72
pursuant to Section 2.01(f) of Appendix A hereto), the Class A-5b
Redemption Account and the Class A-5c Redemption Account, FOURTH, from
the Class A-4 Redemption Account, FIFTH, from the Class A-3 Redemption
Account, SIXTH, from the Class A-2 Redemption Account, SEVENTH, from the
Class A-1 Redemption Account and, EIGHTH, on a pro rata basis, from the
Class A-1 Interest Account, the Class A-2 Interest Account, the Class
A-3 Interest Account, the Class A-4 Interest Account, the Class A-5a
Interest Account, the Class A-5b Interest Account and the Class A-5c
Interest Account; provided, however, cash or Investment Securities may
not be removed from the Class A-5a Redemption Account (but only if the
Class A-5a Notes have been reset to bear interest at an Auction Rate
pursuant to Section 2.01(f) of Appendix A hereto), the Class A-5b
Redemption Account, the Class A-5c Redemption Account or the Class B
Redemption Account if such cash or Investment Securities are required to
redeem Auction Rate Notes for which a notice of redemption has been
given pursuant to Section 2.09(h) hereof. In addition, (I) any amounts
on deposit in the Class A-1 Redemption Account may be used to pay Issuer
Derivative Payments (including any Termination Payments) on any
Derivative Products corresponding to the Class A-1 Notes to the extent
such payments have not been previously paid from amounts on deposit in
the Collection Fund; (II) any amounts on deposit in the Class A-2
Redemption Account may be used to pay Issuer Derivative Payments
(including any Termination Payments) on any Derivative Products
corresponding to the Class A-2 Notes to the extent such payments have
not been previously paid from amounts on deposit in the Collection Fund;
(III) any amounts on deposit in the Class A-3 Redemption Account may be
used to pay Issuer Derivative Payments (including any Termination
Payments) on any Derivative Products corresponding to the Class A-3
Notes to the extent such payments have not been previously paid from
amounts on deposit in the Collection Fund; (IV) any amounts on deposit
in the Class A-4 Redemption Account may be used to pay Issuer Derivative
Payments (including any Termination Payments) on any Derivative Products
corresponding to the Class A-4 Notes to the extent such payments have
not been previously paid from amounts on deposit in the Collection Fund;
and (V) any amounts on deposit in the Class A-5a Redemption Account may
be used to pay Issuer Derivative Payments (including any Termination
Payments) on any Derivative Products corresponding to the Class A-5a
Notes to the extent such payments have not been previously paid from
amounts on deposit in the Collection Fund.
SECTION 5.07. REMARKETING FEE FUND.
(a) DEPOSITS TO THE REMARKETING FEE FUND. There shall be
deposited into the Remarketing Fee Fund all amounts transferred thereto
from the Collection Fund pursuant to Section 5.05(c)(i) hereof. On each
Quarterly Distribution Date, an amount up to the Quarterly Funding
Amount shall be deposited to the Remarketing Fee Fund pursuant to
Section 5.05(c)(i) hereof.
(b) USE OF MONEYS IN THE REMARKETING FEE FUND. Amounts on
deposit in the Remarketing Fee Fund shall be used to pay the Remarketing
Fees due on the Reset Rate Notes on its corresponding Reset Date. If the
amount on deposit in the Remarketing Fee Fund on any Quarterly
Distribution Date, after the payment of any Remarketing Fees due on such
Quarterly Distribution Date, exceeds the Reset Period Target Amount, the
Issuer may direct the Indenture Trustee to transfer such excess to the
Collection Fund on such Quarterly Distribution Date.
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SECTION 5.08. RESERVE FUND.
(a) DEPOSITS TO THE RESERVE FUND. The Indenture Trustee shall
deposit to the Reserve Fund the proceeds of the Series 2004-2 Notes set
forth in Section 2.11(b) hereof. If the Reserve Fund is used for the
purposes described in subsection (b) this Section, 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
Distribution Date pursuant to Section 5.05(c)(ix) hereof. If the full
amount required to restore the Reserve Fund to the Reserve Fund
Requirement is not available in the Collection Fund on such next
succeeding Distribution Date, the Indenture Trustee shall continue to
transfer funds from the Collection Fund as they become available and in
accordance with Section 5.05(c)(ix) hereof until the deficiency in the
Reserve Fund has been eliminated.
(b) USE OF MONEYS IN THE RESERVE FUND. On each Distribution
Date, to the extent there are insufficient moneys in the Collection Fund
to make the transfers required by Sections 5.05(c)(i), (ii), (iii) and
(v) hereof, then, the amount of such deficiency shall be paid directly
from the Reserve Fund to the extent such deficiency has not been paid
from the Capitalized Interest Fund or the Note Payment Fund. Money in
the Reserve Fund may also be used to pay principal on the Series 2004-2
Notes only (i) on the date of their Stated Maturity, (ii) upon a
redemption in full of the Series 2004-2 Notes or (iii) in connection
with the defeasance of this Indenture in accordance with Article X
hereof. On the date of redemption of all of the Series 2004-2 Notes, the
Indenture Trustee shall transfer all amounts in the Reserve Fund to the
Note Payment Fund. On any Distribution Date that the amount in the
Reserve Fund exceeds the Reserve Fund Requirement with respect thereto,
the Indenture Trustee, at the direction of the Issuer, shall transfer
the excess to the Collection Fund.
(c) SUBSTITUTION OF RESERVE FUND SURETY BOND. 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.
(d) CALCULATION OF RESERVE FUND REQUIREMENT. The Issuer, or the
Administrator on behalf of the Issuer, shall provide the Indenture
Trustee with the information necessary for the Indenture Trustee to
determine the Reserve Fund Requirement on each Distribution Date, and
the Indenture Trustee may conclusively rely on such information so
provided.
SECTION 5.09. SUPPLEMENTAL INTEREST FUND.
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(a) DEPOSITS TO THE SUPPLEMENTAL INTEREST FUND. Amounts
transferred from the Collection Fund pursuant to Section 5.05(c)(viii)
hereof representing the Supplemental Interest Deposit Amount shall be
deposited to the Supplemental Interest Fund.
(b) USE OF MONEYS IN THE SUPPLEMENTAL INTEREST FUND. All amounts
on deposit in the Supplemental Interest Fund shall be transferred to the
Collection Fund on each Quarterly Distribution Date.
SECTION 5.10. TRANSFERS TO ISSUER. Transfers from the Collection Fund to
the Issuer may be made in accordance with Section 5.05(c)(xviii) hereof;
provided, however, that no transfer of assets to the Issuer shall be made if
there is not on deposit in the Reserve Fund an amount equal to at least the
Reserve Fund Requirement.
SECTION 5.11. INVESTMENT OF FUNDS HELD BY INDENTURE TRUSTEE. The
Indenture Trustee shall invest money held for the credit of any Fund, 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
definition of the Investment Securities. 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, Account or
Subaccount 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, Account
or Subaccount. 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, Account and Subaccount 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.
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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, subject to the terms and conditions of
Article VII hereof.
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 5.12. 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
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
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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:
(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);
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(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.
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, Accounts and Subaccounts 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, Accounts and
Subaccounts.
SECTION 5.13. 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 Higher Education
Act or other applicable laws.
(b) Subject to the payment of its fees and expenses (including,
without limitation, all indemnification amounts it is entitled to
receive pursuant to Section 7.05 hereof) pursuant to Sections 7.05 and
7.07 hereof, 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 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.
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(c) The Indenture Trustee shall, at such time as there are no
Series 2004-2 Notes Outstanding and all sums due the Indenture Trustee
pursuant to Sections 7.05 and 7.07 hereof and all amounts payable to any
Servicer, the Administrator, the Auction Agent, the Broker-Dealers, the
Remarketing Agents and the Counterparties have been paid, release any
remaining portion of the Trust Estate that secured the Series 2004-2
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 subsection (c) only upon receipt of an
Issuer Order and (if required by the Trust Indenture Act) Independent
Certificates in accordance with Sections 314(c) and 314(d)(1) of the
Trust Indenture Act.
(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 Sections 314(c) and 314(d)(1) of the
Trust Indenture Act or an Opinion of Counsel in lieu of such Independent
Certificates to the effect that the Trust Indenture Act does not require
any such Independent Certificates.
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 Class A 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 Class A 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 Class B
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 Class B
Notes when due and payable or failure to make any payment due under any
other Subordinate Obligations when due;
(e) 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
Series 2004-2 Notes, and continuation of such default for a period of 90
days after written notice thereof by the Indenture Trustee to the
Issuer; and
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(f) the occurrence of an Event of Bankruptcy with respect to the
Issuer.
Failure to pay any Reset Rate Notes Carry-over Amount, any Auction Rate Notes
Carry-over Amount or any accrued interest on such Reset Rate Notes Carry-over
Amount or Auction Rate Notes Carry-over Amount shall not constitute an Event of
Default.
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 hereof 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 Program 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 Class A Notes and all Issuer
Derivative Payments (excluding all Termination Payments other than Priority
Termination Payments) which are paid on a parity with interest on the Class A
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 Class A Notes on which such interest shall be in default and
with respect to such Issuer Derivative Payments then due as provided in the ISDA
Master Agreement, as the case may be, such payments to be made ratably to the
parties entitled thereto without discrimination or preference, SECOND, to the
payment of the principal of all Class A 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 Class B Notes and all
Issuer Derivative Payments (excluding all Termination Payments other than
Priority Termination Payments) which are paid on a parity with interest on the
Class B 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 Class B Notes on which such interest shall be in default
and with respect to such Issuer Derivative Payments then due as provided in the
ISDA Master Agreement, as the case may be, such payments to be made ratably to
the parties entitled thereto without discrimination or preference, FOURTH, to
the payment of the principal of all Class B Notes then due, such payments to be
made ratably to the parties entitled thereto without discrimination or
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preference, FIFTH, to pay Reset Rate Notes Carry-over Amounts or Auction Rate
Notes Carry-over Amounts (and any accrued interest thereon) on the Class A
Notes, such payments to be made ratably to the parties entitled thereto without
discrimination or preference, SIXTH, to pay Auction Rate Notes Carry-over
Amounts (and any accrued interest thereon) on the Class B Notes, such payments
to be made ratably to the parties entitled thereto without discrimination or
preference, SEVENTH, to pay unpaid amounts (including Termination Payments)
under a Derivative Product on which the Issuer Derivative Payments thereunder
are paid on a parity with interest on the Class A Notes, such payments to be
made ratably to the parties entitled thereto without discrimination or
preference, EIGHTH, to pay unpaid amounts (including Termination Payments) under
a Derivative Product on which the Issuer Derivative Payments thereunder are paid
on a parity with interest on the Class B Notes, such payments to be made ratably
to the parties entitled thereto without discrimination or preference, and,
NINTH, to Nelnet, Inc., to reimburse it for any amounts paid by it to the
Remarketing Agents for remarketing fees and expenses.
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
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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.
Notwithstanding the foregoing, the Indenture Trustee is prohibited from
selling the Financed Eligible Loans following an Event of Default, other than a
default in the payment of any principal or interest on any Series 2004-2 Note,
unless:
(a) The Registered Owners of all of the Highest Priority
Obligations at the time Outstanding consent to such a sale;
(b) The proceeds of such a sale will be sufficient to discharge
all the Outstanding Obligations pursuant to Article X hereof at the date
of such a sale; or
(c) The Issuer, or the Administrator on behalf of the Issuer,
determines that the collections on the Financed Eligible Loans would not
be sufficient on an ongoing basis to make all payments on such
Obligations as such payments would have become due if such Obligations
had not been declared due and payable, and the Indenture Trustee obtains
the consent of the Registered Owners of at least 66-2/3% of the
aggregate principal amount of the Highest Priority Obligations at the
time Outstanding.
Such a sale shall also require the consent of all the Registered Owners
of the Subordinate Obligations unless the proceeds of such a sale would be
sufficient to discharge the Subordinate Obligations pursuant to Article X hereof
at the date of such a sale.
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
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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(e) 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
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
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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 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 Series 2004-2 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 Series
2004-2 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 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.
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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.
SECTION 6.15. NOTICE OF DEFAULTS. Within 90 days after the occurrence of any
default hereunder with respect to the Series 2004-2 Notes, the Indenture Trustee
shall transmit 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 Series 2004-2 Note, or in the payment of any
sinking fund installment with respect to the Series 2004-2 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
Series 2004-2 Notes. For the purpose of this Section, 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 Series 2004-2 Notes.
ARTICLE VII
THE INDENTURE 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,
(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
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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 Series 2004-2 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 Series 2004-2 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,
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.
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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 of Directors 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) through (d) 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, 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
Obligations 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
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
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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 Series 2004-2 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.
Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the Trust
Indenture Act.
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 a 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, subject to the terms and conditions of
this Article.
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 Higher Education 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 Higher Education
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 Series 2004-2 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 SERIES 2004-2 NOTES. The
Indenture Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. An Indenture Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act 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 Series
2004-2 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 Series 2004-2 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 an 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 clause (a) above,
the Board of Directors 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 (c) by the
Issuer without cause so long as no Event of Default as described in Sections
6.01(a), (b), (c), (d) or (f) exists or has existed within the last 30 days, in
each case 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 an 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 of Directors by an instrument in
writing duly authorized by resolution. In the case of any such appointment by
the Board of Directors of a successor to the Indenture Trustee, the Board of
Directors shall forthwith cause notice thereof to be mailed to the Registered
Owners of the Series 2004-2 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 of Directors 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 Higher Education
Act with respect to the Financed Eligible Loans originated under the Higher
Education 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
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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
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 Series 2004-2 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 Series 2004-2 Notes shall not
have been authenticated, any successor to the Indenture Trustee may authenticate
such Series 2004-2 Notes in its own name; and in all such cases such certificate
shall have the full force which it has anywhere in the Series 2004-2 Notes or in
this Indenture.
SECTION 7.13. ADDITIONAL COVENANTS BY THE INDENTURE TRUSTEE TO CONFORM
TO THE HIGHER EDUCATION ACT. The Indenture Trustee covenants that it will at all
times be an Eligible Lender under the Higher Education Act so long as such
designation is necessary, as determined by the Issuer, to maintain the
guarantees and federal benefits under the Higher Education Act with respect to
the Financed Eligible Loans, that it will acquire Eligible Loans originated
under the Higher Education Act in its capacity as an Eligible Lender and that it
will not dispose of or deliver any Financed Eligible Loans originated under the
Higher Education Act or any security interest in any such Financed Eligible
Loans to any party who is not an Eligible Lender so long as the Higher Education
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 a
Servicer or a 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.
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SECTION 7.16. SERVICING AGREEMENT. The Indenture Trustee acknowledges
the receipt of a copy of the Servicing Agreement, dated as of April 1, 2004,
between the Issuer and Nelnet, Inc.
SECTION 7.17. ADDITIONAL COVENANTS OF INDENTURE TRUSTEE. The Indenture
Trustee, by the execution hereof, covenants, represents and agrees that:
(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 Higher Education Act and the
Regulations and will, upon written notice from an Authorized
Representative of the Issuer, the Secretary, or a Guaranty Agency, use
its reasonable efforts to cause this Indenture to be amended (in
accordance with Section 8.01 hereof) if the Higher Education 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 Series 2004-2 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 Series
2004-2 Notes, (c) any change in the Indenture Trustee or (d) any other
information reasonably requested to be reported to each Rating Agency; 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 Rating Services
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 Class of the Series 2004-2
Notes may involve discussions and/or meetings with representatives of the
Indenture Trustee at mutually agreeable times and places.
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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,
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 SERVICERS. 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 a Servicer
while such 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 such 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 Section
310(a)(1) of the Trust Indenture Act 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, 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, it shall resign immediately in the manner and with the effect
specified in this Article. Neither the Issuer nor any Person directly or
indirectly controlling or controlled by, or under common control with, the
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Issuer shall serve as Indenture Trustee. The Indenture Trustee shall comply with
Section 310(b) of the Trust Indenture Act, including the optional provisions
permitted by the second sentence of Section 310(b)(9) of the Trust Indenture
Act; provided, however, that there shall be excluded from the operation of
Section 310(b)(1) of the Trust Indenture Act any indenture or indentures under
which other securities of the Issuer are outstanding if the requirements of such
exclusion set forth in Section 310(b)(1) of the Trust Indenture Act are met.
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 Series 2004-2
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 Series
2004-2 Notes of any Class 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 Series 2004-2 Notes, of
principal (and premium, if any) and interest, if any, owing and unpaid
in respect of the Series 2004-2 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 Series 2004-2 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 Series 2004-2 Note any plan of reorganization,
arrangement, adjustment or composition affecting the Series 2004-2 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 Series 2004-2 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 Series 2004-2 Notes, and it
shall not be necessary to make any Registered Owners of the Series 2004-2 Notes
parties to any such proceedings.
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SECTION 7.25. PAYMENT OF TAXES AND OTHER GOVERNMENTAL CHARGES. The
Indenture Trustee shall request, and Register Owners 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 Series 2004-2 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.
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 Series 2004-2 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 Higher Education 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;
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(g) to make any change as shall be necessary in order to obtain
and maintain for any of the Series 2004-2 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 Higher
Education Act, the Regulations or the Code and the regulations
promulgated thereunder;
(i) 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 and Article V hereof with
respect to any particular Derivative Product;
(j) to create any additional Funds or Accounts or Subaccounts
under this Indenture deemed by the Indenture Trustee to be necessary or
desirable;
(k) to amend the Indenture to allow for any Series 2004-2 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 Series 2004-2 Notes or Derivative Product
and providing rights to such provider under this Indenture, including
with respect to defaults and remedies;
(l) 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 Series
2004-2 Notes;
(m) to make any other change with a Rating Confirmation; or
(n) 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. The Issuer shall provide each Rating
Agency with prior written notice of any 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 Series 2004-2 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 Series 2004-2 Note and any additional consent required
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pursuant to any 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.
The Issuer shall provide each Rating Agency with prior written notice of any
Supplemental Indenture.
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 Series 2004-2 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 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
Higher Education Act or granting of a security interest therein to any Person
other than an Eligible Lender or a Servicer, unless the Higher Education 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 Series 2004-2 Notes, the Indenture
Trustee shall transmit in the manner and to the extent provided in Section
313(c) of the Trust Indenture Act, 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 Series 2004-2 Note, or
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in the payment of any sinking fund installment with respect to the Series 2004-2
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 Series 2004-2 Notes. For the purpose of this Section,
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 Series 2004-2 Notes.
SECTION 8.05. CONFORMITY WITH THE TRUST INDENTURE ACT. Every
Supplemental Indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
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 Series 2004-2 Notes held by any person executing such
instrument as a Registered Owner of Series 2004-2 Notes and the fact, amount,
and numbers of the Series 2004-2 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 Series 2004-2 Notes described in such
certificate; provided, however, that at all times the Indenture Trustee may
require the actual deposit of such Series 2004-2 Note or Series 2004-2 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:
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If intended for the Issuer:
Nelnet Education 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, National Association
6th and Marquette, N9303-110
Minneapolis, Minnesota 55479
Attn: Corporate Trust Department
Telephone: (612) 667-4802
Facsimile: (612) 667-2149
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 electronically, 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
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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 Series 2004-2
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.
SECTION 9.07. NONPRESENTMENT OF SERIES 2004-2 NOTES OR INTEREST CHECKS.
Should any of the Series 2004-2 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 Series 2004-2 Notes or interest checks so
due, for the benefit of the Registered Owners thereof, a sum of money sufficient
to pay such Series 2004-2 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
Series 2004-2 Notes or interest checks and all rights of such Registered Owners
against the Issuer under the Series 2004-2 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 Series 2004-2
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 Series
2004-2 Note or interest check, and such Series 2004-2 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 Trust Indenture Act 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.
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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 Series
2004-2 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
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 Series 2004-2
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 Series
2004-2 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.
(a) Registered Owners may communicate pursuant to Section 312(b)
of the Trust Indenture Act with other Registered Owners with respect to
their rights under this Indenture or under the Series 2004-2 Notes. Upon
receipt by the Indenture Trustee of any request by three or more
Registered Owners or by one or more holders of Series 2004-2 Notes
evidencing not less than 25% of the Outstanding Amount of the Series
2004-2 Notes to receive a copy of the current list of Registered Owners
(whether or not made pursuant to Section 312(b) of the Trust Indenture
Act), the Indenture Trustee shall promptly notify the Issuer thereof by
providing to the Issuer a copy of such request and a copy of the list of
Registered Owners produced in response thereto.
(b) Registered Owners of Series 2004-2 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
Series 2004-2 Notes in accordance with Section 312 of the Trust
Indenture Act, 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 Section
312(b) of the Trust Indenture Act.
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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
Series 2004-2 Notes and the Derivative Value of any Derivative Product.
SECTION 9.18. FINANCED ELIGIBLE LOANS. The Issuer expects to originate
or 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 the Trust Estate) 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
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.
SECTION 9.20. CONFLICT WITH TRUST INDENTURE ACT. If any provision of
this Indenture limits, qualifies of conflicts with another provision of this
Indenture that is required to be included in this Indenture by any of the
provisions of the Trust Indenture Act, such required provision shall control.
The provisions of Sections 310 through 317 of the Trust Indenture Act
that impose duties on any Person (including the provisions automatically deemed
included in this Indenture unless expressly excluded by this Indenture) are a
part of and govern this Indenture, whether or not physically contained in this
Indenture.
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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 Series 2004-2 Notes and interest thereon) and all Issuer Derivative
Payments are fully paid or provision made for its payment as provided in this
Article.
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 Series 2004-2
Notes, the principal of and interest on the Series 2004-2 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 Series 2004-2 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) Series 2004-2 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 Series 2004-2 Note will be
considered to have been paid if the Series 2004-2 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 clause (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
Series 2004-2 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.
(d) In no event shall the Indenture Trustee deliver over to the
Issuer any Financed Eligible Loans originated under the Higher Education
Act unless the Issuer is an Eligible Lender, if the Higher Education 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 SERIES 2004-2 NOTES. Any Series
2004-2 Notes which have been paid by the Issuer, mutilated Series 2004-2 Notes
replaced by new Series 2004-2 Notes, and any temporary Series 2004-2 Note for
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which definitive Series 2004-2 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 Series 2004-2 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 [YY] 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 subsection (d) of this Section, 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.
(b) Notice of any prospective termination, specifying the
Distribution Date for payment of the final distribution and requesting
the surrender of the Series 2004-2 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
Distribution Date stating (i) the Distribution Date upon which final
payment of the Series 2004-2 Notes shall be made, (ii) the amount of any
such final payment, and (iii) the location for presentation and
surrender of the Series 2004-2 Notes. Payment of the final distribution
which shall be made only upon presentation and surrender of the Series
2004-2 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 subsection (d) of this Section, 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.
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 subsection
(e) of this Section unless both of the following occur:
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(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
subsection (c) of this Section), 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 affect 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 Distribution Date the Indenture Trustee shall cause to be paid to
Registered Owners and the Issuer amounts distributable on such
Distribution Date pursuant to Article V hereof. 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 such 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, 2004) and of its performance under its
Servicing Agreement has been made under the supervision of the officer signing
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such certificate; and (b) to the best of such officers' knowledge, based on such
review, such Servicer has fulfilled all its obligations under its 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. ISSUER'S CERTIFICATE. Each month, not later than the 15th
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 hereof.
SECTION 12.04. STATEMENTS TO REGISTERED OWNERS. 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 Series 2004-2 Notes and Financed Eligible Loans
as of the end of the preceding month, the following to the extent applicable;
(a) the amount of payments with respect to each Class of Series
2004-2 Notes paid with respect to principal during the preceding month;
(b) the amount of payments with respect to each Class of Series
2004-2 Notes paid with respect to interest during the preceding month;
(c) the amount of the payments allocable to any Registered
Owners' interest carry-over, 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 Amount of the Series 2004-2 Notes
of each 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 Class of variable rate Series
2004-2 Notes, indicating how such interest rate is calculated;
106
(g) the amount of the servicing fees allocated to each 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, Broker-Dealer fees, Remarketing 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 Capitalized Interest Fund, the Class B Supplemental
Reserve Fund and the Reserve Fund;
(l) the aggregate amount, if any, paid by the Indenture Trustee
to acquire Eligible Loans from amounts on deposit in the Acquisition
Fund during the preceding month;
(m) the amount remaining in the Acquisition 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 Issuer 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 Guaranty Agency
and which are awaiting payment;
(p) the Aggregate Value of the Trust Estate and the Outstanding
Amount of the Series 2004-2 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
Eligible 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, NATIONAL ASSOCIATION, as
Indenture Trustee
By /S/ Scott E. Ulven
------------------------------------------
Scott E. Ulven, Assistant Vice President
Acknowledged and accepted as to
clause "C" of the Granting
Clauses as of the day and year
first written above:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Eligible Lender Trustee
By /S/ Scott E. Ulven
------------------------------------------
Scott E. Ulven, Assistant Vice President
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APPENDIX A
CERTAIN TERMS AND PROVISIONS OF
THE RESET RATE NOTES
ARTICLE I
DEFINITIONS
Except as provided below in this Section, all terms which are defined in
Article I of the Indenture shall have the same meanings, respectively, in this
Appendix A as such terms are given in Article I of the Indenture and Appendix B
to the Indenture. In addition, the following terms shall have the following
respective meanings:
"ACCRUAL PERIOD"` shall mean, with respect to a Quarterly Distribution
Date and (a) a Class of the Reset Rate Notes that bears interest at a floating
rate of interest, the period from and including the immediately preceding
Quarterly Distribution Date for such Class of the Reset Rate Notes, or in the
case of the initial such period the Closing Date, to but excluding such current
Quarterly Distribution Date; provided that, if more than one Interest Rate
Change Date occurs for any Class of the Reset Rate Notes within any given
Accrual Period, the related rate of interest for the entire Accrual Period shall
be the weighted average of the interest rates applicable on such Class of the
Reset Rate Notes for each day during such Accrual Period; and (b) a Class of the
Reset Rate Notes that bears interest at a fixed rate, the period from and
including the immediately preceding Quarterly Distribution Date, to but
excluding the current Quarterly Distribution Date.
"ACTUAL/360" shall mean that interest is calculated on the basis of the
actual number of days elapsed in a year of 360 days.
"ACTUAL/365 (FIXED)" shall mean that interest is calculated on the basis
of the actual number of days elapsed in a year of 365 days, regardless of
whether accrual or payment occurs in a leap year.
"ACTUAL/ACTUAL (ACCRUAL BASIS)" shall mean that interest is calculated
on the basis of the actual number of days elapsed in a year of 365 days, or 366
days for every day in a leap year.
"ACTUAL/ACTUAL (PAYMENT BASIS)" shall mean that interest is calculated
on the basis of the actual number of days elapsed in a year of 365 days if the
interest period ends in a non-leap year, or 366 days if the interest period ends
in a leap year, as the case may be.
"ALL HOLD RATE" shall mean, for a Class of the Reset Rate Notes, the
applicable Index plus or minus the related Spread (with respect to a Class of
the Reset Rate Notes that will bear interest at a floating rate) or the
applicable fixed rate, which may be expressed as the fixed rate pricing
benchmark plus or minus a spread (with respect to a Class of the Reset Rate
Notes that will bear interest at a fixed rate), that the Remarketing Agents, in
consultation with the Issuer, determine will be in effect, unless the related
Call Option is exercised, in the event that 100% of the holders of that Class of
the Reset Rate Notes choose to hold their Reset Rate Notes for the upcoming
Reset Period. The All Hold Rate shall be a rate that the Remarketing Agents, in
consultation with the Issuer, in their good faith determination, believe would
result in the remarketing of the entire applicable Class of the Reset Rate Notes
at a price equal to 100% of the Outstanding Amount thereof; provided, however,
the All Hold Rate shall not exceed Three-Month LIBOR plus 0.75%.
"BUSINESS DAY" shall mean, with respect to the LIBOR Rate Notes and the
Reset Rate Notes, (a) with respect to calculating One-Month, Two-Month and
Three-Month LIBOR, any day on which banks in New York, New York and London,
England are open for the transaction of international business; and (b) for all
other purposes, any day other than a Saturday, a Sunday or a day on which
banking institutions or trust companies in New York, New York or Minneapolis,
Minnesota are authorized or obligated by law, regulation or executive order to
remain closed.
"CALL OPTION" shall mean, the option described in Section 2.06 of this
Appendix A owned by Nelnet, Inc. or one of its subsidiaries as a permitted
transferee (provided, that no such subsidiary shall possess the Call Option if
it at any time owned an interest in any of the Financed Eligible Loans) to
purchase 100% of a Class of the Reset Rate Notes on each related Reset Date on
or after November 1, 2005, exercisable at a price equal to 100% of the
Outstanding Amount of such Class, less all amounts distributed to the Registered
Owners of the related Class of the Reset Rate Notes as a payment of principal on
the related Quarterly Distribution Date, plus any accrued and unpaid interest
and Reset Rate Notes Carry-over Amount not paid by the Issuer on the related
Quarterly Distribution Date, and pursuant to the terms and conditions set forth
in the Reset Rate Note Procedures.
"CALL RATE" shall mean, for a Class of the Reset Rate Notes for which a
Call Option has been exercised, the rate of interest that is either: (a) if that
Class did not have at least one related Derivative Product in effect during the
previous Reset Period, the rate applicable for the most recent Reset Period
during which the Failed Remarketing Rate was not in effect; or (b) if that Class
had one or more related Derivative Products in effect during the previous Reset
Period, the weighted average of the floating rates of interest that were due to
the related Counterparties from the Issuer during the previous Reset Period for
that Class. This rate will continue to apply for each Reset Period while the
holder of the Call Option retains that Class of the Reset Rate Notes.
"CLASS A-5A NOTES INTEREST RATE" shall mean, for any Accrual Period
after the initial Accrual Period, Three-Month LIBOR as determined on the related
LIBOR Determination Date, plus 0.14%, based on an Actual/360 accrual method. For
the initial Accrual Period, the Class A-5a Rate shall mean 1.35909%, based on an
Actual/360 accrual method. The Class A-5a Notes Interest Rate shall be changed
on each related Reset Date to the interest rate (which shall not exceed
Three-Month LIBOR plus 0.75%) and Day Count Basis that will be set forth in the
notice required to be delivered by the Issuer and/or the Remarketing Agents on
each related Remarketing Terms Determination Date and Spread Determination Date,
as applicable, pursuant to the procedures set forth in the Reset Rate Note
Procedures.
"CMT RATE" shall mean, for any relevant Interest Rate Determination Date
prior to each related Interest Rate Change Date, the rate displayed on the
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applicable Designated CMT Moneyline Telerate Page shown below by 3:00 p.m., New
York City time, on that Interest Rate Determination Date under the caption ". .
.. Treasury Constant Maturities . . . Federal Reserve Board Release H.15. . .
..Mondays Approximately 3:45 p.m.," under the column for: (a) if the Designated
CMT Moneyline Telerate Page is 7051, the rate on that Interest Rate
Determination Date; or (b) if the Designated CMT Moneyline Telerate Page is
7052, the average for the week, the month or the quarter, as specified on the
Remarketing Terms Determination Date, ended immediately before the week in which
the related Interest Rate Determination Date occurs. The following procedures
will apply if the CMT Rate cannot be determined as described above: (i) if the
rate described above is not displayed on the relevant page by 3:00 p.m., New
York City time on that Interest Rate Determination Date, unless the calculation
is made earlier and the rate is available from that source at that time on that
Interest Rate Determination Date, then the CMT Rate will be the Treasury
constant maturity rate having the designated index maturity, as published in
H.15(519) or another recognized electronic source for displaying the rate; (ii)
if the applicable rate described above is not published in H.15(519) or another
recognized electronic source for displaying such rate by 3:00 p.m., New York
City time on that Interest Rate Determination Date, unless the calculation is
made earlier and the rate is available from one of those sources at that time,
then the CMT Rate will be the Treasury constant maturity rate, or other United
States Treasury rate, for the index maturity and with reference to the relevant
Interest Rate Determination Date, that is published by either the Board of
Governors of the Federal Reserve System or the United States Department of the
Treasury and that the Issuer determines to be comparable to the rate formerly
displayed on the Designated CMT Moneyline Telerate Page shown above and
published in H.15(519); (iii) if the rate described in the prior paragraph
cannot be determined, then the Issuer will determine the CMT Rate to be a yield
to maturity based on the average of the secondary market closing offered rates
as of approximately 3:30 p.m., New York City time, on the relevant Interest Rate
Determination Date reported, according to their written records, by leading
primary United States government securities dealers in New York City. The Issuer
will select five such securities dealers and will eliminate the highest and
lowest quotations or, in the event of equality, one of the highest and lowest
quotations, for the most recently issued direct noncallable fixed rate
obligations of the United States Treasury ("Treasury Notes") with an original
maturity of approximately the designated index maturity and a remaining term to
maturity of not less than the designated index maturity minus one year in a
representative amount; (iv) if the Issuer cannot obtain three Treasury Note
quotations of the kind described in clause (iii) above, the Issuer will
determine the CMT Rate to be the yield to maturity based on the average of the
secondary market bid rates for Treasury Notes with an original maturity longer
than the designated CMT index maturity which have a remaining term to maturity
closest to the designated CMT index maturity and in a representative amount, as
of approximately 3:30 p.m., New York City time, on the relevant Interest Rate
Determination Date of leading primary United States government securities
dealers in New York City. In selecting these offered rates, the Issuer will
request quotations from at least five such securities dealers and will disregard
the highest quotation (or if there is equality, one of the highest) and the
lowest quotation (or if there is equality, one of the lowest). If two Treasury
Notes with an original maturity longer than the designated CMT index maturity
have remaining terms to maturity that are equally close to the designated CMT
index maturity, the Issuer will obtain quotations for the Treasury Note with the
shorter remaining term to maturity; (v) if three or four but not five leading
primary United States government securities dealers are quoting as described in
the prior paragraph, then the CMT Rate for the relevant Interest Rate
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Determination Date will be based on the average of the bid rates obtained and
neither the highest nor the lowest of those quotations will be eliminated; or
(vi) if fewer than three leading primary United States government securities
dealers selected by the Issuer are quoting as described in clause (v) above, the
CMT Rate will remain the CMT Rate then in effect on that Interest Rate
Determination Date.
"COMMERCIAL PAPER RATE" shall mean, for any relevant Interest Rate
Determination Date prior to each related Interest Rate Change Date, the Bond
Equivalent Yield (as defined below) of the rate for 90-day commercial paper, as
published in H.15(519) prior to 3:00 p.m., New York City time, on that Interest
Rate Determination Date under the heading "Commercial Paper--Financial." If the
rate described above is not published in H.15(519) by 3:00 p.m., New York City
time, on that Interest Rate Determination Date, unless the calculation is made
earlier and the rate was available from that source at that time, then the
Commercial Paper Rate will be the Bond Equivalent Yield of the rate on the
relevant Interest Rate Determination Date, for commercial paper having the index
maturity specified on the Remarketing Terms Determination Date, as published in
H.15 Daily Update or any other recognized electronic source used for displaying
that rate under the heading "Commercial Paper--Financial." For purposes of this
definition of "Commercial Paper Rate," the "Bond Equivalent Yield" equals
[(NxD)/[360(Dx90)] times 100], where "D" refers to the per annum rate determined
as set forth above, quoted on a bank discount basis and expressed as a decimal
and "N" refers to 365 or 366, as the case may be. If the rate described above
cannot be determined, the Commercial Paper Rate will remain the commercial paper
rate then in effect on that Interest Rate Determination Date.
"COMMERCIAL PAPER RATE MINIMUM PURCHASE AMOUNT" shall have the meaning
ascribed to such term in Section 2.07(b) of this Appendix A.
"DAY COUNT BASIS" means 30/360, Actual/360, Actual/365 (fixed),
Actual/Actual (accrual basis) or Actual/Actual (payment basis), as applicable.
"ELIGIBLE COUNTERPARTY" shall mean any entity, which may be an affiliate
of a Remarketing Agent, engaged in the business of entering into derivative
instrument contracts that satisfies the Rating Agency Condition.
"ELIGIBLE RESET RATE NOTES CARRY-OVER MAKE-UP AMOUNT" shall mean, with
respect to each Accrual Period relating to a Class of the Reset Rate Notes as to
which, as of the first day of such Accrual Period, there is any unpaid Reset
Rate Notes Carry-over Amount, an amount equal to the lesser of (a) interest
computed on the principal balance of the Class A-5a Notes in respect to such
Accrual Period at a per annum rate equal to the excess, if any, of the Net Loan
Rate over the Class A-5a Notes Interest Rate, and (b) the aggregate Reset Rate
Notes Carry-over Amount remaining unpaid as of the first day of such Accrual
Period together with interest accrued and unpaid thereon through the end of such
Accrual Period.
"FAILED REMARKETING" shall mean, with respect to a Class of the Reset
Rate Notes and each related Reset Date, the situation where (a) the Remarketing
Agents, in consultation with the Issuer, cannot establish one or more of the
terms required to be set on the Remarketing Terms Determination Date, (b) the
Remarketing Agents are unable to establish the related Spread, Initial Rate (if
such Class of the Reset Rate Notes is to be reset to bear interest at an Auction
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Rate pursuant to Section 2.01(f) of this Appendix) or fixed rate of interest on
the Spread Determination Date or the Spread, Initial Rate (if such Class of the
Reset Rate Notes is to be reset to bear interest at an Auction Rate pursuant to
Section 2.01(f) of this Appendix) or fixed rate of interest would exceed
three-month LIBOR plus 0.75%, (c) the Remarketing Agents are unable to remarket
some or all of the tendered Reset Rate Notes at the Spread, the Initial Rate (if
such Class of the Reset Rate Notes is to be reset to bear interest at an Auction
Rate pursuant to Section 2.01(f) of this Appendix A) or fixed rate of interest
established on the Spread Determination Date and, in their sole discretion,
elect not to purchase those Reset Rate Notes, (d) any failure of the Issuer to
redeem a Class of Reset Rate Notes on a Reset Date following the delivery of a
notice of redemption or any failure of Nelnet, Inc., or one of its designated
affiliates, to purchase a Class of the Reset Rate Notes on a Reset Date
following the exercise of the Call Option, (e) any of the conditions specified
in Section 8 of the Remarketing Agreement have not been satisfied or (f) any
applicable Rating Agency Condition has not been satisfied.
"FAILED REMARKETING RATE" shall mean, for any applicable Reset Period
and any Class of the Reset Rate Notes, Three-Month LIBOR plus 0.75%.
"FEDERAL FUNDS RATE" shall mean, for any relevant Interest Rate
Determination Date prior to each related Interest Rate Change Date, the rate set
forth for such day opposite the caption "Federal Funds (effective)" in the
weekly statistical release designated H.15(519), or any successor publication,
published by the Board of Governors of the Federal Reserve System. If such rate
is not published in the relevant H.15(519) for any day, the rate for such day
shall be the arithmetic mean of the rates for the last transaction in overnight
Federal Funds arranged prior to 9:00 a.m., New York City time, on that day by
each of four leading brokers in such transactions located in New York City
selected by the Issuer. The Federal Funds Rate for each Saturday and Sunday and
for any other that is not a Business Day shall be the Federal Funds Rate for the
preceding Business Day as determined above.
"H.15(519)" shall mean the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
United States Federal Reserve System.
"H.15 DAILY UPDATE" shall mean the daily update for H.15(519), available
through the World Wide Web site of the Board of Governors of the Federal Reserve
System at HTTP://WWW.FEDERALRESERVE.GOV/RELEASES/H15/UPDATE, or any successor
site or publications.
"HOLD NOTICE" shall mean a written statement (or an oral statement
confirmed in writing, which may be by e-mail) by a Registered Owner or
beneficial owner of a Reset Rate Note delivered to a Remarketing Agent on or
before the Notice Date that such Registered Owner or beneficial owner desires to
hold its Reset Rate Notes for the upcoming Reset Period and affirmatively agrees
to receive a rate of interest of not less than the applicable All Hold Rate
commencing on the related Reset Date.
"INDEX" or "INDICES" shall mean LIBOR, a Commercial Paper Rate, the CMT
Rate, the Federal Funds Rate, the 91-day Treasury Bill Rate and the Prime Rate.
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"INDEX MATURITY" shall mean, with respect to any Accrual Period, the
interval between Interest Rate Change Dates for each applicable Index during
such Accrual Period, commencing on the first day of that Accrual Period.
"INITIAL RESET DATE" shall mean, for the Class A-5a Notes, the Quarterly
Distribution Date in May of 2009.
"INITIAL REMARKETING AGENCY AGREEMENT" shall mean each agreement,
substantially in the form of Appendix A to the Remarketing Agreement to be
entered into on each Remarketing Terms Determination Date (unless the Call
Option has been exercised) between the Remarketing Agents and the Issuer.
"INTEREST RATE CHANGE DATE" shall mean for each Accrual Period, the date
or dates, based on the applicable Index, on which the rate of interest for any
Class of the Reset Rate Notes bearing interest at a floating rate is to be
reset.
"INTEREST RATE DETERMINATION DATE" shall mean, for each Accrual Period,
and (a) for any Class of the Reset Rate Notes that bear interest at a LIBOR
based rate, the related LIBOR Determination Date; or (b) for each Class of the
Reset Rate Notes that bear interest at a floating rate that is not LIBOR based,
the applicable date or dates set forth in the related Remarketing Terms Notice,
on which the applicable rate of interest to be in effect as of the next related
Interest Rate Change Date will be determined by the Issuer.
"LIBOR" shall mean One-Month LIBOR, Two-Month LIBOR and Three-Month
LIBOR, as applicable
"NELNET ELIGIBLE PURCHASER" shall mean Nelnet, Inc. or any of its
affiliates; provided that any such affiliate has at no time owned an interest in
any of the Financed Eligible Loans.
"NET LOAN RATE" shall mean, with respect to any Accrual Period
applicable to a Class of the Reset Rate Notes, the weighted average return on
the Financed Eligible Loans, including all Revenues derived from such Financed
Eligible Loans, less all Program Expenses expressed as a percentage of the
average outstanding principal balance of such Financed Eligible Loans, which
percentage shall be calculated by the Issuer on a quarterly basis, in arrears
and provided to the Indenture Trustee and the Remarketing Agents. In making the
determination of the Net Loan Rate, the Issuer shall take into account any
Counterparty Payments received and/or any Issuer Derivative Payments made on a
Derivative Product which does not correspond to a specific Class of the Series
2004-2 Notes (unless such Derivative Product corresponds to the Class of the
Series 2004-2 Notes for which the calculation of the Net Loan Rate is being
performed).
"91-DAY TREASURY BILL RATE" shall mean for any relevant Interest Rate
Determination Date, prior to each related Interest Rate Change Date, the rate
equal to the weighted average per annum discount rate (expressed as a bond
equivalent yield and applied on a daily basis) for direct obligations of the
United States with a maturity of thirteen weeks ("91-day Treasury Bills") sold
at the applicable 91-day Treasury Bill auction, as published in H.15(519) or
otherwise or as reported by the U.S. Department of the Treasury. In the event
that the results of the auctions of 91-day Treasury Bills cease to be published
or reported as provided above, or that no 91-day Treasury Bill auction is held
A-6
in a particular week, then the 91-day Treasury Bill Rate in effect as a result
of the last such publication or report will remain in effect until such time, if
any, as the results of auctions of 91-day Treasury Bills will again be so
published or reported or such auction is held, as the case may be.
"NOTICE DATE" shall mean, for each Class of the Reset Rate Notes, 12:00
noon, New York City time, on the sixth Business Day prior to the related Reset
Date.
"ONE-MONTH LIBOR" see definition of "Three-Month LIBOR."
"PRIME RATE" shall mean, for any relevant Interest Rate Determination
Date prior to each related Interest Rate Change Date, the prime rate or base
lending rate on that date, as published in H.15(519), prior to 3:00 p.m., New
York City time, on that Interest Rate Determination Date under the heading "Bank
Prime Loan." The Issuer will observe the following procedures if the Prime Rate
cannot be determined as described above: (a) if the rate described above is not
published in H.15(519) prior to 3:00 p.m., New York City time, on the relevant
Interest Rate Determination Date unless the calculation is made earlier and the
rate was available from that source at that time, then the Prime Rate will be
the rate for that Interest Rate Determination Date, as published in H.15 Daily
Update or another recognized electronic source for displaying such rate opposite
the caption "Bank Prime Loan"; (b) if the above rate is not published in either
H.15(519), H.15 Daily Update or another recognized electronic source for
displaying such rate by 3:00 p.m., New York City time, on the relevant Interest
Rate Determination Date, then the Issuer will determine the Prime Rate to be the
average of the rates of interest publicly announced by each bank that appears on
the Reuters screen designated as "USPRIME1" as that bank's prime rate or base
lending rate as in effect on that Interest Rate Determination Date; (c) if fewer
than four rates appear on the Reuters screen USPRIME1 page on the relevant
Interest Rate Determination Date, then the Prime Rate will be the average of the
prime rates or base lending rates quoted, on the basis of the actual number of
days in the year divided by a 360-day year, as of the close of business on that
Interest Rate Determination Date by three major banks in New York City selected
by the Issuer; or (d) if the banks selected by the Issuer are not quoting as
mentioned above, the Prime Rate will remain the prime rate then in effect on
that Interest Rate Determination Date.
"REFERENCE BANKS" shall mean, four major banks in the London interbank
market selected by the Issuer.
"REMARKETING AGENCY AGREEMENT" shall mean the collective reference to an
Initial Remarketing Agency Agreement and the related Supplemental Remarketing
Agency Agreement.
"REMARKETING AGENTS" shall mean, initially, J.P. Morgan Securities Inc.
or Morgan Stanley & Co. Incorporated. The Issuer, in its sole discretion, may
change any Remarketing Agent for any Class of the Reset Rate Notes for any Reset
Period at any time on or before a related Remarketing Terms Determination Date.
"REMARKETING AGREEMENT" shall mean the Remarketing Agreement, dated as
of April 1, 2004, between the Issuer and the Remarketing Agents, as amended and
supplemented pursuant to the terms thereof.
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"REMARKETING TERMS DETERMINATION DATE" shall mean, for a Class of the
Reset Rate Notes, not later than 3:00 p.m., New York City time, on the eighth
Business Day prior to the applicable Reset Date.
"REMARKETING TERMS NOTICE" shall mean the notice delivered by the
Remarketing Agents to the applicable Registered Owners of a Class of the Reset
Rate Notes, the Indenture Trustee and the Rating Agencies on each Remarketing
Terms Determination Date containing the information set forth in the Reset Rate
Note Procedures.
"RESET DATE" shall mean a Quarterly Distribution Date on which certain
terms for any Class of the Reset Rate Notes may be changed in accordance with
the Reset Rate Note Procedures.
"RESET PERIOD" shall mean, with respect to each Class of the Reset Rate
Notes, a period of at least three months (or any other longer duration that is a
multiple of three months) that will always end on a Quarterly Distribution Date,
which will be the next Reset Date for such Class of the Reset Rate Notes;
provided, that no Reset Period may end after the Stated Maturity of such Class
of the Reset Rate Notes.
"RESET RATE NOTE PROCEDURES" shall mean Article II of this Appendix A.
"RESET RATE NOTES CARRY-OVER AMOUNT" shall mean the excess, if any, of
(a) the amount of interest on a Reset Rate Note that would have accrued with
respect to the related Accrual Period at the interest rate for such Reset Rate
Note established pursuant to Section 2.01(b) of this Appendix A over (b) the
amount of interest on such Reset Rate Note actually accrued with respect to such
Reset Rate Note with respect to such Accrual Period based on the Net Loan Rate,
together with the unreduced portion of any such excess from prior Accrual
Periods; provided that any reference to "principal" or "interest" in the
Indenture and in this Appendix A and the Reset Rate Notes shall not include
within the meanings of such words any Reset Rate Notes Carry-over Amount or any
interest accrued on any Reset Rate Notes Carry-over Amount.
"SCHEDULE REPLACEMENT ORDER" shall mean an Issuer Order replacing
Schedule A to the related Class of the Reset Rate Notes to be delivered with
respect to the related Reset Date.
"SPREAD" shall mean the percentage determined by the Remarketing Agents
on the related Spread Determination Date, with respect to a Class of the Reset
Rate Notes that is to bear a floating rate of interest, in excess of or below
the applicable Index that will be in effect with respect to such Class of the
Reset Rate Notes during any Reset Period after the initial Reset Period so as to
result in a rate that, in the reasonable opinion of the Remarketing Agents, will
enable all of the tendered Reset Rate Notes of the applicable Class to be
remarketed by the Remarketing Agents at 100% of the Outstanding Amount of such
Reset Rate Notes.
"SPREAD DETERMINATION DATE" shall mean, for each Class of the Reset Rate
Notes, 3:00 p.m., New York City time, on the third Business Day prior to the
related Reset Date.
"SPREAD DETERMINATION NOTICE" shall mean the notice delivered by the
Remarketing Agents to the Registered Owners or beneficial owners of a Class of
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the Reset Rate Notes, the Indenture Trustee and the Rating Agencies on each
related Spread Determination Date containing the information set forth in the
Reset Rate Note Procedures.
"SUPPLEMENTAL REMARKETING AGENCY AGREEMENT" shall mean each agreement,
substantially in the form of Appendix B to the Remarketing Agreement to be
entered into on each Spread Determination Date (unless the Call Option has been
exercised or a Failed Remarketing has been declared) between the Issuer and the
Remarketing Agents.
"TELERATE PAGE 3750" shall mean the display page so designated on the
Moneyline Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"30/360" shall mean that interest is calculated on the basis of a
360-day year consisting of twelve 30-day months
"THREE-MONTH LIBOR," "TWO-MONTH LIBOR" and "ONE-MONTH LIBOR" mean, with
respect to any Accrual Period, the London interbank offered rate for deposits in
U.S. dollars having the Index Maturity which appears on Telerate Page 3750 as of
11:00 a.m., London time, on the related LIBOR Determination Date. If this rate
does not appear on Telerate Page 3750, the rate for that day will be determined
on the basis of the rates at which deposits in U.S. dollars, having the Index
Maturity and in a principal amount of not less than U.S. $1,000,000, are offered
at approximately 11:00 a.m., London time, on that LIBOR Determination Date, to
prime banks in the London interbank market by the Reference Banks. The Issuer
will request the principal London office of each Reference Bank to provide a
quotation of its rate. If the Reference Banks provide at least two quotations,
the rate for that day will be the arithmetic mean of the quotations. If the
Reference Banks provide fewer than two quotations, the rate for that day will be
the arithmetic mean of the rates quoted by major banks in New York City,
selected by the Issuer, at approximately 11:00 a.m., New York time, on that
LIBOR Determination Date, for loans in U.S. dollars to leading European banks
having the Index Maturity and in a principal amount of not less than U.S.
$1,000,000. If the banks selected as described above are not providing
quotations, Three-Month LIBOR, Two-Month LIBOR and One-Month LIBOR in effect for
the applicable Accrual Period will be Three-Month LIBOR, Two-Month LIBOR and
One-Month LIBOR, as applicable, in effect for the previous Accrual Period.
"TRUST AUCTION DATE" shall have the meaning ascribed to such term in
Section 2.05(c) of this Appendix A.
"TWO-MONTH LIBOR" see definition of "Three-Month LIBOR."
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ARTICLE II
RESET RATE NOTE PROCEDURES
SECTION 2.01. INTEREST RATES; PRINCIPAL PAYMENTS; RESET RATE NOTES
CARRY-OVER AMOUNT.
(a) The Class A-5a Notes will bear interest from the Closing Date
through and including the related Initial Reset Date, payable on each
Quarterly Distribution Date, at the rate set forth in the definition of
Class A-5a Notes Interest Rate. The applicable interest rate for each
subsequent Reset Period will be set forth on Schedule A to the
applicable Reset Rate Note and determined as set forth below. Interest
on any Class of the Reset Rate Notes after the initial Reset Period may
be reset to bear any of a fixed rate, a floating rate or an Auction Rate
at the option of the Remarketing Agents, in consultation with the
Issuer, but shall not exceed Three-Month LIBOR plus 0.75%. Interest on
each Class of the Reset Rate Notes shall be paid on each Quarterly
Distribution Date at the priority level set forth in Section 5.05(c) of
the Indenture.
(b) The interest rate, or the mechanism for calculating the
interest rate, on each Class of the Reset Rate Notes will be reset as of
each corresponding Reset Date as determined by (i) the Remarketing
Agents, in consultation with the Issuer, with respect to (A) the length
of the Reset Period or, if the Class of the Reset Rate Notes is to be
reset to bear interest at an Auction Rate pursuant to subsection (f) of
this Section, the length of the initial Auction Period for such Class of
the Reset Rate Notes, (B) whether the rate is (1) fixed, and if fixed,
the applicable pricing benchmark and Day Count Basis, (2) floating and,
if floating, the applicable Index and Day Count Basis or (3) an Auction
Rate, (C) the applicable Interest Rate Determination Dates within each
Accrual Period or, if the Class of the Reset Rate Notes is to be reset
to bear interest at an Auction Rate pursuant to subsection (f) of this
Section, the initial Auction Date and Initial Rate Adjustment Date for
such Class of the Reset Rate Notes, (D) the interval between Interest
Rate Change Dates during each Accrual Period, (E) whether the Reset Rate
Notes constitute Non-amortizing Reset Rate Notes, and (F) the related
All Hold Rate; and (ii) the Remarketing Agents, in their sole
determination, with respect to the setting of the applicable (A) fixed
rate of interest, (B) Spread to the chosen Index or (C) if the Class of
the Reset Rate Notes is to be reset to bear interest at an Auction Rate
pursuant to subsection (f) of this Section, the Initial Rate, as
applicable.
(c) In the event that a Class of the Reset Rate Notes is reset to
bear (or continues to bear) a fixed rate of interest or a floating rate
of interest (other than an Auction Rate) based on an Index other than
LIBOR or a Commercial Paper Rate, the Issuer, if required pursuant to
Section 2.10 of this Appendix A, will be responsible for arranging, on
behalf of the Issuer and the Trust Estate, one or more Derivative
Products to hedge the floating/fixed rate of interest risk and, together
with the Remarketing Agents, for selecting the Counterparties thereto in
accordance with the procedures set forth in Section 2.10(d) of this
Appendix A. No Class of the Reset Rate Notes will be reset (or continue)
to bear interest at a fixed rate or a floating rate based on an Index
other than LIBOR or a Commercial Paper Rate or shall constitute
Non-Amortizing Reset Rate Notes unless the Rating Agency Condition has
been satisfied.
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(d) Each Class of the Reset Rate Notes shall be entitled to
receive Principal Reduction Payments on each Quarterly Distribution
Date, unless such Class of the Reset Rate Notes constitutes
Non-amortizing Reset Rate Notes or such Class of the Reset Rate Notes is
reset to bear interest at an Auction Rate pursuant to subsection (f) of
this Section, all as provided in Section 5.06 of the Indenture.
(e) If (A) the Commercial Paper Rate Trigger has occurred, (B)
the Class A-5a Notes have not been redeemed on the Quarterly
Distribution Date immediately succeeding the occurrence of the
Commercial Paper Rate Trigger and (C) the interest rate for the Class
A-5a Notes established pursuant to Section 2.01(b) of this Appendix A is
greater than the Net Loan Rate, then the Class A-5a Notes Interest Rate
for that Accrual Period will be the Net Loan Rate. If the interest rate
applicable to such Class of the Reset Rate Notes for any Accrual Period
is the Net Loan Rate, the Indenture Trustee shall determine the Reset
Rate Notes Carry-over Amount, if any, with respect to such Reset Rate
Notes for such Accrual Period. Such Reset Rate Notes Carry-over Amount
shall bear interest calculated at a rate equal to One-Month LIBOR (as
determined by the Issuer, provided the Indenture Trustee has received
notice of One-Month LIBOR from the Issuer, and if the Indenture Trustee
shall not have received such notice from the Issuer, then as determined
by the Indenture Trustee) from the Quarterly Distribution Date for the
Accrual Period with respect to which such Reset Rate Notes Carry-over
Amount was calculated, until paid. Any payment in respect of Reset Rate
Notes Carry-over Amount shall be applied, first, to any accrued interest
payable thereon and, second, in reduction of such Reset Rate Notes
Carry-over Amount. For purposes of the Indenture and this Appendix A,
any reference to "principal" or "interest" herein shall not include
within the meaning of such words Reset Rate Notes Carry-over Amount or
any interest accrued on any such Reset Rate Notes Carry-over Amount.
Such Reset Rate Notes Carry-over Amount shall be separately calculated
for each Reset Rate Note by the Indenture Trustee during such Accrual
Period in sufficient time for the Indenture Trustee to give notice to
each Registered Owner of such Reset Rate Notes Carry-over Amount as
required in the next succeeding sentence. Not less than four days before
the Quarterly Distribution Date for an Accrual Period with respect to
which such Reset Rate Notes Carry-over Amount has been calculated by the
Indenture Trustee, the Indenture Trustee shall give written notice to
each Registered Owner, the Remarketing Agents and the Issuer of the
Reset Rate Notes Carry-over Amount applicable to each Registered Owner's
Reset Rate Note, which written notice may accompany the payment of
interest made to each such Registered Owner on such Quarterly
Distribution Date or otherwise shall be mailed on such Quarterly
Distribution Date by first-class mail, postage prepaid, or by electronic
means to each such Registered Owner at such Registered Owner's address
as it appears on the registration records maintained by the Indenture
Trustee. In addition to such Reset Rate Notes Carry-over Amount, such
notice shall state, that, unless and until a Reset Rate Note has been
redeemed (other than by optional redemption), after which redemption all
accrued Reset Rate Notes Carry-over Amounts (and all accrued interest
thereon) that remain unpaid shall be canceled and no Reset Rate Notes
Carry-over Amount (or interest accrued thereon) shall be paid with
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respect to any redeemed Reset Rate Note, (a) the Reset Rate Notes
Carry-over Amount (and interest accrued thereon calculated at a rate
equal to One-Month LIBOR) shall be paid or, in case of a defeasance,
provided for by the Indenture Trustee on a Reset Rate Note on the
earliest of (i) the date of defeasance or optional redemption of the
Reset Rate Notes, or (ii) the first occurring Quarterly Distribution
Date if and to the extent that (x) the Eligible Reset Rate Notes
Carry-over Make-Up Amount with respect to such subsequent Accrual Period
is greater than zero, and (y) moneys are available pursuant to the terms
of the Indenture in an amount sufficient to pay all or a portion of such
Reset Rate Notes Carry-over Amount (and interest accrued thereon); and
(b) interest shall accrue on the Reset Rate Notes Carry-over Amount at a
rate equal to One-Month LIBOR until such Reset Rate Notes Carry-over
Amount is paid in full or is cancelled.
The Reset Rate Notes Carry-over Amount (and interest accrued
thereon) for Reset Rate Notes shall be paid or, in case of a defeasance,
provided for by the Indenture Trustee on Outstanding Reset Rate Notes on
the earliest of (a) the date of defeasance or optional redemption of any
of the Reset Rate Notes or (b) the first occurring Quarterly
Distribution Date if and to the extent that (i) the Eligible Reset Rate
Notes Carry-over Make-Up Amount with respect to such Accrual Period is
greater than zero, and (ii) on such Quarterly Distribution Date there
are sufficient moneys in the Collection Fund to pay all interest due on
the Reset Rate Notes on such Quarterly Distribution Date. Any Reset Rate
Notes Carry-over Amount (and any interest accrued thereon) on any Reset
Rate Note which is due and payable on a Quarterly Distribution Date,
when such Class of the Reset Rate Note is to be redeemed (other than by
optional redemption), shall be paid to the Registered Owner thereof on
said Quarterly Distribution Date to the extent that moneys are available
therefor in accordance with the provisions of this Appendix A; provided,
however, that any Reset Rate Notes Carry-over Amount (and any interest
accrued thereon) which is not yet due and payable on said Quarterly
Distribution Date shall be cancelled with respect to said Reset Rate
Note that is to be redeemed (other than by optional redemption) on said
Quarterly Distribution Date and shall not be paid on any succeeding
Quarterly Distribution Date. To the extent that any portion of the Reset
Rate Notes Carry-over Amount (and any interest accrued thereon) remains
unpaid after payment of a portion thereof, such unpaid portion shall be
paid in whole or in part as required hereunder until fully paid or, in
case of a defeasance, provided for by the Indenture Trustee on the
earliest of (a) the date of defeasance or optional redemption of any of
the Reset Rate Notes or (b) the next occurring Quarterly Distribution
Date or Dates, as necessary, if and to the extent that the conditions in
the second preceding sentence are satisfied. On any Quarterly
Distribution Date on which the Indenture Trustee pays only a portion of
the Reset Rate Notes Carry-over Amount (and any interest accrued
thereon) on Reset Rate Notes, the Indenture Trustee shall give written
notice in the manner set forth in the immediately preceding paragraph to
the Registered Owner of such Reset Rate Note receiving such partial
payment of the Reset Rate Notes Carry-over Amount remaining unpaid on
such Reset Rate Note.
The Quarterly Distribution Date or other date on which such Reset
Rate Notes Carry-over Amount (or any interest accrued thereon) for Reset
Rate Notes shall be paid shall be determined by the Issuer, or by the
Administrator on behalf of the Issuer, in accordance with the provisions
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of the immediately preceding paragraph, and the Indenture Trustee shall
make payment of the Reset Rate Notes Carry-over Amount (and any interest
accrued thereon) in the same manner as, and from the same Account from
which, it pays interest on the Reset Rate Notes on a Quarterly
Distribution Date. Any payment of Reset Rate Notes Carry-over Amounts
(and interest accrued thereon) shall reduce the amount of Eligible Reset
Rate Notes Carry-over Make-Up Amount.
(f) Any Class of the Reset Rate Notes may be reset on its
corresponding Reset Date to bear interest at an Auction Rate. If the
Issuer determines to reset the interest rate on any Class of the Reset
Rate Notes to an Auction Rate pursuant to this subsection (f), all of
the Reset Rate Notes of such Class shall be subject to mandatory tender
on the corresponding Reset Date and no Registered Owner or beneficial
owner of such Class of the Reset Rate Notes shall be permitted to submit
a Hold Notice for such Class of the Reset Rate Notes for such Reset
Date. If such Class of Reset Rate Notes is not successfully remarketed
to bear interest at an Auction Rate, a Failed Remarketing shall be
declared by the Remarketing Agents pursuant to Section 2.05 of this
Appendix A. If such Class of the Reset Rate Notes is successfully
remarketed to bear interest at an Auction Rate, such Class of the Reset
Rate Notes shall no longer be subject to any of the provisions of this
Appendix A and shall, as of such Reset Date, be deemed to be Auction
Rate Notes under the Indenture and subject to the provisions of Appendix
B to the Indenture. On any Reset Date on which a Class of the Reset Rate
Notes is to be reset to bear interest at an Auction Rate, the Issuer may
pay and cancel up to $49,999.99 of such Class of the Reset Rate Notes to
permit such Class of the Reset Rate Notes to be remarketed as Auction
Rate Notes in the Authorized Denominations applicable to Auction Rate
Notes. Any outstanding Reset Rate Notes Carry-over Amount on a Class of
the Reset Rate Notes which have been reset to bear interest at an
Auction Rate pursuant to this subsection (f) and which is not paid on
the related Reset Date shall be deemed to be Auction Rate Notes
Carry-over Amount on such Class and shall be governed by the provisions
of Appendix B to the Indenture.
SECTION 2.02. END OF RESET PERIOD NOTICE.
(a) Unless notice of the exercise of the related Call Option as
described in Section 2.06(c) of this Appendix A has been given, the
Issuer, not less than 30 nor more than 45 calendar days prior to any
Remarketing Terms Determination Date, will (i) give written notice
(which may include facsimile or other electronic transmission, if
permitted pursuant to the recipient's standard procedures) to the
Securities Depository, with a copy to the Indenture Trustee, notifying
them of the upcoming Reset Date and that the applicable Class of the
Reset Rate Notes is subject to mandatory, automatic tender on the
related Reset Date unless the applicable Registered Owner elects not to
tender by the timely delivery of a Hold Notice; and (ii) request that
the Securities Depository notify its participants of the contents of
that notice given to the Securities Depository, the Remarketing Terms
Notice to be given on the Remarketing Terms Determination Date pursuant
to Section 2.03(c) of this Appendix A, the Spread Determination Notice
to be given on the Spread Determination Date pursuant to Section 2.09(e)
of this Appendix A, and the procedures concerning the timely delivery of
a Hold Notice pursuant to Section 2.08 of this Appendix A that must be
followed if any beneficial owner of a Reset Rate Note wishes to retain
its Reset Rate Notes.
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(b) The Issuer will also include the names and contact
information of any applicable Remarketing Agents confirmed or appointed
by the Issuer on or before the date the notice given pursuant to
subsection (a) of this Section, or if no Remarketing Agents have then
been so chosen, the Issuer will provide adequate contact information for
Registered Owners to receive information regarding the upcoming Reset
Date.
(c) If the Securities Depository or its respective nominee is no
longer the holder of record of the related Class of the Reset Rate
Notes, the Issuer, or the Remarketing Agents on its behalf, will send
the Registered Owners of those Reset Rate Notes, with a copy to the
Indenture Trustee, the required notice setting forth the information in
subsections (a) and (b) of this Section not less than 15 nor more than
30 calendar days prior to any Remarketing Terms Determination Date. In
addition, in the event that Definitive Certificates evidencing an
interest in the Reset Rate Notes are issued, the Issuer shall cause the
Indenture Trustee to provide any additional procedures applicable to
such Reset Date while in definitive form to the related Registered
Owners.
SECTION 2.03. REMARKETING TERMS DETERMINATION DATE.
(a) Subject to the provisions of the Remarketing Agreement, prior
to the Remarketing Terms Determination Date, and unless the related Call
Option has been exercised, the Purchase Option pursuant to Section
2.07(b) of this Appendix A has been exercised or the Financed Eligible
Loans have been auctioned pursuant to Section 2.13 of this Appendix A,
the Issuer shall re-affirm the capability of the initial Remarketing
Agents to perform under the Remarketing Agreement, or enter into new
remarketing agreements with other or additional remarketing agents, who
shall function as the Remarketing Agents with respect to the related
Reset Date. On each Remarketing Terms Determination Date, the Issuer and
the Remarketing Agents will enter into an Initial Remarketing Agency
Agreement for the remarketing of the related Class of the Reset Rate
Notes.
(b) Unless the related Call Option has been exercised, the
Purchase Option pursuant to Section 2.07(a) or (b) of this Appendix A
has been exercised or the Financed Eligible Loans have been auctioned
pursuant to Section 2.13 of this Appendix A, the Remarketing Agents, in
consultation with the Issuer, will establish the following terms for the
applicable Class of the Reset Rate Notes by the Remarketing Terms
Determination Date:
(i) the expected weighted average life of that Class of
the Reset Rate Notes, based on prepayment and other assumptions
customary for comparable securities;
(ii) the name and contact information of the Remarketing
Agents;
(iii) the next Reset Date and length of such Reset Period
or, if the Class of the Reset Rate Notes is to be reset to bear
interest at an Auction Rate pursuant to Section 2.01(f) of this
Appendix A, the initial Auction Date, Initial Rate Adjustment
Date and the initial Auction Rate Distribution Date ;
A-14
(iv) the interest rate mode (i.e., fixed rate, floating
rate or Auction Rate);
(v) if in floating rate mode, the applicable Index;
(vi) if in floating rate mode, the interval between
Interest Rate Change Dates;
(vii) if in floating rate mode, the applicable Interest
Rate Determination Dates;
(viii) if in fixed rate mode, the applicable fixed rate
pricing benchmark;
(ix) if in fixed rate mode, whether there will be a
related Derivative Product and, if so, the identities of the
Eligible Counterparties from which bids will be solicited, if
any;
(x) if in floating rate mode, based on an Index other than
LIBOR or a Commercial Paper Rate, whether there will be a related
Derivative Product and, if so, the identities of the Eligible
Counterparties from which bids will be solicited, if any;
(xi) the applicable Accrual Period and Day Count Basis;
(xii) the related All Hold Rate, unless such Class of the
Reset Rate Notes is to be reset to bear interest at an Auction
Rate pursuant to Section 2.01(f) of this Appendix A, in which
case the notice shall provide that all of the Reset Rate Notes of
such class are subject to mandatory tender and that no Registered
Owner or beneficial owner of such Class of the Reset Rate Notes
shall be permitted to deliver a Hold Notice for such Reset Date;
(xiii) whether such Class of the Reset Rate Notes will
constitute Non-amortizing Reset Rate Notes;
(xv) if Definitive Certificates are to be issued, the
procedures for delivery and exchange thereof and for dealing with
lost or mutilated Reset Rate Notes; and
(xvi) any other relevant terms (other than the related
Spread or fixed rate of interest, as applicable) incidental to
the foregoing for the next Reset Period;
provided, that any interest rate mode (including any reset of a Class of
the Reset Rate Notes to bear interest at an Auction Rate pursuant to
Section 2.01(f) of this Appendix), other than a floating rate based on
LIBOR or the Commercial Paper Rate, will require that the Rating Agency
Condition be satisfied prior to the delivery of the related Remarketing
Terms Notice.
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(c) The Remarketing Agents will communicate all of the
information established in subsection (b) of this Section in the
Remarketing Terms Notice required to be given in writing (which may
include facsimile or other electronic transmission if in accordance with
the Securities Depository's standard procedures) to the Securities
Depository or the Registered Owners (if not the Securities Depository)
of the applicable Class of the Reset Rate Notes, as applicable, the
Indenture Trustee and the Rating Agencies on the related Remarketing
Terms Determination Date. If the Class of the Reset Rate Notes is to be
reset to bear interest at an Auction Rate pursuant to Section 2.01(f) of
this Appendix, the Issuer, by Issuer Order, shall (i) (A) if there is no
Auction Agent, appoint an Auction Agent, and (B) appoint a Broker-Dealer
for such Class and enter into a Broker-Dealer Agreement with such
Broker-Dealer and (ii) provide the Indenture Trustee, the Auction Agent
and the designated Broker-Dealer for such Class with the name of the
designated Broker-Dealer for such Class and the initial Auction Date,
the Initial Rate Adjustment Date and the initial Auction Rate
Distribution Date for such Class.
(d) In addition, prior to the Remarketing Terms Determination
Date, the Issuer shall cause the Schedule Replacement Order with respect
to the Reset Rate Notes to be delivered to the Indenture Trustee and the
Securities Depository or, if the Class of Reset Rate Notes is to be
reset to bear interest at an Auction Rate, cause replacement notes for
such Class in the form of Exhibit C to the Indenture to be delivered to
the Indenture Trustee and the Securities Depository.
SECTION 2.04. ALL HOLD RATE. On each Remarketing Terms Determination
Date, unless such Class of the Reset Rate Notes is to be reset to bear interest
at an Auction Rate pursuant to Section 2.01(f) of this Appendix, the Remarketing
Agents, in consultation with the Issuer, will establish the related All Hold
Rate. Unless such Class of the Reset Rate Notes is to be reset to bear interest
at an Auction Rate pursuant to Section 2.01(f) of this Appendix, if 100% of the
Registered Owners of a Class of the Reset Rate Notes deliver timely Hold Notices
wherein they elect to hold their Reset Rate Notes for the next Reset Period, the
related interest rate for that Class during the immediately following Reset
Period will be the All Hold Rate. The All Hold Rate will be the minimum rate of
interest that will be effective for the upcoming Reset Period. If any of the
related Registered Owners are deemed to have tendered their Class of the Reset
Rate Notes and the rate of interest using the Spread or fixed rate of interest
established on the Spread Determination Date is higher than the All Hold Rate,
all Registered Owners who delivered a Hold Notice agreeing to be subject to the
All Hold Rate instead will be entitled to the higher rate of interest for the
upcoming Reset Period.
SECTION 2.05. FAILED REMARKETING.
(a) With respect to each Reset Date for which the holder of the
Call Option does not timely deliver written notice of its intention to
exercise the Call Option pursuant to Section 2.06(a) of this Appendix A
or the holder of the Purchase Option does not timely deliver written
notice of its intention to exercise its Purchase Option pursuant to
Section 2.07(a) or (b) of this Appendix A and the Financed Eligible
Loans have not been auctioned pursuant to Section 2.13 of this Appendix
A and if any of the conditions set forth in the definition of "Failed
Remarketing" are applicable, a Failed Remarketing will be declared by
the Remarketing Agents and the provisions of this Section will apply. In
order to prevent the declaration of a Failed Remarketing, the
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Remarketing Agents will have the option, but not the obligation, to
purchase any Reset Rate Notes tendered that they are not otherwise able
to remarket or with respect to which a committed purchaser defaults on
their purchase obligations. If at any time a Failed Remarketing is
declared on a Class of the Reset Rate Notes on the related Spread
Determination Date, (i) all Reset Rate Notes of such Class will be
deemed to have been held by the applicable Registered Owners on the
related Reset Date, regardless of any deemed tenders made to Remarketing
Agents; (ii) except as provided in Section 2.01(e) of this Appendix A,
the Failed Remarketing Rate for such Class of the Reset Rate Notes will
apply; and (iii) a Reset Period of three months will be established for
such Class.
(b) If there is a Failed Remarketing of a Class of the Reset Rate
Notes, Registered Owners of that Class shall not be entitled to exercise
any remedies as a result of the failure of their Class of the Reset Rate
Notes to be remarketed on the related Reset Date.
(c) If the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes are no longer Outstanding, a Class of the
Reset Rate Notes bears interest at the Failed Remarketing Rate and the
holder of the Purchase Option does not timely deliver written notice of
its intention to exercise its Purchase Option pursuant to Section
2.07(a) or (b) of this Appendix A, the Indenture Trustee (or its
designated agent), if requested by the Issuer, shall offer for sale a
Pro rata Portion of the Financed Eligible Loans held in the Trust Estate
as provided in this subsection (c). Any portfolio of the Financed
Eligible Loans sold pursuant to the Purchase Option set forth in Section
2.07(a) of this Appendix A or pursuant to the auction procedures
described in this subsection (c) shall have representative
characteristics substantially equivalent to the portfolio of all
Financed Eligible Loans including, without limitation, such
characteristics as average borrower indebtedness, mix of type of loans
(Stafford, PLUS, consolidation, subsidized, unsubsidized), delinquency
and default rate, loans in claim status, maturity, type of educational
institution for which the loan funded costs of attendance (four year,
two year, proprietary and nonproprietary), identity of Guaranty Agency,
and other similar characteristics which may impact upon the value of
such Financed Eligible Loans. Any such sale shall be consummated at
least two Business Days prior to the next Reset Date (the "Trust Auction
Date"). The Indenture Trustee shall provide written notice to the Issuer
of any such offer for sale at least three Business Days in advance of
the Trust Auction Date. If the holder of the Purchase Option does not
deliver notice of its intention to exercise the Purchase Option and
deliver an amount equal to the purchase price within 25 days following a
Reset Date on which a Class of the Reset Rate Notes bears interest at
the Failed Remarketing Rate, the Issuer may instruct the Indenture
Trustee to auction the Pro rata Portion of the Financed Eligible Loans.
Any Nelnet Eligible Purchaser may bid at any such auction. If at least
two independent bids are received, the Indenture Trustee (or its
designated agent) shall solicit and resolicit new bids from all
participating bidders until only one bid remains or the remaining
bidders decline to resubmit bids. The Indenture Trustee shall accept the
highest of such remaining bids if it is at least equal to the Pro rata
Minimum Purchase Amount. In the event that only one or more Nelnet
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Eligible Purchasers bid at such auction and fewer than two independent
bids are received, the Indenture Trustee shall accept the highest of
such remaining bids if it is at least equal to the Pro rata Minimum
Purchase Amount and the fair market value of such Financed Eligible
Loans as of the Quarterly Distribution Date immediately preceding the
Trust Auction Date. If the highest remaining bid is not equal to or in
excess of the higher of the amounts described in the preceding two
sentences, the Indenture Trustee shall not consummate such sale. The Pro
rata Minimum Purchase Amount means, with respect to the Reset Rate
Notes, that amount, together with any amounts on deposit in any related
Account of the Note Payment Fund, the Supplemental Interest Fund or the
Remarketing Fee Fund corresponding to such Class of the Reset Rate Notes
and a Pro rata Portion of the amounts on deposit in the Capitalized
Interest Fund and the Reserve Fund (if such amounts can be released from
the Reserve Fund), each after the distribution of amounts on deposit in
the Collection Fund on the most recent Distribution Date, which is equal
to or in excess of the amount necessary to redeem the Class of the Reset
Rate Notes bearing interest at the Failed Remarketing Rate pursuant to
the redemption provisions of Section 2.09(b) of the Indenture, to pay
all amounts due (including any Issuer Derivative Payments and applicable
Termination Payments) on any Derivative Product corresponding to such
Class of the Reset Rate Notes and to pay a Pro rata Portion of any
Program Expenses to such redemption date. The Indenture Trustee may
consult, and, at the direction of the Issuer, shall consult, with a
financial advisor, including an Underwriter, an Initial Purchaser, a
Remarketing Agent or the Administrator, to determine if the fair market
value of the Financed Eligible Loans has been offered by any Nelnet
Eligible Purchaser. From the proceeds of the sale of the Financed
Eligible Loans and the amounts on deposit in the Funds and Accounts
described in this subsection (c), the Indenture Trustee shall deposit
amounts sufficient to redeem the related Class of the Reset Rate Notes
on the next succeeding Reset Date pursuant to the redemption provisions
of Section 2.09(b) of the Indenture and to pay any Issuer Derivative
Payments corresponding to such Class of the Reset Rate Notes into
separate Accounts established by the Indenture Trustee within the Note
Payment Fund and shall deposit the remainder to the Collection Fund to
pay the Pro rata Portion of the Program Expenses to such Reset Date. The
Indenture Trustee shall use the amounts on deposit in those Accounts to
redeem such Class of the Reset Rate Notes on the applicable Reset Date
and to pay all amounts due (including any Issuer Derivative Payments and
applicable Termination Payments) pursuant to the corresponding
Derivative Product. If an auction is not completed and the Class of the
Reset Rate Notes continues to bear interest at the Failed Remarketing
Rate, the Issuer may request the Indenture Trustee to solicit bids for
the Financed Eligible Loans with respect to any Quarterly Distribution
Date for which the holder of the Purchase Option described in Section
2.07(a) of this Appendix A has not delivered timely notice of its
intention to exercise its Purchase Option or delivered an amount equal
to the purchase price by the specified date upon terms similar to those
described above, and the Indenture Trustee shall be obligated to make
such solicitations if requested to do so by the Issuer.
SECTION 2.06. CALL OPTION.
(a) With respect to each Reset Date, Nelnet, Inc. is hereby
granted a Call Option for the purchase of not less than 100% of any
Class of the Reset Rate Notes to be reset on such Reset Date (if such
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Reset Date is on or after November 1, 2005), exercisable at a price
equal to 100% of the Outstanding Amount of that Class, less all amounts
distributed to the related Registered Owners of the Reset Rate Notes as
a payment of principal on the related Quarterly Distribution Date, plus
any accrued and unpaid interest not paid by the Issuer on the applicable
Reset Date and any Reset Rate Notes Carry-over Amounts (and any accrued
interest thereon) due and payable on such Class of the Reset Rate Notes
(as described in Appendix A hereto).
(b) Nelnet, Inc. may transfer ownership of the Call Option at any
time to any Nelnet Eligible Purchaser.
(c) The Call Option may be exercised at any time on or prior to
the Spread Determination Date or before the declaration of a Failed
Remarketing, as applicable, by the holder thereof by delivering a
written notice stating its desire to exercise the Call Option on the
Reset Date to the Securities Depository, the Indenture Trustee, the
Remarketing Agents and the Rating Agencies; provided that the Call
Option may not be exercised before the day following the last Quarterly
Distribution Date immediately preceding the next applicable Reset Date.
Once written notice of the exercise of the Call Option is given, such
exercise may not be rescinded. All amounts due and owed to the
applicable Registered Owners shall be remitted on or before the related
Reset Date by the holder of the Call Option in accordance with the
standard procedures established by the Securities Depository for
transfer of securities to ensure timely payment to the related
Registered Owners of the Reset Rate Notes.
(d) If the Call Option is exercised with respect to any Class of
the Reset Rate Notes, (i) the interest rate on that Class will be the
Call Rate; and (ii) a Reset Period of three months will be established.
At the end of such three month Reset Period, the holder of the Call
Option may either remarket that Class pursuant to the remarketing
procedures set forth in this Appendix A and in the Remarketing Agreement
or retain that Class for one or more successive three-month Reset
Periods at the then existing Call Rate. In the event the holder of the
Call Option chooses to remarket that Class of the Reset Rate Notes, such
holder shall be solely responsible for all costs and expenses relating
to the preparation of any new offering document and any other related
costs and expenses associated with such remarketing, other than the fees
of the Remarketing Agents, as more fully set forth in Section 3 of the
Remarketing Agreement.
(e) If notice that the Call Option is going to be exercised with
respect to a Class of the Reset Rate Notes is given pursuant to
subsection (c) of this Section, but such Class of the Reset Rate Notes
is not purchased on the Reset Date, a Failed Remarketing shall be deemed
to have occurred and such Class of the Reset Rate Notes shall bear
interest at the Failed Remarketing Rate.
(f) Other than in connection with the exercise of a Call Option,
none of Nelnet, Inc., the Issuer or any of their affiliates shall have
the ability to purchase any Reset Rate Notes tendered to the Remarketing
Agents.
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SECTION 2.07. PURCHASE OPTIONS.
(a) If the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes are no longer Outstanding, Nelnet, Inc. is
hereby granted an option to purchase a Pro rata Portion of Financed
Eligible Loans held in the Trust Estate at a purchase price equal to the
greater of the Pro rata Minimum Purchase Amount and the fair market
value of such Financed Eligible Loans as of the Quarterly Distribution
Date immediately preceding the date of sale for the purpose of redeeming
any Class of the Reset Rate Notes or making additional Principal
Reduction Payments on any Class of the Reset Rate Notes on any Reset
Date pursuant to Section 2.09(b) of the Indenture. Any portfolio of
Financed Eligible Loans sold pursuant to this subsection (a) shall have
representative characteristics substantially equivalent to the portfolio
of all Financed Eligible Loans including, without limitation, such
characteristics as average borrower indebtedness, mix of type of loans
(Stafford, PLUS, consolidation, subsidized, unsubsidized), delinquency
and default rate, loans in claim status, maturity, type of educational
institution for which the loan funded costs of attendance (four year,
two year, proprietary and nonproprietary), identity of Guaranty Agency,
and other similar characteristics which may impact upon the value of
such Financed Eligible Loans. The holder of the Purchase Option shall
exercise such option by delivering a written notice at least three
Business Days prior to the related Reset Date stating its desire to
exercise this option to the Securities Depository, the Indenture
Trustee, the Remarketing Agents and the Rating Agencies on the Spread
Determination Date for such Class of the Reset Rate Notes that it
intends to exercise its Purchase Option and by delivering to the
Indenture Trustee an amount equal to the purchase price of such Financed
Eligible Loans on or before the second Business Day prior to the Reset
Date for such Class of the Reset Rate Notes. If the holder of the
Purchase Option fails to provide the required notice or purchase price,
such Class of the Reset Rate Notes shall bear interest at the Failed
Remarketing Rate during the following Reset Period. The Indenture
Trustee may consult, and, at the direction of the Issuer, shall consult,
with a financial advisor, including an Underwriter, an Initial
Purchaser, a Remarketing Agent or the Administrator, to determine if the
fair market value of the Financed Eligible Loans has been offered by any
Nelnet Eligible Purchaser. From the proceeds of the sale of the Financed
Eligible Loans and the amounts on deposit in the Funds and Accounts
described in this subsection (a), the Indenture Trustee shall deposit
amounts sufficient to redeem the related Class of the Reset Rate Notes
on the next succeeding Reset Date occurring after November 1, 2005
pursuant to the redemption provisions of Section 2.09(b) of the
Indenture and to pay any Issuer Derivative Payments corresponding to
such Class of the Reset Rate Notes into separate Accounts established by
the Indenture Trustee within the Note Payment Fund and shall deposit the
remainder to the Collection Fund. The Indenture Trustee shall use the
amounts on deposit in those Accounts to redeem such Class of the Reset
Rate Notes on the applicable Reset Date and to pay any such Issuer
Derivative Payments pursuant to the corresponding Derivative Product.
(b) If the Commercial Paper Rate Trigger has occurred, Nelnet,
Inc. is hereby granted an option to purchase all of the Financed
Eligible Loans held in the Trust Estate at a purchase price equal to the
greater of the fair market value of such Financed Eligible Loans or the
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Commercial Paper Rate Minimum Purchase Amount. The Commercial Paper Rate
Minimum Purchase Amount means the amount, together with any amounts on
deposit in the Funds established pursuant to the Indenture, that is
sufficient to redeem the Series 2004-2 Notes pursuant to the redemption
provisions of Section 2.09(f) and (g)(ii) of the Indenture, to pay all
amounts due (including any Issuer Derivative Payments and applicable
Termination Payments) on any Derivative Product and to pay any Program
Expenses to the final redemption date of the Series 2004-2 Notes. The
holder of the Purchase Option shall exercise such option by delivering
written notice stating its desire to exercise this option to the
Securities Depository, the Indenture Trustee, the Remarketing Agents and
the Rating Agencies at least thirty (30) days prior to the next
succeeding Quarterly Distribution Date that it intends to exercise its
Purchase Option and by delivering to the Indenture Trustee an amount
equal to the purchase price determined as described above at least
thirty (30) days prior to the next succeeding Quarterly Distribution
Date. If the holder of the Purchase Option fails to provide the required
notice or an amount sufficient to redeem the Series 2004-2 Notes, the
Trustee shall attempt to sell the Financed Loans held within the Trust
Estate pursuant to Section 2.13 of this Appendix A. The Indenture
Trustee may consult, and, at the direction of the Issuer, shall consult,
with a financial advisor, including an Underwriter, an Initial
Purchaser, a Remarketing Agent or the Administrator, to determine if the
fair market value of the Financed Eligible Loans has been offered by any
Nelnet Eligible Purchaser. From the proceeds of the sale of the Financed
Eligible Loans and the amounts on deposit in the Funds and Accounts
described in this subsection (b), the Indenture Trustee shall deposit
amounts sufficient to redeem each Class of the Series 2004-2 Notes on
the next succeeding Quarterly Distribution Date occurring on or after
November 1, 2005 or Auction Rate Distribution Date, as appropriate,
pursuant to the mandatory redemption provisions of Section 2.09(f) and
(g)(ii) of the Indenture and to pay all amounts due (including any
Issuer Derivative Payments and applicable Termination Payments) on any
Derivative Product into separate Accounts established by the Indenture
Trustee within the Note Payment Fund and shall deposit the remainder to
the Collection Fund to pay the remaining Program Expenses to the final
redemption date of the Series 2004-2 Notes. The Indenture Trustee shall
use the amounts on deposit in those Accounts to redeem the Series 2004-2
Notes on their Quarterly Distribution Date or Auction Rate Distribution
Date, as appropriate, and to pay any Issuer Derivative Payments
(including all applicable Termination Payments) pursuant to the
corresponding Derivative Product.
(c) Nelnet, Inc. may transfer ownership of either or both of the
Purchase Options described in this Section at any time to any Nelnet
Eligible Purchaser.
SECTION 2.08. HOLD NOTICE. Unless the Class of the Reset Rate Notes is
to be reset to bear interest at an Auction Rate pursuant to Section 2.01(f) of
this Appendix, at any time on or after the Remarketing Terms Determination Date,
but on or prior to the Notice Date, the Registered Owners of the applicable
Reset Rate Notes will have the option to deliver a Hold Notice to any
Remarketing Agent setting forth their desire to hold their Reset Rate Notes for
the next Reset Period at a rate of interest not less than the All Hold Rate and
on the terms set forth in the Remarketing Terms Notice. Such Hold Notice may be
delivered as an oral statement to a Remarketing Agent, if subsequently confirmed
in writing within 24 hours, which confirmation may be in the form of an e-mail
if timely received by the applicable Remarketing Agent. If a Registered Owner
does not timely deliver a Hold Notice to a Remarketing Agent (and such Hold
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Notice will not be considered delivered until actually received by such
Remarketing Agent), 100% of that Registered Owner's Reset Rate Notes will be
deemed to have been tendered for remarketing. Any duly delivered Hold Notice
will be irrevocable, but will be subject to a mandatory tender of the applicable
Reset Rate Notes pursuant to any exercise of the related Call Option. All of the
Reset Rate Notes of an applicable Class, whether or not tendered, will bear
interest during any Reset Period on the same terms.
SECTION 2.09. SPREAD DETERMINATION DATE.
(a) On each Spread Determination Date, unless a Failed
Remarketing has been declared or the related Call Option has been
exercised, the Issuer and the Remarketing Agents will enter into a
Supplemental Remarketing Agency Agreement.
(b) If pursuant to the Remarketing Terms Notice, the Remarketing
Agents, in consultation with the Issuer, have determined that a Class of
the Reset Rate Notes is to be reset to bear a fixed rate of interest,
then the applicable fixed rate of interest for the corresponding Reset
Period will be determined on the Spread Determination Date by adding (i)
the applicable spread as determined by the Remarketing Agents on the
Spread Determination Date; and (ii) the yield to maturity on the Spread
Determination Date of the applicable fixed rate pricing benchmark,
selected by the Remarketing Agents, as having an expected weighted
average life based on a scheduled maturity at the next Reset Date, which
would be used in accordance with customary financial practice in pricing
new issues of asset-backed securities of comparable average life;
provided that such fixed rate of interest will in no event be lower than
the related All Hold Rate. The Remarketing Agents shall determine the
applicable fixed rate of interest for such Class of the Reset Rate Notes
(by reference to the applicable fixed rate pricing benchmark plus or
minus the spread determined on the Remarketing Terms Determination Date)
on each Spread Determination Date irrespective of whether no remarketing
will occur as the result of the application of the All Hold Rate.
(c) If pursuant to the Remarketing Terms Notice, the Remarketing
Agents, in consultation with the Issuer, have determined that a Class of
the Reset Rate Notes is to be reset to bear a floating rate of interest,
then, on the related Spread Determination Date, the Remarketing Agents
will establish the applicable Spread to be added or subtracted from the
applicable Index; provided that such floating rate of interest will in
no event be lower than the related All Hold Rate.
(d) If pursuant to the Remarketing Terms Notice, the Remarketing
Agents, in consultation with the Issuer, have determined that a Class of
the Reset Rate Notes is to be reset to bear an Auction Rate, then, on
the related Spread Determination Date, the Remarketing Agents will
establish the Initial Rate for such Class.
(e) On or immediately following the Spread Determination Date,
the Remarketing Agents will communicate in writing the contents of the
Spread Determination Notice to the Securities Depository (which may
include facsimile or other electronic transmission if in accordance with
the recipient's standard procedures) with instructions to distribute
such notice its related participants or the Registered Owners of the
applicable Class of the Reset Rate Notes, as applicable, the Indenture
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Trustee and the Rating Agencies. The Spread Determination Notice will
contain: (i) the determined Spread, Initial Rate (if such Class of the
Reset Rate Notes is to be reset to bear interest at an Auction Rate
pursuant to Section 2.01(f) of this Appendix A) or fixed rate of
interest, as the case may be, or, if applicable, a statement that the
All Hold Rate or the Failed Remarketing Rate will be in effect; (ii) if
applicable, the identity of any selected Counterparty or Counterparties;
(iii) if applicable, the floating rate (or rates) of interest to be due
to each selected Counterparty on each Distribution Date during the
upcoming Reset Period; and (iv) any other information that the Issuer or
the Remarketing Agents deem applicable.
SECTION 2.10. DERIVATIVE PRODUCTS.
(a) If the Remarketing Agents, in consultation with the Issuer,
(i) have determined that the interest rate (other than an Auction Rate)
for a Class of the Reset Rate Notes for the next Reset Period will be
based on an Index other than LIBOR or a Commercial Paper Rate; and (ii)
determine that entering into a Derivative Product with respect to such
Class of the Reset Rate Notes would be in the best interest of the Trust
Estate based on existing market conditions, then on or prior to the
Remarketing Terms Determination Date, the Issuer will arrange for, and,
on the related Reset Date, will enter into or will instruct the
Indenture Trustee to enter into (not in its individual capacity but
solely as Indenture Trustee) one or more Derivative Products with one or
more Eligible Counterparties for the next Reset Period to hedge against
some or all of the basis risk.
(b) If the Remarketing Agents, in consultation with the Issuer,
(i) have determined that the interest rate for a Class of the Reset Rate
Notes for the next Reset Period will be a fixed rate and (ii) determine
that entering into a Derivative Product with respect to such Class of
the Reset Rate Notes would be in the best interest of the Trust Estate
based on existing market conditions, then on or prior to the Remarketing
Terms Determination Date, the Issuer will arrange for, and, on the
related Reset Date, will enter into or will instruct the Indenture
Trustee to enter into (not in its individual capacity but solely as
Indenture Trustee) one or more Derivative Products with one or more
Eligible Counterparties for the next Reset Period to facilitate the
Issuer's ability to pay the applicable Class of the Reset Rate Notes
interest at its fixed rate.
(c) In exchange for providing to the Issuer the related
Counterparty Payment, each Counterparty will be entitled to receive on
each Distribution Date from the Issuer an Issuer Derivative Payment in
the priority set forth in Section 5.05(c) of the Indenture.
(d) The Issuer and the applicable Remarketing Agents, in
determining the Counterparty to the required Derivative Product, will
solicit bids from at least three Eligible Counterparties and will select
the lowest of these bids to provide the Derivative Product. If the
lowest bidder specifies a notional amount that is less than the
Outstanding Amount of the related Class of the Reset Rate Notes, the
Issuer and the applicable Remarketing Agents may select more than one
Eligible Counterparty, but only to the extent that such additional
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Eligible Counterparties have provided the next lowest received bid or
bids, and enter into more than one Derivative Product that result in the
Rating Agency Condition being satisfied. On or before the Spread
Determination Date, the Issuer and the Remarketing Agents will select
the Counterparty or Counterparties and the Issuer will enter into or
will instruct the Indenture Trustee to enter into (not in its individual
capacity but solely as Indenture Trustee) the required Derivative
Products on the related Reset Date for the upcoming Reset Period.
(e) It is a condition precedent to the entering into of any
Derivative Product and the setting of the amount to be paid to the
related Counterparty that the Rating Agency Condition is satisfied. No
Derivative Product will be entered into by the Issuer for any Reset
Period where either the related Call Option has been exercised or a
Failed Remarketing has been declared. Each such Derivative Product, will
terminate at the earlier to occur of the next related Reset Date or a
specified termination event set forth in the related Derivative Product.
SECTION 2.11. PAYMENT OF PRINCIPAL ON THE RESET RATE NOTES. If, on any
Quarterly Distribution Date, Principal Reduction Payments would be payable to a
Class of Non-Amortizing Reset Rate Notes, those Principal Reduction Payments
will be allocated to that Class and deposited into the Class A-5a Redemption
Account of the Note Payment Fund, as appropriate, where it will remain until the
next Reset Date for that Class of the Reset Rate Notes as provided in Section
5.06(b) of the Indenture, unless such amounts are required to be transferred to
the Collection Fund pursuant to Section 5.06(b) of the Indenture or an Event of
Default under the Indenture has occurred (in which case the Indenture Trustee
will distribute all sums on deposit therein to the Registered Owners of the
Reset Rate Notes in accordance with the provisions of Section 6.02 of the
Indenture). On each Reset Date for a Class of the Reset Rate Notes which
constituted Non-Amortizing Reset Rate Notes during the preceding Reset Period,
all sums, if any, then on deposit in the Class A-5a Redemption Account of the
Note Payment Fund, including any allocation of principal made on the same date
will be distributed by the Indenture Trustee, at the direction of the Issuer, as
set forth in Section 5.05 of the Indenture, to the Registered Owners of that
Class of the Reset Rate Notes, as of the related Record Date, in reduction of
principal of such Class; provided, that, in the event on any Quarterly
Distribution Date the amount on deposit in the Class A-5a Redemption Account of
the Note Payment Fund would equal the Outstanding Amount of that Class, no
additional amounts will be deposited into the Class A-5a Redemption Account of
the Note Payment Fund and all amounts therein will be distributed by the
Indenture Trustee, at the direction of the Issuer, as set forth in Section 5.05
of the Indenture, on the next related Reset Date to the related Registered
Owners, and on such Reset Date that Class of the Reset Rate Notes will no longer
be Outstanding.
SECTION 2.12. REMARKETING AGENTS; REMARKETING FEE FUND.
(a) The initial Remarketing Agents, appointed pursuant to the
terms of the Remarketing Agreement are J.P. Morgan Securities Inc. and
Morgan Stanley & Co. Incorporated. The terms and conditions of the
Remarketing Agreement will govern the duties and obligations of the
Remarketing Agents. The Issuer and the Remarketing Agents will enter
into on each related (i) Remarketing Terms Determination Date, an
Initial Remarketing Agency Agreement, unless (A) a Failed Remarketing is
declared, or (B) the related Call Option has been exercised on or prior
to such date; and (ii) Spread Determination Date, a Supplemental
Remarketing Agency Agreement, unless (A) a Failed Remarketing is
declared, (B) the related Call Option has been exercised, or (C) 100% of
the related Registered Owners have timely delivered a Hold Notice and
the All Hold Rate will apply for the next related Reset Period.
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(b) Excluding all Reset Rate Notes of a Class for which a
Remarketing Agent has received a timely delivered Hold Notice (or if the
related Call Option has been exercised or a Failed Remarketing has been
declared), on the Reset Date that commences each Reset Period, each
related Reset Rate Note will be automatically tendered, or deemed
tendered, to the relevant Remarketing Agent for remarketing by such
Remarketing Agent on the Reset Date at 100% of its Outstanding principal
amount. If the related Class of the Reset Rate Notes is held in
book-entry form, subject to subsection (c) of this Section, 100% of the
Outstanding Amount of such Reset Rate Notes will be paid by the
Remarketing Agents on the related Reset Date in accordance with the
standard procedures of the Securities Depository.
(c) The Remarketing Agents will attempt, on a reasonable efforts
basis and in accordance with the terms and conditions of the Remarketing
Agreement and the related Remarketing Agency Agreement, to remarket the
tendered Reset Rate Notes of the applicable Class at a price equal to
100% of the Outstanding principal amount so tendered. Purchasers of the
Reset Rate Notes will be credited with their positions on the Reset Date
with respect to positions held through DTC or on the next Business Day
with respect to positions held through Euroclear or Clearstream.
(d) Each of the Remarketing Agents, in its individual or any
other capacity, may buy, sell, hold and deal in any class of the Series
2004-2 Notes, including, but not limited to, purchasing any tendered
Reset Rate Notes as part of the remarketing process. Any Remarketing
Agent that owns a Reset Rate Note may exercise any vote or join in any
action which any beneficial owner of any Class of Series 2004-2 Notes
may be entitled to exercise or take with like effect as if it did not
act in any capacity under the Remarketing Agency Agreement. Any
Remarketing Agent, in its individual capacity, either as principal or
agent, may also engage in or have an interest in any financial or other
transaction with the Issuer, each Servicer, the Indenture Trustee (in
its individual capacity), the Eligible Lender Trustee (in its individual
capacity) or the Issuer as freely as if it did not act in any capacity
under the Remarketing Agreement or any Remarketing Agency Agreement. No
Registered Owner or beneficial owner of any Reset Rate Note will have
any rights or claims against any Remarketing Agent as a result of such
Remarketing Agent's not purchasing any tendered Reset Rate Note, which
results in the declaration of a Failed Remarketing.
(e) Each of the Remarketing Agents will be entitled to receive a
fee in connection with their services rendered for each successful
remarketing of a Class of the Reset Rate Notes in the amount set forth
in the Remarketing Agreement and the related Remarketing Agency
Agreement. Subject to the terms and conditions set forth in the
Remarketing Agreement, the Issuer, in its sole discretion, may change
the Remarketing Agents for any Class of the Reset Rate Notes for any
Reset Period at any time on or before the related Remarketing Terms
Determination Date. Furthermore, a Remarketing Agent may resign at any
time; provided that no resignation may become effective on a date that
is later than 15 Business Days prior to a Remarketing Terms
Determination Date.
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(f) The fees associated with each successful remarketing will be
payable directly to the Remarketing Agents from amounts on deposit from
time to time in the Remarketing Fee Fund. On each Quarterly Distribution
Date, Revenues will be deposited into the Remarketing Fee Fund, in the
priority set forth in Section 5.05(c) of the Indenture, in an amount up
to the Quarterly Funding Amount. In the event that the fees owed to any
Remarketing Agent on a Reset Date exceeds the amount then on deposit
(after giving effect to distributions made on such Reset Date) in the
Remarketing Fee Fund, such shortfall shall be paid from the Collection
Fund on future Quarterly Distribution Dates in the priority set forth in
Section 5.05(c) of the Indenture. The Issuer shall also be responsible
for certain remarketing costs and expenses to the extent set forth in
Section 3 of the Remarketing Agreement, which shall be paid on each
Quarterly Distribution Date from the Collection Fund at the priority set
forth in Section 5.05(c) of the Indenture.
SECTION 2.13. AUCTION OF FINANCED ELIGIBLE LOANS UPON COMMERCIAL PAPER
RATE Trigger. If the Commercial Paper Rate Trigger has occurred and the holder
of the Purchase Option has not exercised its Purchase Option pursuant to Section
2.07(b) of this Appendix A, the Indenture Trustee (or its designated agent)
shall offer for sale all of the Financed Eligible Loans held within the Trust
Estate. Any such sale shall be consummated on or before the Trust Auction Date.
The Indenture Trustee shall provide written notice to the Issuer of any such
offer for sale at least three Business Days in advance of the Trust Auction
Date. Any Nelnet Eligible Purchaser is permitted to bid at any such auction. If
at least two independent bids are received, the Indenture Trustee (or its
designated agent) shall solicit and resolicit new bids from all participating
bidders until only one bid remains or the remaining bidders decline to resubmit
bids. The Indenture Trustee shall accept the highest of such remaining bids if
it is at least equal to the Commercial Paper Rate Minimum Purchase Amount. In
the event that only one or more Nelnet Eligible Purchasers bid at such auction
and fewer than two independent bids are received, the Indenture Trustee shall
accept the highest of such remaining bids if it is at least equal to the
Commercial Paper Rate Minimum Purchase Amount and the fair market value of such
Financed Eligible Loans as of the Quarterly Distribution Date immediately
preceding the Trust Auction Date. The Indenture Trustee shall accept the highest
of such remaining bids if it is, together with any amounts on deposit in the
Funds established pursuant to the Indenture, equal to or in excess of the
Commercial Paper Rate Minimum Purchase Amount. If the highest remaining bid is
not equal to or in excess of the higher of the amounts described in the two
preceding sentences, the Indenture Trustee shall not consummate such sale. The
Indenture Trustee may consult, and, at the direction of the Issuer, shall
consult, with a financial advisor, including an Underwriter, an Initial
Purchaser, a Remarketing Agent or the Administrator, to determine if the fair
market value of the Financed Eligible Loans has been offered by any Nelnet
Eligible Purchaser. The proceeds of any such sale, together with any amounts on
deposit in the Funds established pursuant to the Indenture, will be applied to
the redemption of all Notes Outstanding pursuant to the mandatory redemption
provisions of Section 2.09(f) and (g)(ii) of the Indenture, to pay any required
Issuer Derivative Payment (including all applicable Termination Payments) and to
pay the remaining Program Expenses through the final redemption date of the
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Series 2004-2 Notes. If the sale is not completed, the Indenture Trustee shall
solicit bids for the Financed Eligible Loans with respect to every other future
Quarterly Distribution Date for which the holder of the Purchase Option
described in Section 2.05(b) of this Appendix A has not delivered timely notice
of its intention to exercise its Purchase Option or delivered an amount equal to
the purchase price by the specified date upon terms similar to those described
above.
SECTION 2.14. EXECUTION OF DOCUMENTS. The Indenture Trustee is hereby
authorized and directed to execute and deliver, not in its individual capacity,
but solely as Indenture Trustee on behalf of the Issuer, the Remarketing
Agreement, any Derivative Products, and all Remarketing Agency Agreements as the
Issuer, in writing and from time to time, shall instruct the Indenture Trustee.
The Indenture Trustee shall not be liable to any party, any third party or any
Registered Owner for any such actions taken at the written instruction of the
Issuer. Notwithstanding the foregoing, in the event that the Indenture Trustee
declines or fails to execute or deliver any such document, instrument,
certificate or agreement as instructed by the Issuer, the Administrator is
hereby authorized, in its sole discretion, to execute and deliver, not in its
individual capacity but solely as Administrator on behalf of the Issuer, all
such required documents, instruments, certificates and agreements. The foregoing
authorization shall represent a limited power of attorney granted by the Issuer
to the Administrator to act on its behalf and the Administrator shall not be
liable to any party, any third party or any Registered Owner for any such
actions taken in good faith and in accordance with these Reset Rate Note
Procedures.
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APPENDIX B
CERTAIN TERMS AND PROVISIONS OF
THE AUCTION RATE NOTES
ARTICLE I
DEFINITIONS
Except as provided below in this Section, all terms which are defined in
Article I of the Indenture shall have the same meanings, respectively, in this
Appendix B as such terms are given in the Article I of the Indenture and
Appendix A to the Indenture. In addition, the following terms shall have the
following respective meanings:
"ACCRUAL PERIOD" shall mean, with respect to each Class of the Auction
Rate Notes, the Initial Period and each period commencing on an Auction Rate
Distribution Date for such Class of the Auction Rate Notes and ending on but
shall exclude (a) the next succeeding Auction Rate Distribution Date for such
Class of the Auction Rate Notes or (b) the Stated Maturity of such Class of the
Auction Rate Notes, as applicable.
"ALL-HOLD RATE" shall mean, on any date of determination, the interest
rate per annum equal to 90% of the Applicable LIBOR Rate, rounded to the nearest
one thousandth of one percent; provided that in no event shall the All-Hold Rate
be more than the Interest Rate Limitation or less than zero.
"APPLICABLE CP SPREAD," on any date of determination, shall mean the
following percentages, based on the lowest rating assigned to such Class of the
Auction Rate Notes:
CREDIT RATING
APPLICABLE
S&P MOODY'S FITCH CP SPREAD
---------- ---------- ------- ----------
"AAA" "Aaa" "AAA" 0.75%
"AA-" to "AA+" "Aa3" to Aa1" "AA-" to AA+" 0.75
"A-" to "A+" "A3" to "A1" "A-" to "A+" 0.75
"BBB-" to BBB+" "Baa3" to "Baa1" "BBB-" to "BBB+" 1.00
Below "BBB-" Below "Baa3" Below "BBB-" 1.50
"APPLICABLE LIBOR RATE" shall mean, with respect to the Auction Rate
Notes (a) for Auction Periods of 28 days or less, One-Month LIBOR; (b) for
Auction Periods of more than 28 days but less than 91 days, Three-Month LIBOR;
(c) for Auction Periods of more than 90 days but less than 181 days, Six-Month
LIBOR; and (d) for Auction Periods of more than 180 days, One-Year LIBOR. As
used in this definition and otherwise herein, the terms "One-Month LIBOR,"
"Three-Month LIBOR," "Six-Month LIBOR" or "One-Year LIBOR" mean the rate of
interest per annum equal to the rate per annum at which United States dollar
deposits having a maturity of one month, three months, six months or one year,
respectively, are offered to prime banks in the London interbank market which
appear on the Reuters Screen LIBOR Page as of approximately 11:00 a.m., London
time, on the Interest Rate Determination Date. If at least two such quotations
appear, One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR,
respectively, will be the arithmetic mean (rounded upwards, if necessary, to the
nearest one hundredth of one percent) of such offered rates. If fewer than two
such quotes appear, One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or
One-Year LIBOR, respectively, with respect to such Auction Period will be
determined at approximately 11:00 a.m., London time, on such Interest Rate
Determination Date on the basis of the rate at which deposits in United States
dollars having a maturity of one month, three months, six months or one year,
respectively, are offered to prime banks in the London interbank market by four
major banks in the London interbank market selected by the Auction Agent or the
Indenture Trustee, as applicable, and in a principal amount of not less than
U.S. $1,000,000 and that is representative for a single transaction in such
market at such time. The Auction Agent or the Indenture Trustee, as applicable,
will request the principal London office of each of such banks to provide a
quotation of its rate. If at least two quotations are provided, One-Month LIBOR,
Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR, respectively, will be the
arithmetic mean (rounded upwards, if necessary, to the nearest one hundredth of
one percent) of such offered rates. If fewer than two quotations are provided,
One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR,
respectively, with respect to such Auction Period will be the arithmetic mean
(rounded upwards, if necessary, to the nearest one hundredth of one percent) of
the rates quoted at approximately 11:00 a.m., New York City time on such
Interest Rate Determination Date by three major banks in New York, New York
selected by the Auction Agent or the Indenture Trustee, as applicable, for loans
in United States dollars to leading European banks having a maturity of one
month, three months, six months or one year, respectively, and in a principal
amount equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year
LIBOR, respectively, in effect for the applicable Auction Period will be
One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR,
respectively, in effect for the immediately preceding Auction Period.
"APPLICABLE T-BILL SPREAD" shall mean, on any date of determination, the
following percentages, based on the lowest rating assigned to such Class of the
Auction Rate Notes as of such date:
B-2
CREDIT RATING
APPLICABLE T-BILL
STANDARD & POOR'S MOODY'S INVESTORS SERVICE FITCH, INC. SPREAD
----------------- ------------------------- ----------- -----------------
"AAA" "Aaa" "AAA" 1.25%
"AA-" to "AA+" "Aa3" to "Aa1" "AA-" to "AA+" 1.25
"A-" to "A+" "A3" to "A1" "A-" to "A+" 1.25
"BBB-" to "BBB+" "Baa3" to "Baa1" "BBB-" to "BBB+" 1.50
Below "BBB-" Below "Baa3" Below "BBB-" 2.00
"AUCTION" shall mean the implementation of the Auction Procedures on an
Auction Date.
"AUCTION AGENT" shall mean the Initial Auction Agent under the Initial
Auction Agent Agreement unless and until a Substitute Auction Agent Agreement
becomes effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.
"AUCTION AGENT AGREEMENT" shall mean the Initial Auction Agent Agreement
unless and until a Substitute Auction Agent Agreement is entered into, after
which "Auction Agent Agreement" shall mean such Substitute Auction Agent
Agreement.
"AUCTION AGENT FEE" has the meaning set forth in the Auction Agent
Agreement.
"AUCTION DATE" shall mean, initially, (a) the auction date for the Class
A-5a Notes set forth in an Issuer Order pursuant to Section 2.03(c) of Appendix
A to the Indenture if the Class A-5a Notes have been reset to bear interest at
an Auction Rate pursuant to Section 2.01(f) of Appendix A to the Indenture, (b)
May 27, 2004 for the Class A-5b Notes, (c) May 27, 2004 for the Class A-5c
Notes, (d) May 27, 2004 for the Class B-1 Notes and (f) May 27, 2004 for the
Class B-2 Notes; and thereafter, the Business Day immediately preceding the
first day of each Auction Period for such Class, other than:
(i) each Auction Period commencing after the ownership of the
applicable Auction Rate Notes is no longer maintained in Book-entry Form
by the Securities Depository;
(ii) each Auction Period commencing after and during the
continuance of a Payment Default; or
(iii) each Auction Period commencing less than two Business Days
after the cure or waiver of a Payment Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed pursuant to Section 2.02(h) of this Appendix B.
"AUCTION PERIOD" shall mean the period applicable to each Class of the
Auction Rate Notes during which time the interest rate is determined pursuant to
Section 2.02(a) of this Appendix B, which Auction Period (after the Initial
Period for such Class) initially shall consist generally of 28 days for each
Class of the Auction Rate Notes, as the same may be adjusted pursuant to
Sections 2.01 and 2.02(g) of this Appendix B.
B-3
"AUCTION PERIOD ADJUSTMENT" shall mean an adjustment to the Auction
Period as provided in Section 2.02(g) of this Appendix B.
"AUCTION PROCEDURES" shall mean the procedures set forth in Section
2.02(a) of this Appendix B by which the Auction Rate is determined.
"AUCTION RATE" shall mean the rate of interest per annum that results
from implementation of the Auction Procedures and is determined as described in
Section 2.02(a)(iii)(B) of this Appendix B.
"AUCTION RATE NOTES" shall mean, collectively, the Class A-5a Notes (but
only if the Class A-5a Notes have been reset to bear interest at an Auction Rate
pursuant to Section 2.01(f) of Appendix A to the Indenture), the Class A-5b
Notes, the Class A-5c Notes and the Class B Notes.
"AUCTION RATE NOTES CARRY-OVER AMOUNT" shall mean, (a) during an Auction
Period when a Class of the Auction Rate Notes bears interest at the Net Loan
Rate, the excess, if any, of (i) the amount of interest on an Auction Rate Note
that would have accrued with respect to the related Accrual Period at the least
of the applicable Auction Rate and the components included in the Maximum Rate
over (ii) the amount of interest on such Auction Rate Note actually accrued with
respect to such Auction Rate Note with respect to such Accrual Period based on
the Net Loan Rate, together with the unreduced portion of any such excess from
prior Accrual Periods and (b) with respect to a Class B Note during any period
during which the Subordinate Interest Trigger has occurred and is continuing,
the interest which would have been paid on the Class B Note with respect to the
related Accrual Period, together with the unreduced portion of any such unpaid
interest from prior Accrual Periods; provided that any reference to "principal"
or "interest" in the Indenture and in this Appendix B and the Auction Rate Notes
shall not include within the meanings of such words any Auction Rate Notes
Carry-over Amount or any interest accrued on any Auction Rate Notes Carry-over
Amount. Auction Rate Notes Carry-over Amounts shall apply only during an Auction
Period when a Class of the Auction Rate Notes bears interest at the Net Loan
Rate or during a period when the Subordinate Interest Trigger has occurred and
is continuing.
"AUCTION RATE NOTES INTEREST RATE" shall mean each variable rate of
interest per annum borne by a Class of the Auction Rate Notes for each
respective Auction Period and determined in accordance with the provisions of
Sections 2.01 and 2.02 of this Appendix B.
"AVAILABLE AUCTION RATE NOTES" has the meaning set forth in Section
2.02(a)(iii)(A)(1) of this Appendix B.
"BID" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix B.
"BID AUCTION RATE" has the meaning set forth in Section
2.02(a)(iii)(A)(3) of this Appendix B.
"BIDDER" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix B.
B-4
"BOND EQUIVALENT YIELD" shall mean with respect to any security with a
maturity of six months or less the rate for which is quoted in THE WALL STREET
JOURNAL on a bank discount basis, a yield (expressed as a percentage) calculated
in accordance with the following formula and rounded up to the nearest
one-hundredth of one percent:
Bond Equivalent Yield = Q X N x 100
------------
360 - (T x Q)
where "Q" refers to the per annum interest rate for the security quoted on a
bank discount basis and expressed as a decimal, "N" refers to 365 or 366 (days),
as the case may be, and "T" refers to the number of days to maturity.
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" shall mean a form or system
under which (a) the beneficial right to principal and interest may be
transferred only through a book entry, (b) physical securities in registered
form are issued only to a Securities Depository or its nominee as registered
owner, with the securities "immobilized" to the custody of the Securities
Depository, and (c) the book entry is the record that identifies the owners of
beneficial interests in that principal and interest.
"BROKER-DEALER" shall mean (a) the broker-dealer appointed by the Issuer
in an Issuer Order pursuant to Section 2.03(c) of Appendix A to the Indenture
for the Class A-5a Notes if the Class A-5a Notes have been reset to bear
interest at an Auction Rate pursuant to Section 2.01(f) of Appendix A to the
Indenture, (b) J.P. Morgan Securities Inc. and UFS Securities L.L.C. with
respect to the Class A-5b Notes and the Class B-1 Notes and (c) Morgan Stanley &
Co. Incorporated with respect to the Class A-5c Notes and the Class B-2 Notes,
or any other broker or dealer (each as defined in the Securities Exchange Act of
1934, as amended), commercial bank or other entity permitted by law to perform
the functions required of a Broker-Dealer set forth in the Auction Procedures
that (i) is a Participant (or an affiliate of a Participant), (ii) has been
appointed as such by the Issuer pursuant to Section 2.02(f) of this Appendix B,
and (iii) has entered into a Broker-Dealer Agreement that is in effect on the
date of reference.
"BROKER-DEALER AGREEMENT" shall mean each agreement between the Auction
Agent and a Broker-Dealer, pursuant to which the Broker-Dealer agrees to
participate in Auctions as set forth in the Auction Procedures, as from time to
time amended or supplemented. Each Broker-Dealer Agreement shall be in
substantially the form of the Broker-Dealer Agreements, each dated as of April
1, 2004, among Deutsche Bank Trust Company Americas, as Auction Agent, and the
Broker-Dealers.
"BROKER-DEALER FEE" has the meaning set forth in the Auction Agent
Agreement.
"BROKER-DEALER FEE RATE" has the meaning set forth in the Auction Agent
Agreement.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, holiday
or other day on which the New York Stock Exchange or banks located in New York,
New York, or in the city in which the principal office of the Indenture Trustee
or the Auction Agent is located, are authorized or permitted by law or executive
order to close; provided that with respect to Auction Dates such term shall
exclude April 14 and 15 and December 30 and 31 and such other dates as may be
agreed to in writing by the Auction Agent, the Broker-Dealers and the Issuer.
B-5
"CLASS A-5A NOTES INTEREST RATE" shall mean, if the Class A-5a Notes
have been reset to bear interest at an Auction Rate pursuant to Section 2.01(f)
of Appendix A to the Indenture, the Auction Rate Notes Interest Rate on the
Class A-5a Notes.
"CLASS A-5B NOTES INTEREST RATE" shall mean the Auction Rate Notes
Interest Rate on the Class A-5b Notes.
"CLASS A-5C NOTES INTEREST RATE" shall mean the Auction Rate Notes
Interest Rate on the Class A-5c Notes.
"CLASS B-1 NOTES INTEREST RATE" shall mean the Auction Rate Notes
Interest Rate on the Class B-1 Notes.
"CLASS B-2 NOTES INTEREST RATE" shall mean the Auction Rate Notes
Interest Rate on the Class B-2 Notes.
"CP CAP" shall mean, for any Auction Date, the rate (for the then
current Auction) at which the Quarterly Average Auction Rate equals the
Quarterly Average CP Rate plus the Applicable CP Spread, such rate to be
determined by the formula:
N x (C + S) - R,
Where N is the number of Auction Dates which precede the current Auction Date by
91 days or less, including the current Auction Date; C is the Quarterly Average
CP Rate; S is the Applicable CP Spread; and, R is the sum of the Auction Rates
for Auction Dates preceding the current Auction Date by 91 days or less,
excluding the current Auction.
"ELIGIBLE AUCTION RATE NOTES CARRY-OVER MAKE-UP AMOUNT" shall mean, (a)
with respect to each Accrual Period relating to a Class of the Auction Rate
Notes as to which, as of the first day of such Accrual Period, there is any
unpaid Auction Rate Notes Carry-over Amount, an amount equal to the lesser of
(i) interest computed on the principal balance of such Class of the Auction Rate
Notes in respect to such Accrual Period at a per annum rate equal to the excess,
if any, of the Net Loan Rate over the Auction Rate and (ii) the aggregate
Auction Rate Notes Carry-over Amount remaining unpaid as of the first day of
such Accrual Period together with interest accrued and unpaid thereon through
the end of such Accrual Period and (b) with respect to with respect to each
Accrual Period relating to a Class of the Class B Notes as to which, as of the
first day of such Accrual Period, there is any unpaid Auction Rate Notes
Carry-over Amount due to the occurrence and continuation of the Subordinate
Interest Trigger and the Subordinate Interest Trigger is no longer continuing,
an amount equal to such unpaid Auction Rate Notes Carry-over Amount.
"EXISTING OWNER" shall mean (a) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a
Broker-Dealer listed in the Existing Owner Registry at the close of business on
the Business Day immediately preceding the Auction Date for such Auction and (b)
with respect to and for the purpose of dealing with the Broker-Dealer in
connection with an Auction, a Person who is a beneficial owner of Auction Rate
Notes.
B-6
"EXISTING OWNER REGISTRY" shall mean the registry of Persons who are
owners of the Auction Rate Notes, maintained by the Auction Agent as provided in
the Auction Agent Agreement.
"HOLD ORDER" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix B.
"INITIAL AUCTION AGENT" shall mean Deutsche Bank Trust Company Americas,
a New York banking corporation, its successors and assigns.
"INITIAL AUCTION AGENT AGREEMENT" shall mean, collectively, the Auction
Agent Agreement dated as of April 1, 2004, by and among the Issuer, the
Indenture Trustee and the Initial Auction Agent, including any amendment thereof
or supplement thereto.
"INITIAL PERIOD" shall mean, as to each Class of the Auction Rate Notes,
the period commencing on the Closing Date and continuing through the day
immediately preceding the Initial Rate Adjustment Date for the Auction Rate
Notes.
"INITIAL RATE" shall mean 1.09% per annum for the Class A-5b Notes,
1.09% per annum for the Class A-5c Notes, 1.20% per annum for the Class B-1
Notes and 1.20% per annum for the Class B-2 Notes, and, if the Class A-5a Notes
have been reset to bear interest at an Auction Rate pursuant to Section 2.01(f)
of Appendix A to the Indenture, the per annum rate for the Class A-5a Notes
established by the Remarketing Agents pursuant to Section 2.09(d) of Appendix A
to the Indenture.
"INITIAL RATE ADJUSTMENT DATE" shall mean May 28, 2004 for the Class
A-5b Notes, May 28, 2004 for the Class A-5c Notes, May 28, 2004 for the Class
B-1 Notes and May 28, 2004 for the Class B-2 Notes, and, if the Class A-5a Notes
have been reset to bear interest at an Auction Rate pursuant to Section 2.01(f)
of Appendix A to the Indenture, the initial rate adjustment date for the Class
A-5a Notes set forth in an Issuer Order pursuant to Section 2.03(c) of Appendix
A to the Indenture.
"INTEREST RATE ADJUSTMENT DATE" shall mean (a) with respect to the Class
A-5a Notes if the Class A-5a Notes have been reset to bear interest at an
Auction Rate pursuant to Section 2.01(f) of Appendix A to the Indenture, the
date on which a Class A-5a Notes Interest Rate is effective, and shall mean,
with respect to the Class A-5a Notes, the date of commencement of each Auction
Period for the Class A-5a Notes, (b) with respect to the Class A-5b Notes, the
date on which a Class A-5b Notes Interest Rate is effective, and shall mean,
with respect to the Class A-5b Notes, the date of commencement of each Auction
Period for the Class A-5b Notes, (c) with respect to the Class A-5c Notes, the
date on which a Class A-5c Notes Interest Rate is effective, and shall mean,
with respect to the Class A-5c Notes, the date of commencement of each Auction
Period for the Class A-5c Notes, (d) with respect to the Class B-1 Notes, the
date on which a Class B-1 Notes Interest Rate is effective, and shall mean, with
respect to the Class B-1 Notes, the date of commencement of each Auction Period
for the Class B-1 Notes and (e) with respect to the Class B-2 Notes, the date on
which a Class B-2 Notes Interest Rate is effective, and shall mean, with respect
to the Class B-2 Notes, the date of commencement of each Auction Period for the
Class B-2 Notes.
B-7
"INTEREST RATE DETERMINATION DATE" shall mean, with respect to each
Class of the Auction Rate Notes, the Auction Date for such Class, or if no
Auction Date is applicable to such Class of the Auction Rate Notes, the Business
Day immediately preceding the date of commencement of an Auction Period for such
Class.
"INTEREST RATE LIMITATION" shall mean, on any date of determination, the
lesser of (a) the highest rate the Issuer may legally pay from time to time or
(b) 17%.
"MAXIMUM RATE" on any date of determination shall mean the least of:
(a) the Applicable LIBOR Rate plus 1.00%;
(b) the Interest Rate Limitation;
(c) for Auctions after the initial Auction Date, the T-Bill Cap;
(d) for Auctions after the initial Auction Date, the CP Cap; and
(e) the Net Loan Rate.
"90-DAY FINANCIAL COMMERCIAL PAPER RATE" shall mean the 90-Day AA
Financial Commercial Paper rate posted on the Federal Reserve Release entitled
"Commercial Paper Rates and Outstandings," which rate may be available on the
Internet at WWW.FEDERALRESERVE.GOV/RELEASES/CP.
"NET LOAN RATE" shall mean, with respect to any Accrual Period
applicable to a Class of the Auction Rate Notes, the weighted average return on
the Financed Eligible Loans, including all Revenues derived from such Financed
Eligible Loans, less all Program Expenses expressed as a percentage of the
average outstanding principal balance of such Financed Eligible Loans, which
percentage shall be calculated by the Issuer on a quarterly basis, in arrears
and provided to the Indenture Trustee and the Auction Agent. In making the
determination of the Net Loan Rate, the Issuer shall take into account any
Counterparty Payments received and/or any Issuer Derivative Payments made on a
Derivative Product which does not correspond to a specific Class of the Series
2004-2 Notes (unless such Derivative Product corresponds to the Class of the
Series 2004-2 Notes for which the calculation of the Net Loan Rate is being
performed).
"NON-PAYMENT RATE" shall mean One-Month LIBOR plus 1.50%.
"ONE-MONTH LIBOR," "THREE-MONTH LIBOR," "SIX-MONTH LIBOR" or "ONE-YEAR
LIBOR," shall mean the offered rate, as determined by the Auction Agent or
Indenture Trustee, as applicable, of the Applicable LIBOR Rate for United States
dollar deposits which appears on Telerate Page 3750, as reported by Bloomberg
Financial Markets Commodities News (or such other page as may replace Telerate
Page 3750 for the purpose of displaying comparable rates) as of approximately
11:00 a.m., London time, on the LIBOR Determination Date; provided, that if on
any calculation date, no rate appears on Telerate Page 3750 as specified above,
the Auction Agent or the Indenture Trustee, as applicable, shall determine the
arithmetic mean of the offered quotations of four major banks in the London
B-8
interbank market, for deposits in United States dollars for the respective
periods specified above to the banks in the London interbank market as of
approximately 11:00 a.m., London time, on such calculation date and in a
principal amount of not less than $1,000,000 that is representative of a single
transaction in such market and at such time, unless fewer than two such
quotations are provided, in which case, the Applicable LIBOR Rate shall be the
arithmetic mean of the offered quotations that leading banks in New York City
selected by the Auction Agent or the Indenture Trustee, as applicable, are
quoting on the relevant LIBOR Determination Date for loans in United States
dollars to leading European banks in a principal amount of not less than
$1,000,000 that is representative of a single transaction in such market at such
time. All percentages resulting from such calculations shall be rounded upwards,
if necessary, to the nearest one-hundredth of one percent.
"ORDER" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix B.
"PAYMENT DEFAULT" shall mean, with respect to the Auction Rate Notes,
(a) a default in the due and punctual payment of any installment of interest on
such Auction Rate Notes, other than as a result of the occurrence or
continuation of the Subordinate Interest Trigger or (b) a default in the due and
punctual payment of any interest on and principal of such Auction Rate Notes at
their maturity.
"POTENTIAL OWNER" shall mean any Person (including an Existing Owner
that is (a) a Broker-Dealer when dealing with the Auction Agent and (b) a
potential beneficial owner when dealing with a Broker-Dealer) who may be
interested in acquiring Auction Rate Notes (or, in the case of an Existing Owner
thereof, an additional principal amount of Auction Rate Notes).
"PSA" shall mean the Public Securities Association, its successors and
assigns.
"QUARTERLY AVERAGE AUCTION RATE" shall mean the simple average of the
Auction Rates for such Class of the Auction Rate Notes for Auction Dates
preceding the current Auction Date by 91 days or less, including the current
Auction Date.
"QUARTERLY AVERAGE CP RATE" shall mean the simple average of the Bond
Equivalent Yield of 90-Day Financial Commercial Paper Rates for the 91 days
preceding (but not including) the current Auction Date.
"QUARTERLY AVERAGE T-BILL RATE" shall mean the simple average of the
Bond Equivalent Yield of 91-day Treasury bills auctioned in the 91 days
preceding (but not including) the current Auction Date.
"RECORD DATE" shall mean, with respect to the Auction Rate Notes, the
Business Day next preceding the applicable Auction Rate Distribution Date.
"SELL ORDER" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix B.
"SUBMISSION DEADLINE" shall mean 1:00 p.m., eastern time, on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.
B-9
"SUBMITTED BID" has the meaning set forth in Section 2.02(a)(iii)(A) of
this Appendix B.
"SUBMITTED HOLD ORDER" has the meaning set forth in Section
2.02(a)(iii)(A) of this Appendix B.
"SUBMITTED ORDER" has the meaning set forth in Section 2.02(a)(iii)(A)
of this Appendix B.
"SUBMITTED SELL ORDER" has the meaning set forth in Section
2.02(a)(iii)(A) of this Appendix B.
"SUBSTITUTE AUCTION AGENT" shall mean the Person with whom the Issuer
and the Indenture Trustee enter into a Substitute Auction Agent Agreement.
"SUBSTITUTE AUCTION AGENT AGREEMENT" shall mean an auction agent
agreement containing terms substantially similar to the terms of the Initial
Auction Agent Agreement, whereby a Person having the qualifications required by
Section 2.02(e) of this Appendix B agrees with the Indenture Trustee and the
Issuer to perform the duties of the Auction Agent under this Appendix B.
"SUFFICIENT BIDS" has the meaning set forth in Section 2.02(a)(iii)(A)
of this Appendix B.
"T-BILL CAP" shall mean, for any Auction Date, the rate (for the then
current auction) at which the Quarterly Average Auction Rate equals the
Quarterly Average T-Bill Rate plus the Applicable T-Bill Spread, such rate to be
determined by the formula:
N x (T+S) - R,
where N is the number of Auction Dates which precede the current Auction Date by
91 days or less, including the current Auction Date; T is the Quarterly Average
T-Bill Rate; S is the Applicable T-Bill Spread; and R is the sum of the Auction
Rates for Auction Dates preceding the current Auction Date by 91 days or less,
excluding the current Auction.
ARTICLE II
TERMS AND ISSUANCE
SECTION 2.01. AUCTION RATE NOTES INTEREST RATE AND AUCTION RATE NOTES
CARRY-OVER AMOUNTS. During the Initial Period, the Auction Rate Notes shall bear
interest at the Initial Rate for such Class. Thereafter, and except with respect
to an Auction Period Adjustment, the Auction Rate Notes shall bear interest at
an Auction Rate Notes Interest Rate based on a 28-day Auction Period for the
Auction Rate Notes, as determined pursuant to this Section and Section 2.02 of
this Appendix B.
For the Auction Rate Notes during the Initial Period and each Auction
Period thereafter, interest at the applicable Auction Rate Notes Interest Rate
shall accrue daily and shall be computed for the actual number of days elapsed
on the basis of a year consisting of 360 days.
B-10
The Auction Rate Notes Interest Rate to be borne by the Auction Rate
Notes after such Initial Period for each Auction Period until an Auction Period
Adjustment, if any, shall be determined as described below. Unless otherwise
specified in an Issuer Order, each such Auction Period after the Initial Period
shall commence on and include the day following the expiration of the
immediately preceding Auction Period and terminate on and include the Wednesday
(unless such day is not followed by a Business Day, in which case on the next
succeeding day that is followed by a Business Day) of the following fourth week;
provided, however, that in the case of the Auction Period that immediately
follows the Initial Period for the Auction Rate Notes, such Auction Period shall
commence on the Initial Rate Adjustment Date. The Auction Rate Notes Interest
Rate on the Auction Rate Notes for each Auction Period shall be the Auction Rate
in effect for such Auction Period as determined in accordance with Section
2.02(a) of this Appendix B. By way of example, if an Auction Period ordinarily
would end on a Wednesday, but the following Thursday is not a Business Day, the
Auction Period will end on that Thursday and the new Auction Period will begin
on Friday.
Notwithstanding the foregoing, unless otherwise specified in an Issuer
Order, if an Auction is scheduled to occur for the next Auction Period on a date
that was reasonably expected to be a Business Day, but such Auction does not
occur because such date is later not considered to be a Business Day, the
Auction shall nevertheless be deemed to have occurred, and the applicable
Auction Rate Notes Interest Rate in effect for the next Auction Period will be
the Auction Rate Notes Interest Rate in effect for the preceding Auction Period
and such Auction Period will generally be 28 days in duration, beginning on the
calendar day following the date of the deemed Auction and ending on (and
including) the applicable Wednesday (unless such day is not followed by a
Business Day, in which case on the next succeeding day that is followed by a
Business Day) of the following fourth week. If the preceding Auction Period was
other than generally 28 days in duration, the Auction Rate Notes Interest Rate
for the deemed Auction will instead be the rate of interest determined by the
applicable Broker-Dealer on equivalently rated auction securities with a
comparable length of auction period.
Notwithstanding the foregoing:
(a) if the ownership of an Auction Rate Note is no longer
maintained in Book-entry Form, the Auction Rate Notes Interest Rate on
the Auction Rate Notes for any Accrual Period commencing after the
delivery of certificates representing Auction Rate Notes pursuant to the
Indenture shall equal the Maximum Rate on the Business Day immediately
preceding the first day of such subsequent Accrual Period; or
(b) if a Payment Default shall have occurred, the Auction Rate
Notes Interest Rate on the Auction Rate Notes for the Accrual Period
commencing on or immediately after such Payment Default, and for each
Accrual Period thereafter, to and including the Accrual Period, if any,
during which, or commencing less than two Business Days after, such
Payment Default is cured, shall equal the applicable Non-Payment Rate on
the first day of each such Accrual Period.
In accordance with Section 2.02(a)(iii)(B) and (C) of this Appendix B,
the Auction Agent shall promptly give written notice to the Indenture Trustee
and the Issuer of each Auction Rate Notes Interest Rate (unless the Auction Rate
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Notes Interest Rate is the applicable Non-Payment Rate) and the Maximum Rate
when such rate is not the Auction Rate Notes Interest Rate, applicable to the
Class of the Auction Rate Notes. The Indenture Trustee shall notify the
Registered Owners and the Issuer of Auction Rate Notes of the applicable Auction
Rate Notes Interest Rate applicable to such Auction Rate Notes for each Auction
Period not later than the third Business Day of such Auction Period.
Notwithstanding any other provision of the Auction Rate Notes or the Indenture
and except for the occurrence of a Payment Default, interest payable on the
Auction Rate Notes for an Auction Period shall never exceed for such Auction
Period the amount of interest payable at the applicable Maximum Rate in effect
for such Auction Period.
If the Auction Rate for a Class of the Auction Rate Notes is greater
than the Maximum Rate, then the Auction Rate Notes Interest Rate for such Class
for that Accrual Period will be the Maximum Rate. If the Auction Rate Notes
Interest Rate applicable to such Class of the Auction Rate Notes for any Accrual
Period is the Net Loan Rate, the Indenture Trustee shall determine the Auction
Rate Notes Carry-over Amount, if any, with respect to such Class of the Auction
Rate Notes for such Accrual Period. If interest on a Class of the Auction Rate
Notes for any Accrual Period is not paid due to the occurrence and continuation
of the Subordinate Interest Trigger, the Indenture Trustee shall determine the
Auction Rate Notes Carry-over Amount, if any, with respect to such Class of the
Auction Rate Notes for such Accrual Period. Such Auction Rate Notes Carry-over
Amount shall bear interest calculated at a rate equal to One-Month LIBOR (as
determined by the Auction Agent, provided the Indenture Trustee has received
notice of One-Month LIBOR from the Auction Agent, and if the Indenture Trustee
shall not have received such notice from the Auction Agent, then as determined
by the Indenture Trustee) from the Auction Rate Distribution Date for the
Accrual Period with respect to which such Auction Rate Notes Carry-over Amount
was calculated, until paid. Any payment in respect of Auction Rate Notes
Carry-over Amount shall be applied, first, to any accrued interest payable
thereon and, second, in reduction of such Auction Rate Notes Carry-over Amount.
For purposes of the Indenture and this Appendix B, any reference to "principal"
or "interest" herein shall not include within the meaning of such words Auction
Rate Notes Carry-over Amount or any interest accrued on any such Auction Rate
Notes Carry-over Amount. Such Auction Rate Notes Carry-over Amount shall be
separately calculated for each Auction Rate Note by the Indenture Trustee during
such Accrual Period in sufficient time for the Indenture Trustee to give notice
to each Registered Owner of such Auction Rate Notes Carry-over Amount as
required in the next succeeding sentence. Not less than four days before the
Auction Rate Distribution Date for such Class of the Auction Rate Notes for an
Accrual Period with respect to which such Auction Rate Notes Carry-over Amount
has been calculated by the Indenture Trustee, the Indenture Trustee shall give
written notice to each Registered Owner, the Auction Agent and the Issuer of the
Auction Rate Notes Carry-over Amount applicable to each Registered Owner's
Auction Rate Note, which written notice may accompany the payment of interest
made to each such Registered Owner on such Auction Rate Distribution Date or
otherwise shall be mailed on such Auction Rate Distribution Date by first-class
mail, postage prepaid, or by electronic means to each such Registered Owner at
such Registered Owner's address as it appears on the registration records
maintained by the Indenture Trustee. In addition to such Auction Rate Notes
Carry-over Amount, such notice shall state, that, unless and until an Auction
Rate Note has been redeemed (other than by optional redemption), after which
redemption all accrued Auction Rate Notes Carry-over Amounts (and all accrued
interest thereon) that remain unpaid shall be canceled and no Auction Rate Notes
Carry-over Amount (or interest accrued thereon) shall be paid with respect to
any redeemed Auction Rate Note, (a) the Auction Rate Notes Carry-over Amount
(and interest accrued thereon calculated at a rate equal to One-Month LIBOR)
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shall be paid or, in case of a defeasance, provided for by the Indenture Trustee
on an Auction Rate Note on the earliest of (i) the date of defeasance or
optional redemption of the Auction Rate Notes, or (ii) the first occurring
Auction Rate Distribution Date for such Class of the Auction Rate Notes if and
to the extent that (x) the Eligible Auction Rate Notes Carry-over Make-Up Amount
with respect to such subsequent Accrual Period is greater than zero, and (y)
moneys are available pursuant to the terms of the Indenture in an amount
sufficient to pay all or a portion of such Auction Rate Notes Carry-over Amount
(and interest accrued thereon); and (b) interest shall accrue on the Auction
Rate Notes Carry-over Amount at a rate equal to One-Month LIBOR until such
Auction Rate Notes Carry-over Amount is paid in full or is cancelled.
The Auction Rate Notes Carry-over Amount (and interest accrued thereon)
for Auction Rate Notes shall be paid or, in case of a defeasance, provided for
by the Indenture Trustee on Outstanding Auction Rate Notes on the earliest of
(a) the date of defeasance or optional redemption of any of the Auction Rate
Notes or (b) the first occurring Auction Rate Distribution Date for such Class
of the Auction Rate Notes if and to the extent that (i) the Eligible Auction
Rate Notes Carry-over Make-Up Amount with respect to such Accrual Period is
greater than zero, and (ii) on such Auction Rate Distribution Date there are
sufficient moneys in the Collection Fund to pay all interest due on the Auction
Rate Notes on such Auction Rate Distribution Date. Any Auction Rate Notes
Carry-over Amount (and any interest accrued thereon) on any Auction Rate Note
which is due and payable on an Auction Rate Distribution Date, which Auction
Rate Note is to be redeemed (other than by optional redemption) on said Auction
Rate Distribution Date, shall be paid to the Registered Owner thereof on said
Auction Rate Distribution Date to the extent that moneys are available therefor
in accordance with the provisions of this Appendix B; provided, however, that
any Auction Rate Notes Carry-over Amount (and any interest accrued thereon)
which is not yet due and payable on said Auction Rate Distribution Date shall be
cancelled with respect to said Auction Rate Note that is to be redeemed (other
than by optional redemption) on said Auction Rate Distribution Date and shall
not be paid on any succeeding Auction Rate Distribution Date. To the extent that
any portion of the Auction Rate Notes Carry-over Amount (and any interest
accrued thereon) remains unpaid after payment of a portion thereof, such unpaid
portion shall be paid in whole or in part as required hereunder until fully paid
or, in case of a defeasance, provided for by the Indenture Trustee on the
earliest of (a) the date of defeasance or optional redemption of any of the
Auction Rate Notes or (b) the next occurring Auction Rate Distribution Date or
Dates, as necessary, if and to the extent that the conditions in the second
preceding sentence are satisfied. On any Auction Rate Distribution Date on which
the Indenture Trustee pays only a portion of the Auction Rate Notes Carry-over
Amount (and any interest accrued thereon) on Auction Rate Notes, the Indenture
Trustee shall give written notice in the manner set forth in the immediately
preceding paragraph to the Registered Owner of such Auction Rate Note receiving
such partial payment of the Auction Rate Notes Carry-over Amount remaining
unpaid on such Auction Rate Note.
The Auction Rate Distribution Date for a Class of the Auction Rate Notes
or other date on which such Auction Rate Notes Carry-over Amount (or any
interest accrued thereon) for Auction Rate Notes shall be paid shall be Issuer,
or by the Administrator on behalf of the Issuer, Trustee in accordance with the
provisions of the immediately preceding paragraph, and the Indenture Trustee
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shall make payment of the Auction Rate Notes Carry-over Amount (and any interest
accrued thereon) in the same manner as, and from the same Account from which, it
pays interest on the Auction Rate Notes on an Auction Rate Distribution Date for
the appropriate Class of the Auction Rate Notes. Any payment of Auction Rate
Notes Carry-over Amounts (and interest accrued thereon) shall reduce the amount
of Eligible Auction Rate Notes Carry-over Make-Up Amount.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Auction Rate Notes Interest Rate with respect to
Auction Rate Notes, or, if for any reason such manner of determination shall be
held to be invalid or unenforceable, the Auction Rate Notes Interest Rate for
the next succeeding Accrual Period, which Accrual Period shall be an Auction
Period, for Auction Rate Notes shall be the Maximum Rate as determined by the
Auction Agent for such next succeeding Auction Period, and if the Auction Agent
shall fail or refuse to determine the Maximum Rate, the Maximum Rate shall be
determined by the securities dealer appointed by the Issuer capable of making
such a determination in accordance with the provisions of this Appendix B and
written notice of such determination shall be given by such securities dealer to
the Indenture Trustee.
SECTION 2.02. AUCTION RATE.
(a) DETERMINING THE AUCTION RATE. By purchasing Auction Rate
Notes, whether in an Auction or otherwise, each purchaser of the Auction
Rate Notes, or its Broker-Dealer, must agree and shall be deemed by such
purchase to have agreed (x) to participate in Auctions on the terms
described herein, (y) to have its beneficial ownership of the Auction
Rate Notes maintained at all times in Book-entry Form for the account of
its Participant, which in turn will maintain records of such beneficial
ownership and (z) to authorize such Participant to disclose to the
Auction Agent such information with respect to such beneficial ownership
as the Auction Agent may request.
So long as the ownership of Auction Rate Notes is maintained in
Book-entry Form by the Securities Depository, an Existing Owner may
sell, transfer or otherwise dispose of Auction Rate Notes only pursuant
to a Bid or Sell Order placed in an Auction or otherwise sell, transfer
or dispose of Auction Rate Notes through a Broker-Dealer, provided that,
in the case of all transfers other than pursuant to Auctions, such
Existing Owner, its Broker-Dealer or its Participant advises the Auction
Agent of such transfer. Auctions shall be conducted on each Auction
Date, if there is an Auction Agent on such Auction Date, in the
following manner (the Auction Rate Notes Interest Rates shall be
determined separately for each Class of the Auction Rate Notes):
(i) (A) Prior to the Submission Deadline on each Auction
Date;
(1) each Existing Owner of Auction Rate
Notes may submit to a Broker-Dealer by telephone or
otherwise any information as to:
a. the principal amount of
Outstanding Auction Rate Notes, if any,
owned by such Existing Owner which such
Existing Owner desires to continue to own
without regard to the Auction Rate Notes
Interest Rate for the next succeeding
Auction Period;
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b. the principal amount of
Outstanding Auction Rate Notes, if any,
which such Existing Owner offers to sell if
the Auction Rate Notes Interest Rate for the
next succeeding Auction Period shall be less
than the rate per annum specified by such
Existing Owner; and/or
c. the principal amount of
Outstanding Auction Rate Notes, if any,
owned by such Existing Owner which such
Existing Owner offers to sell without regard
to the Auction Rate Notes Interest Rate for
the next succeeding Auction Period;
and
(2) one or more Broker-Dealers may contact
Potential Owners to determine the principal amount
of Auction Rate Notes which each Potential Owner
offers to purchase, if the Auction Rate Notes
Interest Rate for the next succeeding Auction
Period shall not be less than the rate per annum
specified by such Potential Owner.
The statement of an Existing Owner or a Potential
Owner referred to in (1) or (2) of this paragraph (A) is
herein referred to as an "Order," and each Existing Owner
and each Potential Owner placing an Order is herein
referred to as a "Bidder"; an Order described in clause
(1)a is herein referred to as a "Hold Order"; an Order
described in clauses (1)b and (2) is herein referred to as
a "Bid"; and an Order described in clause (1)c is herein
referred to as a "Sell Order."
(B) (1) Subject to the provisions of Section
2.02(a)(ii) of this Appendix B, a Bid by an
Existing Owner shall constitute an irrevocable
offer to sell:
a. the principal amount of
Outstanding Auction Rate Notes specified in
such Bid if the Auction Rate Notes Interest
Rate determined as provided in this Section
2.02(a) shall be less than the rate
specified therein; or
b. such principal amount, or a
lesser principal amount of Outstanding
Auction Rate Notes to be determined as set
forth in Section 2.02(a)(iv)(A)(4) of this
Appendix B, if the Auction Rate Notes
Interest Rate determined as provided in this
Section 2.02(a) shall be equal to the rate
specified therein; or
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c. such principal amount, or a
lesser principal amount of Outstanding
Auction Rate Notes to be determined as set
forth in Section 2.02(a)(iv)(B)(3) of this
Appendix B, if the rate specified therein
shall be higher than the applicable Maximum
Rate and Sufficient Bids have not been made.
(2) Subject to the provisions of Section
2.02(a)(ii) of this Appendix B, a Sell Order by an
Existing Owner shall constitute an irrevocable
offer to sell:
a. the principal amount of
Outstanding Auction Rate Notes specified in
such Sell Order; or
b. such principal amount, or a
lesser principal amount of Outstanding
Auction Rate Notes set forth in Section
2.02(a)(iv)(B)(3) of this Appendix B, if
Sufficient Bids have not been made.
(3) Subject to the provisions of Section
2.02(a)(ii) of this Appendix B, a Bid by a
Potential Owner shall constitute an irrevocable
offer to purchase:
a. the principal amount of
Outstanding Auction Rate Notes specified in
such Bid if the Auction Rate Notes Interest
Rate determined as provided in this Section
2.02(a) shall be higher than the rate
specified in such Bid; or
b. such principal amount, or a
lesser principal amount of Outstanding
Auction Rate Notes set forth in Section
2.02(a)(iv)(A)(5) of this Appendix B, if the
Auction Rate Notes Interest Rate determined
as provided in this Section 2.02(a) shall be
equal to the rate specified in such Bid.
(ii) (A) Each Broker-Dealer shall submit in writing to the
Auction Agent prior to the Submission Deadline on each
Auction Date all Orders obtained by such Broker-Dealer and
shall specify with respect to each such Order:
(1) the name of the Bidder placing such
Order;
(2) the aggregate principal amount of
Auction Rate Notes that are the subject of such
Order;
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(3) to the extent that such Bidder is an
Existing Owner:
a. the principal amount of Auction
Rate Notes, if any, subject to any Hold
Order placed by such Existing Owner;
b. the principal amount of Auction
Rate Notes, if any, subject to any Bid
placed by such Existing Owner and the rate
specified in such Bid; and
c. the principal amount of Auction
Rate Notes, if any, subject to any Sell
Order placed by such Existing Owner;
and
(4) to the extent such Bidder is a Potential
Owner, the rate specified in such Potential Owner's
Bid.
(B) If any rate specified in any Bid contains more
than three figures to the right of the decimal point, the
Auction Agent shall round such rate up to the next higher
one thousandth of 1%.
(C) If an Order or Orders covering all Outstanding
Auction Rate Notes owned by an Existing Owner is not
submitted to the Auction Agent prior to the Submission
Deadline, the Auction Agent shall deem a Hold Order to
have been submitted on behalf of such Existing Owner
covering the principal amount of Outstanding Auction Rate
Notes owned by such Existing Owner and not subject to an
Order submitted to the Auction Agent.
(D) None of the Issuer, the Indenture Trustee or
the Auction Agent shall be responsible for any failure of
a Broker-Dealer to submit an Order to the Auction Agent on
behalf of any Existing Owner or Potential Owner.
(E) If any Existing Owner submits through a
Broker-Dealer to the Auction Agent one or more Orders
covering in the aggregate more than the principal amount
of Outstanding Auction Rate Notes owned by such Existing
Owner, such Orders shall be considered valid as follows
and in the following order of priority:
(1) All Hold Orders shall be considered
valid, but only up to the aggregate principal
amount of Outstanding Auction Rate Notes owned by
such Existing Owner, and if the aggregate principal
amount of Auction Rate Notes subject to such Hold
Orders exceeds the aggregate principal amount of
Auction Rate Notes owned by such Existing Owner,
the aggregate principal amount of Auction Rate
Notes subject to each such Hold Order shall be
reduced pro rata so that the aggregate principal
amount of Auction Rate Notes subject to such Hold
Order equals the aggregate principal amount of
Outstanding Auction Rate Notes owned by such
Existing Owner.
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(2) a. Any Bid shall be considered valid up
to an amount equal to the excess of the
principal amount of Outstanding Auction Rate
Notes owned by such Existing Owner over the
aggregate principal amount of Auction Rate
Notes subject to any Hold Order referred to
in clause (A) of this paragraph (v);
b. subject to subclause (1) of this
clause (B), if more than one Bid with the
same rate is submitted on behalf of such
Existing Owner and the aggregate principal
amount of Outstanding Auction Rate Notes
subject to such Bids is greater than such
excess, such Bids shall be considered valid
up to an amount equal to such excess;
c. subject to subclauses (1) and (2)
of this clause (B), if more than one Bid
with different rates are submitted on behalf
of such Existing Owner, such Bids shall be
considered valid first in the ascending
order of their respective rates until the
highest rate is reached at which such excess
exists and then at such rate up to the
amount of such excess; and
d. in any such event, the amount of
Outstanding Auction Rate Notes, if any,
subject to Bids not valid under this clause
(B) shall be treated as the subject of a Bid
by a Potential Owner at the rate therein
specified; and
(3) All Sell Orders shall be considered
valid up to an amount equal to the excess of the
principal amount of Outstanding Auction Rate Notes
owned by such Existing Owner over the aggregate
principal amount of Auction Rate Notes subject to
Hold Orders referred to in clause (1) of this
paragraph (v) and valid Bids referred to in clause
(2) of this paragraph (E).
(F) If more than one Bid for Auction Rate Notes is
submitted on behalf of any Potential Owner, each Bid
submitted shall be a separate Bid with the rate and
principal amount therein specified.
(G) An Existing Owner that offers to purchase
additional Auction Rate Notes is, for purposes of such
offer, treated as a Potential Owner.
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(H) Any Bid or Sell Order submitted by an Existing
Owner covering an aggregate principal amount of Auction
Rate Notes not equal to an Authorized Denomination shall
be rejected and shall be deemed a Hold Order. Any Bid
submitted by a Potential Owner covering an aggregate
principal amount of Auction Rate Notes not equal to an
Authorized Denomination shall be rejected.
(I) Any Bid specifying a rate higher than the
applicable Maximum Rate will (1) be treated as a Sell
Order if submitted by an Existing Owner and (2) not be
accepted if submitted by a Potential Owner.
(J) Any Order submitted in an Auction by a
Broker-Dealer to the Auction Agent prior to the Submission
Deadline on any Auction Date shall be irrevocable.
(iii) (A) Not earlier than the Submission Deadline on each
Auction Date, the Auction Agent shall assemble all valid
Orders submitted or deemed submitted to it by the
Broker-Dealers (each such Order as submitted or deemed
submitted by a Broker-Dealer being herein referred to
individually as a "Submitted Hold Order," a "Submitted
Bid" or a "Submitted Sell Order," as the case may be, or
as a "Submitted Order," and collectively as "Submitted
Hold Orders," "Submitted Bids" or "Submitted Sell Orders,"
as the case may be, or as "Submitted Orders") and shall
determine:
(1) the excess of the total principal amount
of Outstanding Auction Rate Notes over the sum of
the aggregate principal amount of Outstanding
Auction Rate Notes subject to Submitted Hold Orders
(such excess being herein referred to as the
"Available Auction Rate Notes"), and
(2) from the Submitted Orders whether:
a. the aggregate principal amount of
Outstanding Auction Rate Notes subject to
Submitted Bids by Potential Owners
specifying one or more rates equal to or
lower than the applicable Maximum Rate;
exceeds or is equal to the sum of:
b. the aggregate principal amount of
Outstanding Auction Rate Notes subject to
Submitted Bids by Existing Owners specifying
one or more rates higher than the applicable
Maximum Rate; and
c. the aggregate principal amount of
Outstanding Auction Rate Notes subject to
Submitted Sell Orders;
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(in the event such excess or such equality exists,
other than because all of the Outstanding Auction
Rate Notes are subject to Submitted Hold Orders,
such Submitted Bids described in subclause a. above
shall be referred to collectively as "Sufficient
Bids"); and
(3) if Sufficient Bids exist, the Bid
Auction Rate, which shall be the lowest rate
specified in such Submitted Bids such that if:
a. (x) each Submitted Bid from
Existing Owners specifying such lowest rate
and (y) all other Submitted Bids from
Existing Owners specifying lower rates were
rejected, thus entitling such Existing
Owners to continue to own the principal
amount of Auction Rate Notes subject to such
Submitted Bids; and
b. (x) each such Submitted Bid from
Potential Owners specifying such lowest rate
and (y) all other Submitted Bids from
Potential Owners specifying lower rates were
accepted;
the result would be that such Existing Owners
described in subclause a. above would continue to
own an aggregate principal amount of Outstanding
Auction Rate Notes which, when added to the
aggregate principal amount of Outstanding Auction
Rate Notes to be purchased by such Potential Owners
described in subclause b. above, would equal not
less than the Available Auction Rate Notes.
(B) Promptly after the Auction Agent has made the
determinations pursuant to Section 2.02(a)(iii)(A) of this
Appendix B, the Auction Agent shall advise the Indenture
Trustee, the Broker-Dealers and the Issuer of the Maximum
Rate and the All-Hold Rate and the components thereof on
the Auction Date and, based on such determinations, the
Auction Rate for the next succeeding Accrual Period as
follows:
(1) if Sufficient Bids exist, that the
Auction Rate for the next succeeding Accrual Period
shall be equal to the Bid Auction Rate so
determined;
(2) if Sufficient Bids do not exist (other
than because all of the Outstanding Auction Rate
Notes are subject to Submitted Hold Orders), that
the Auction Rate for the next succeeding Accrual
Period shall be equal to the applicable Maximum
Rate; or
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(3) if all Outstanding Auction Rate Notes
are subject to Submitted Hold Orders, that the
Auction Rate for the next succeeding Accrual Period
shall be equal to the applicable All-Hold Rate.
(C) Promptly after the Auction Agent has determined
the Auction Rate, the Auction Agent shall determine and
advise the Indenture Trustee of the Auction Rate Notes
Interest Rate.
(iv) Existing Owners shall continue to own the principal
amount of Auction Rate Notes that are subject to Submitted Hold
Orders. If the Maximum Rate is equal to or greater than the Bid
Auction Rate and if Sufficient Bids have been received by the
Auction Agent, the Bid Auction Rate will be the Auction Rate
Notes Interest Rate, and Submitted Bids and Submitted Sell Orders
will be accepted or rejected and the Auction Agent will take such
other action as described below in subparagraph (A).
If the Maximum Rate is less than the Auction Rate, the
Auction Rate Notes Interest Rate shall be the Maximum Rate. If
the Auction Agent has not received Sufficient Bids (other than
because all of the Outstanding Auction Rate Notes are subject to
Submitted Hold Orders), the Auction Rate Notes Interest Rate will
be the Maximum Rate. In any of the cases described above,
Submitted Orders will be accepted or rejected and the Auction
Agent will take such other action as described below in
subparagraph (B).
(A) If Sufficient Bids have been made and the
Maximum Rate is equal to or greater than the Bid Auction
Rate, and if the Maximum Rate does not apply (in which
case the Auction Rate Notes Interest Rate shall be the Bid
Auction Rate), all Submitted Sell Orders shall be accepted
and, subject to the provisions of clauses (4) and (5) of
this Section 2.02(a)(iv), Submitted Bids shall be accepted
or rejected as follows in the following order of priority,
and all other Submitted Bids shall be rejected:
(1) Existing Owners' Submitted Bids
specifying any rate that is higher than the Auction
Rate Notes Interest Rate shall be accepted, thus
requiring each such Existing Owner to sell the
aggregate principal amount of Auction Rate Notes
subject to such Submitted Bids;
(2) Existing Owners' Submitted Bids
specifying any rate that is lower than the Auction
Rate Notes Interest Rate shall be rejected, thus
entitling each such Existing Owner to continue to
own the aggregate principal amount of Auction Rate
Notes subject to such Submitted Bids;
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(3) Potential Owners' Submitted Bids
specifying any rate that is lower than the Auction
Rate Notes Interest Rate
shall be accepted;
(4) Each Existing Owners' Submitted Bid
specifying a rate that is equal to the Auction Rate
Notes Interest Rate shall be rejected, thus
entitling such Existing Owner to continue to own
the aggregate principal amount of Auction Rate
Notes subject to such Submitted Bid, unless the
aggregate principal amount of Outstanding Auction
Rate Notes subject to all such Submitted Bids shall
be greater than the principal amount of Auction
Rate Notes (the "remaining principal amount") equal
to the excess of the Available Auction Rate Notes
over the aggregate principal amount of Auction Rate
Notes subject to Submitted Bids described in
clauses (2) and (3) of this Section 2.02(a)(iv)(A),
in which event such Submitted Bid of such Existing
Owner shall be rejected in part, and such Existing
Owner shall be entitled to continue to own the
principal amount of Auction Rate Notes subject to
such Submitted Bid, but only in an amount equal to
the aggregate principal amount of Auction Rate
Notes obtained by multiplying the remaining
principal amount by a fraction, the numerator of
which shall be the principal amount of Outstanding
Auction Rate Notes owned by such Existing Owner
subject to such Submitted Bid and the denominator
of which shall be the sum of the principal amount
of Outstanding Auction Rate Notes subject to such
Submitted Bids made by all such Existing Owners
that specified a rate equal to the Auction Rate
Notes Interest Rate, subject to the provisions of
Section 2.02(a)(iv)(D) of this Appendix B; and
(5) Each Potential Owner's Submitted Bid
specifying a rate that is equal to the Auction Rate
Notes Interest Rate shall be accepted, but only in
an amount equal to the principal amount of Auction
Rate Notes obtained by multiplying the excess of
the aggregate principal amount of Available Auction
Rate Notes over the aggregate principal amount of
Auction Rate Notes subject to Submitted Bids
described in clauses (2), (3) and (4) of this
Section 2.02(a)(iv)(A) by a fraction the numerator
of which shall be the aggregate principal amount of
Outstanding Auction Rate Notes subject to such
Submitted Bid and the denominator of which shall be
the sum of the principal amount of Outstanding
Auction Rate Notes subject to Submitted Bids made
by all such Potential Owners that specified a rate
equal to the Auction Rate Notes Interest Rate,
subject to the provisions of Section 2.02(a)(iv)(D)
of this Appendix B.
(B) If Sufficient Bids have not been made (other
than because all of the Outstanding Auction Rate Notes are
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subject to Submitted Hold Orders), or if the Maximum Rate
is less than the Bid Auction Rate (in which case the
Auction Rate Notes Interest Rate shall be the Maximum
Rate), subject to the provisions of Section 2.02(a)(iv)(D)
of this Appendix B, Submitted Orders shall be accepted or
rejected as follows in the following order of priority and
all other Submitted Bids shall be rejected:
(1) Existing Owners' Submitted Bids
specifying any rate that is equal to or lower than
the Auction Rate Notes Interest Rate shall be
rejected, thus entitling such Existing Owners to
continue to own the aggregate principal amount of
Auction Rate Notes subject to such Submitted Bids;
(2) Potential Owners' Submitted Bids
specifying (x) any rate that is equal to or lower
than the Auction Rate Notes Interest Rate shall be
accepted and (y) any rate that is higher than the
Auction Rate Notes Interest Rate shall be rejected;
and
(3) each Existing Owner's Submitted Bid
specifying any rate that is higher than the Auction
Rate Notes Interest Rate and the Submitted Sell
Order of each Existing Owner shall be accepted,
thus entitling each Existing Owner that submitted
any such Submitted Bid or Submitted Sell Order to
sell the Auction Rate Notes subject to such
Submitted Bid or Submitted Sell Order, but in both
cases only in an amount equal to the aggregate
principal amount of Auction Rate Notes obtained by
multiplying the aggregate principal amount of
Auction Rate Notes subject to Submitted Bids
described in clause (2)(x) of this Section
2.02(a)(iv)(B) by a fraction, the numerator of
which shall be the aggregate principal amount of
Outstanding Auction Rate Notes owned by such
Existing Owner subject to such Submitted Bid or
Submitted Sell Order and the denominator of which
shall be the aggregate principal amount of
Outstanding Auction Rate Notes subject to all such
Submitted Bids and Submitted Sell Orders.
(C) If all Auction Rate Notes are subject to
Submitted Hold Orders, all Submitted Bids shall be
rejected.
(D) If, as a result of the procedures described in
paragraph (A) or (B) of this Section 2.02(a)(iv), any
Existing Owner would be entitled or required to sell, or
any Potential Owner would be entitled or required to
purchase, a principal amount of Auction Rate Notes that is
not equal to an Authorized Denomination, the Auction Agent
shall, in such manner as in its sole discretion it shall
determine, round up or down the principal amount of
Auction Rate Notes to be purchased or sold by any Existing
Owner or Potential Owner so that the principal amount of
Auction Rate Notes purchased or sold by each Existing
Owner or Potential Owner shall be equal to an Authorized
Denomination.
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(E) If, as a result of the procedures described in
paragraph (B) of this Section 2.02(a)(iv), any Potential
Owner would be entitled or required to purchase less than
an Authorized Denomination of Auction Rate Notes, the
Auction Agent shall, in such manner as in its sole
discretion it shall determine, allocate Auction Rate Notes
for purchase among Potential Owners so that only Auction
Rate Notes in Authorized Denominations are purchased by
any Potential Owner, even if such allocation results in
one or more of such Potential Owners not purchasing any
Auction Rate Notes.
(v) Based on the result of each Auction, the Auction Agent
shall determine the aggregate principal amount of Auction Rate
Notes to be purchased and the aggregate principal amount of
Auction Rate Notes to be sold by Potential Owners and Existing
Owners on whose behalf each Broker-Dealer submitted Bids or Sell
Orders and, with respect to each Broker-Dealer, to the extent
that such aggregate principal amount of Auction Rate Notes to be
sold differs from such aggregate principal amount of Auction Rate
Notes to be purchased, determine to which other Broker-Dealer or
Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers such Broker-Dealer
shall receive, as the case may be, Auction Rate Notes.
(vi) Any calculation by the Auction Agent or the Indenture
Trustee, as applicable, of the Auction Rate Notes Interest Rate,
the Maximum Rate, the All-Hold Rate and the Non-Payment Rate
shall, in the absence of manifest error, be binding on all other
parties.
(vii) Notwithstanding anything in this Appendix B to the
contrary, (A) no Auction for the Auction Rate Notes for an
Auction Period of less than 180 days will be held on any Auction
Date hereunder on which there are insufficient moneys in the
Collection Fund to pay, or otherwise held by the Indenture
Trustee under the Indenture and available to pay, the principal
of and interest due on the Auction Rate Notes on the Auction Rate
Distribution Date for the appropriate Class of the Auction Rate
Notes immediately following such Auction Date, and (B) no Auction
will be held on any Auction Date hereunder during the continuance
of a Payment Default. The Indenture Trustee shall promptly notify
the Auction Agent of any such occurrence.
(b) APPLICATION OF INTEREST PAYMENTS FOR THE AUCTION RATE NOTES.
(i) The Indenture Trustee shall determine not later than
2:00 p.m., eastern time, on the Business Day next succeeding an
Auction Rate Distribution Date, whether a Payment Default has
occurred. If a Payment Default has occurred, the Indenture
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Trustee shall, not later than 2:15 p.m., eastern time, on such
Business Day, send a notice thereof in substantially the form of
Exhibit D attached hereto to the Auction Agent by telecopy or
similar means and, if such Payment Default is cured, the
Indenture Trustee shall immediately send a notice in
substantially the form of Exhibit E attached hereto to the
Auction Agent by telecopy or similar means.
(ii) Not later than 2:00 p.m., eastern time, on each
anniversary of the Closing Date, the Indenture Trustee shall pay
to the Auction Agent, in immediately available funds out of
amounts in the Collection Fund, an amount equal to the Auction
Agent Fee as set forth in the Auction Agent Agreement. Not later
than 2:00 p.m., eastern time, on each Auction Date, the Indenture
Trustee shall pay to the Auction Agent, in immediately available
funds out of amounts in the Collection Fund, an amount equal to
the Broker-Dealer Fee as calculated in the Broker-Dealer
Agreement. The Indenture Trustee shall, from time to time at the
request of the Auction Agent and at the direction of an
Authorized Officer, reimburse the Auction Agent for its
reasonable expenses as provided in the Auction Agent Agreement,
such expenses to be paid out of amounts in the Collection Fund.
(c) CALCULATION OF MAXIMUM RATE, ALL-HOLD RATE, APPLICABLE LIBOR
RATE, AND NON-PAYMENT RATE. The Auction Agent shall calculate the
Maximum Rate, Applicable LIBOR Rate, and All-Hold Rate, as the case may
be, on each Auction Date and shall notify the Indenture Trustee and the
Broker-Dealers of the Maximum Rate, Applicable LIBOR Rate and All-Hold
Rate, as the case may be, as provided in the Auction Agent Agreement;
provided, that if the ownership of the Auction Rate Notes is no longer
maintained in Book-entry Form, or if a Payment Default has occurred,
then the Indenture Trustee shall determine the Maximum Rate, Applicable
LIBOR Rate, All-Hold Rate and Non-Payment Rate for each such Accrual
Period. If the ownership of the Auction Rate Notes is no longer
maintained in Book-entry Form by the Securities Depository, the
Indenture Trustee shall calculate the Maximum Rate on the Business Day
immediately preceding the first day of each Accrual Period after the
delivery of certificates representing the Auction Rate Notes pursuant to
the Indenture. If a Payment Default shall have occurred, the Indenture
Trustee shall calculate the Non-Payment Rate on the Interest Rate
Determination Date for (i) each Accrual Period commencing after the
occurrence and during the continuance of such Payment Default and (ii)
any Accrual Period commencing less than two Business Days after the cure
of any Payment Default. The determination by the Indenture Trustee or
the Auction Agent, as the case may be, of the Maximum Rate, Applicable
LIBOR Rate, All-Hold Rate and Non-Payment Rate shall (in the absence of
manifest error) be final and binding upon all parties. If calculated or
determined by the Auction Agent, the Auction Agent shall promptly advise
the Indenture Trustee of the Maximum Rate, Applicable LIBOR Rate and
All-Hold Rate.
(d) NOTIFICATION OF RATES, AMOUNTS AND AUCTION RATE DISTRIBUTION
DATES.
(i) By 12:00 noon, eastern time, on the Business Day
following each Record Date, the Indenture Trustee shall determine
the aggregate amounts of interest distributable on the next
succeeding Auction Rate Distribution Date for each Class of the
Auction Rate Notes to the beneficial owners of Auction Rate
Notes.
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(ii) At least four days prior to any Auction Rate
Distribution Date, the Indenture Trustee shall:
(A) confirm with the Auction Agent, so long as no
Payment Default has occurred and is continuing and the
ownership of the Auction Rate Notes is maintained in
Book-entry Form by the Securities Depository, (1) the date
of such next Auction Rate Distribution Date for such Class
of the Auction Rate Notes and (2) the amount payable to
the Auction Agent on the Auction Date pursuant to Section
2.02(b)(ii) of this Appendix B;
(B) pursuant to Section 2.01 of this Appendix B,
advise the Registered Owners of each Class of the Auction
Rate Notes of any Auction Rate Notes Carry-over Amount
accruing on such Class of the Auction Rate Notes; and
(C) advise the Securities Depository, so long as
the ownership of the Auction Rate Notes is maintained in
Book-entry Form by the Securities Depository, upon
request, of the aggregate amount of interest distributable
on such next Auction Rate Distribution Date for such Class
of the Auction Rate Notes to the beneficial owners
thereof.
If any day scheduled to be an Auction Rate Distribution Date
shall be changed after the Indenture Trustee shall have given the notice
or confirmation referred to in clause (i) of the preceding sentence, the
Indenture Trustee shall, not later than 11:15 a.m., eastern time, on the
Business Day next preceding the earlier of the new Auction Rate
Distribution Date or the old Auction Rate Distribution Date, by such
means as the Indenture Trustee deems practicable, give notice of such
change to the Auction Agent, so long as no Payment Default has occurred
and is continuing and the ownership of the Auction Rate Notes is
maintained in Book-entry Form by the Securities Depository.
(e) AUCTION AGENT.
(i) Deutsche Bank Trust Company Americas is hereby
appointed as Initial Auction Agent to serve as agent for the
Issuer in connection with Auctions. The Indenture Trustee and the
Issuer will, and the Indenture Trustee is hereby directed to,
enter into the Initial Auction Agent Agreement with Deutsche Bank
Trust Company Americas, as the Initial Auction Agent. Any
Substitute Auction Agent shall be (A) a bank, national banking
association or trust company duly organized under the laws of the
United States of America or any state or territory thereof having
its principal place of business in the Borough of Manhattan, New
York, or such other location as approved by the Indenture Trustee
B-26
in writing and having a combined capital stock or surplus of at
least $50,000,000, or (B) a member of the National Association of
Securities Dealers, Inc., having a capitalization of at least
$50,000,000, and, in either case, authorized by law to perform
all the duties imposed upon it hereunder and under the Auction
Agent Agreement. The Auction Agent may at any time resign and be
discharged of the duties and obligations created by this Appendix
B by giving at least 90 days' notice to the Indenture Trustee,
each Broker-Dealer and the Issuer. The Auction Agent may be
removed at any time by the Indenture Trustee upon the written
direction of an Authorized Officer or the Registered Owners of
51% of the aggregate principal amount of the Auction Rate Notes
then Outstanding, and if by such Registered Owners, by an
instrument signed by such Registered Owners or their attorneys
and filed with the Auction Agent, the Issuer and the Indenture
Trustee upon at least 90 days' written notice. Neither
resignation nor removal of the Auction Agent pursuant to the
preceding two sentences shall be effective until and unless a
Substitute Auction Agent has been appointed and has accepted such
appointment. If required by the Issuer, a Substitute Auction
Agent Agreement shall be entered into with a Substitute Auction
Agent. Notwithstanding the foregoing, the Auction Agent may
terminate the Auction Agent Agreement if, within 25 days after
notifying the Indenture Trustee, each Broker-Dealer and the
Issuer in writing that it has not received payment of any Auction
Agent Fee due it in accordance with the terms of the Auction
Agent Agreement, the Auction Agent does not receive such payment.
(ii) If the Auction Agent shall resign or be removed or be
dissolved, or if the property or affairs of the Auction Agent
shall be taken under the control of any state or federal court or
administrative body because of bankruptcy or insolvency, or for
any other reason, the Indenture Trustee at the direction of an
Authorized Officer, shall use its best efforts to appoint a
Substitute Auction Agent.
(iii) The Auction Agent is acting as agent for the Issuer
in connection with Auctions. In the absence of bad faith,
negligent failure to act or negligence on its part, the Auction
Agent shall not be liable for any action taken, suffered or
omitted or any error of judgment made by it in the performance of
its duties under the Auction Agent Agreement and shall not be
liable for any error of judgment made in good faith unless the
Auction Agent shall have been negligent in ascertaining (or
failing to ascertain) the pertinent facts.
(f) BROKER-DEALERS.
(i) The Auction Agent will enter into Broker-Dealer
Agreements with (A) J.P. Morgan Securities Inc. and (B) Morgan
Stanley & Co. Incorporated and UFS Securities L.L.C. as the
initial Broker-Dealers. An Authorized Officer may, from time to
time, approve one or more additional persons to serve as
Broker-Dealers under Broker-Dealer Agreements and shall be
responsible for providing such Broker-Dealer Agreements to the
Indenture Trustee and the Auction Agent.
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(ii) Any Broker-Dealer may be removed at any time, at the
request of an Authorized Officer, but there shall, at all times,
be at least one Broker-Dealer appointed and acting as such.
(g) CHANGES IN AUCTION PERIOD OR PERIODS AND CERTAIN PERCENTAGES.
(i) While any of the Auction Rate Notes are Outstanding,
the Issuer may, from time to time, change the length of one or
more Auction Periods (an "Auction Period Adjustment") for a Class
of the Auction Rate Notes, in order to conform with then current
market practice with respect to similar securities or to
accommodate economic and financial factors that may affect or be
relevant to the length of the Auction Period and the interest
rate borne by the Auction Rate Notes. The Issuer shall not
initiate an Auction Period Adjustment unless it shall have
received the written consent of the applicable Broker-Dealer,
which consent shall not be unreasonably withheld, not later than
nine days prior to the Auction Date for such Auction Period. The
Issuer shall initiate the Auction Period Adjustment by giving
written notice by Issuer Order to the Indenture Trustee, the
Auction Agent, the applicable Broker-Dealer, each Rating Agency
and the Securities Depository in substantially the form of, or
containing substantially the information contained in, Exhibit F
attached hereto at least 10 days prior to the Auction Date for
such Auction Period.
(ii) Any such adjusted Auction Period shall not be less
than 1 day.
(iii) An Auction Period Adjustment shall take effect only
if (A) the Indenture Trustee and the Auction Agent receive, by
11:00 a.m., eastern time, on the Business Day before the Auction
Date for the first such Auction Period, an Issuer Certificate in
substantially the form attached as, or containing substantially
the same information contained in, Exhibit G attached hereto,
authorizing the Auction Period Adjustment specified in such
certificate along with a copy of the written consent of the
applicable Broker-Dealer and, (B) Sufficient Bids exist as of the
Auction on the Auction Date for such first Auction Period. If the
condition referred to in (A) above is not met, the applicable
Auction Rate Notes Interest Rate for the next Auction Period
shall be determined pursuant to the above provisions of this
Section and the Auction Period shall be the Auction Period
determined without reference to the proposed change. If the
condition referred to in (A) is met but the condition referred in
(B) above is not met, the applicable Auction Rate Notes Interest
Rate for the next Auction Period shall be the Maximum Rate and
the Auction Period shall be the Auction Period determined without
reference to the proposed change.
In connection with any Auction Period Adjustment, the
Auction Agent shall provide such further notice to such parties
as is specified in Section 2.06 of the Auction Agent Agreement.
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(h) CHANGES IN THE AUCTION DATE. The applicable Broker-Dealer,
with the written consent of an Authorized Officer, may specify an
earlier Auction Date (but in no event more than five Business Days
earlier) than the Auction Date that would otherwise be determined in
accordance with the definition of "Auction Date" in Section 1.01 of this
Appendix B with respect to one or more specified Auction Periods in
order to conform with then current market practice with respect to
similar securities or to accommodate economic and financial factors that
may affect or be relevant to the day of the week constituting an Auction
Date and the interest rate borne on the Auction Rate Notes. The
applicable Broker-Dealer shall deliver a written request for consent to
such change in the length of the Auction Date to the Issuer at least 14
days prior to the effective date of such change. If the Issuer shall
have delivered such written consent to the applicable Broker-Dealer,
such Broker-Dealer shall provide notice of its determination to specify
an earlier Auction Date for one or more Auction Periods by means of a
written notice delivered at least 10 days prior to the proposed changed
Auction Date to the Indenture Trustee, the Auction Agent, the Issuer,
each Rating Agency and the Securities Depository. Such notice shall be
substantially in the form of, or contain substantially the information
contained in, Exhibit H attached hereto.
In connection with any change described in this subsection (h),
the Auction Agent shall provide such further notice to such parties as
is specified in Section 2.06 of the Auction Agent Agreement.
SECTION 2.03. ADDITIONAL PROVISIONS REGARDING THE INTEREST RATES ON THE
AUCTION RATE NOTES. The determination of an Auction Rate Notes Interest Rate by
the Auction Agent or any other Person pursuant to the provisions of the
applicable Section of this Article II shall be conclusive and binding on the
Registered Owners of the Auction Rate Notes to which such Auction Rate Notes
Interest Rate applies, and the Issuer and the Indenture Trustee may rely thereon
for all purposes.
In no event shall the cumulative amount of interest paid or payable on
the Auction Rate Notes (including interest calculated as provided herein, plus
any other amounts that constitute interest on the Auction Rate Notes under
applicable law, which are contracted for, charged, reserved, taken or received
pursuant to the Auction Rate Notes or related documents) calculated from the
Date of Closing of the Auction Rate Notes through any subsequent day during the
term of the Auction Rate Notes or otherwise prior to payment in full of the
Auction Rate Notes exceed the amount permitted by applicable law. If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Auction Rate Notes or related documents or otherwise
contracted for, charged, reserved, taken or received in connection with the
Auction Rate Notes, or if the redemption or acceleration of the maturity of the
Auction Rate Notes results in payment to or receipt by the Registered Owner or
any former Registered Owner of the Auction Rate Notes of any interest in excess
of that permitted by applicable law, then, notwithstanding any provision of the
Auction Rate Notes or related documents to the contrary, all excess amounts
theretofore paid or received with respect to the Auction Rate Notes shall be
credited on the principal balance of the Auction Rate Notes (or, if the Auction
Rate Notes have been paid or would thereby be paid in full, refunded by the
recipient thereof), and the provisions of the Auction Rate Notes and related
documents shall automatically and immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
under the Auction Rate Notes and under the related documents.
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SECTION 2.04. PURCHASE OPTION. If the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes are no longer Outstanding,
Nelnet, Inc. is hereby granted an option to purchase a Pro rata Portion of
Financed Eligible Loans held in the Trust Estate at a purchase price equal to
the greater of the Pro rata Minimum Purchase Amount and the fair market value of
such Financed Eligible Loans as of the Quarterly Distribution Date immediately
preceding the date of sale for the purpose of redeeming all or any portion of a
Class of the Auction Rate Notes on any Auction Rate Adjustment Date for such
Class of the Auction Rate Notes pursuant to Section 2.09(d) of the Indenture.
The Pro rata Minimum Purchase Amount means, with respect to the Auction Rate
Notes, that amount, together with an allocable amount on deposit in any Account
of the Note Payment Fund corresponding to such Class of the Auction Rate Notes
and a Pro rata Portion of the amounts on deposit in the Capitalized Interest
Fund and the Reserve Fund (if such amounts can be released from the Reserve
Fund), each after the distribution of amounts on deposit in the Collection Fund
on the most recent Distribution Date, which is equal to or in excess of the
amount necessary to redeem the Auction Rate Notes proposed to be redeemed
pursuant to the redemption provisions of Section 2.09(d) of the Indenture, to
pay all amounts due (including any Issuer Derivative Payments and applicable
Termination Payments) on any Derivative Product corresponding to such Class of
the Auction Rate Notes and to pay a Pro rata Portion of any Program Expenses to
such redemption date. Any portfolio of Financed Eligible Loans sold pursuant to
this Section shall have representative characteristics substantially equivalent
to the portfolio of all Financed Eligible Loans including, without limitation,
such characteristics as average borrower indebtedness, mix of type of loans
(Stafford, PLUS, consolidation, subsidized, unsubsidized), delinquency and
default rate, loans in claim status, maturity, type of educational institution
for which the loan funded costs of attendance (four year, two year, proprietary
and nonproprietary), identity of Guaranty Agency, and other similar
characteristics which may impact upon the value of such Financed Eligible Loans.
The holder of the Purchase Option shall exercise such option by delivering a
written notice stating its desire to exercise this option to the Securities
Depository, the Indenture Trustee, the Auction Agent, the Broker-Dealers and the
Rating Agencies at least fifteen Business Days prior to the Auction Rate
Distribution Date for such Class of the Auction Rate Notes that it intends to
exercise its Purchase Option and by delivering to the Indenture Trustee an
amount equal to the purchase price of such Financed Eligible Loans on or before
the tenth Business Day prior to the Auction Rate Distribution Date for such
Class of the Auction Rate Notes. If the holder of the Purchase Option fails to
provide the required purchase price, no Auction Rate Notes of such Class shall
be called for redemption pursuant to Section 2.09(d) of the Indenture. The
Indenture Trustee may consult, and, at the direction of the Issuer, shall
consult, with a financial advisor, including an Underwriter, an Initial
Purchaser, a Remarketing Agent or the Administrator, to determine if the fair
market value of the Financed Eligible Loans has been offered by any Nelnet
Eligible Purchaser. From the proceeds of the sale of the Financed Eligible Loans
and the amounts on deposit in the Funds and Accounts described in this Section,
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the Indenture Trustee shall deposit amounts sufficient to redeem the related
Class or portion thereof of the Auction Rate Notes on the next succeeding
Auction Rate Distribution Date pursuant to the optional redemption provisions of
Section 2.09(d) of the Indenture and to pay any Issuer Derivative Payments
corresponding to such Class of the Auction Rate Notes into separate Accounts
established by the Indenture Trustee within the Note Payment Fund and shall
deposit the remainder to the Collection Fund. The Indenture Trustee shall use
the amounts on deposit in those Accounts to redeem such portion of the Class of
the Auction Rate Notes on the applicable Auction Rate Distribution Date and to
pay any such Issuer Derivative Payments pursuant to the corresponding Derivative
Product. Subject to Section 2.09(k) of the Indenture, Nelnet, Inc. shall not
have the right to exercise this Purchase Option for the redemption of Class B
Notes until all of the Class A Notes are no longer Outstanding.
Nelnet, Inc. may transfer ownership of the Purchase Option described in
this Section at any time to any Nelnet Eligible Purchaser.
B-31
APPENDIX C
TRANSFER RESTRICTIONS FOR
THE CLASS A-5A NOTES
1. Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used but not otherwise defined in this Appendix C are
defined in the Indenture, which also contains rules as to usage that shall be
applicable herein.
2. The Indenture Trustee, as registrar for the Class A-5a Notes, shall
provide for the registration of the Class A-5a Notes and of transfers and
exchanges of the Class A-5a Notes pursuant to Section 2.03 of the Indenture.
3. The Class A-5a Notes will be initially represented by registered
notes of such Class in global form and shall be issued in the manner set forth
in Section 2.01 of the Indenture. The global notes may be reissued and
represented by Class A-5a Notes in definitive form pursuant to Section 2.01(d)
of the Indenture.
4. Any transfer made in violation of Section 2.03 of the Indenture or
this Appendix C of Class A-5a Notes that represent a beneficial interest in a
Rule 144A Certificate such that the beneficial interest is then held in
Regulation S Certificate, or vice versa, shall be null and void and of no
effect.
5. Each purchaser of the Class A-5a Notes that represent a beneficial
interest in a Global Certificate will be deemed to have represented and agreed,
and each purchaser of a Definitive Certificate will be required to certify in
writing, that:
(i) in connection with the purchase of the Class A-5a Notes, (1)
none of the Issuer, the Indenture Trustee, the Initial Purchasers or any
of their respective affiliates is acting as a fiduciary or financial or
investment advisor for such beneficial owner; (2) such beneficial owner
is not relying (for purposes of making any investment decision or
otherwise) upon any advice, counsel or representations (whether written
or oral) of the Issuer, the Indenture Trustee or the Initial Purchasers
or any of their respective affiliates other than any statements in the
final offering memorandum for such notes, and such beneficial owner has
read and understands such final offering circular; (3) such beneficial
owner has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisors to the extent it has
deemed necessary and has made its own investment decisions (including
decisions regarding the suitability of any transaction pursuant to the
indenture) based upon its own judgment and upon any advice from such
advisors as it has deemed necessary and not upon any view expressed by
the Issuer, the Indenture Trustee, or the Initial Purchasers or any of
their respective affiliates; and (4)(A) the purchaser is a Qualified
Institutional Buyer and is acquiring such Class A-5a Notes for its own
account or as a fiduciary or agent for others (which others also must be
Qualified Institutional Buyers), for investment purposes and not for
distribution in violation of the Securities Act, and it is able to bear
the economic risk of an investment in the Class A-5a Notes and has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of purchasing the Class A-5a
Notes or (B) with respect to the Class A-5a Notes, the purchaser is a
Non-U.S. Person outside the United States of America, acquiring the
Class A-5a Notes pursuant to an exemption from registration in
accordance with Rule 903 or Rule 904 of Regulation S;
(ii) the purchaser understands that the Class A-5a Notes are
being offered only in a transaction that does not require registration
under the Securities Act and, if such purchaser decides to resell or
otherwise transfer such Class A-5a Notes, then it agrees that it will
resell or transfer such Class A-5a Notes only (A) so long as such Class
A-5a Notes are eligible for resale pursuant to Rule 144A, to a person
whom the seller reasonably believes is a Qualified Institutional Buyer
acquiring the Class A-5a Notes for its own account or as a fiduciary or
agent for others (which others must also be Qualified Institutional
Buyers) to whom notice is given that the resale or other transfer is
being made in reliance on Rule 144A, (B) pursuant to an effective
registration statement under the Securities Act, or (C) with respect to
the Class A-5a Notes, to a purchaser who is a Non-U.S. Person outside
the United States of America, acquiring the Class A-5a Notes pursuant to
an exemption from registration under the Securities Act in accordance
with Rule 903 or Rule 904 of Regulation S, in each case in accordance
with any applicable United States state securities or "blue sky" laws or
any securities laws of any other jurisdiction;
(iii) unless the relevant legend set out below has been removed
from the Class A-5a Notes such purchaser shall notify each transferee of
the Class A-5a Notes that (A) such Class A-5a Notes have not been
registered under the Securities Act, (B) the holder of such Class A-5a
Notes is subject to the restrictions on the resale or other transfer
thereof described in paragraph (ii) above, (C) such transferee shall be
deemed to have represented (1) as to its status as a Qualified
Institutional Buyer or, with respect to the Class A-5a Notes, a
purchaser acquiring the Class A-5a Notes in an offshore transaction
pursuant to the requirements of Regulation S, as the case may be, (2) if
such transferee is a Qualified Institutional Buyer, that such transferee
is acquiring the Class A-5a Notes for its own account or as a fiduciary
or agent for others (which others also must be Qualified Institutional
Buyers) (or that such transferee is acquiring such Class A-5a Notes
pursuant to an effective registration statement under the Securities
Act), (3) if such transferee is a Non-U.S. Person outside the United
States of America, that such transferee is acquiring the Class A-5a
Notes pursuant to an exemption from registration under the Securities
Act in accordance with the requirements of Rule 903 or Rule 904 of
Regulation S, (4) that such transferee is not an underwriter within the
meaning of Section 2(11) of the Securities Act, and (5) that such
transferee shall be deemed to have agreed to notify its subsequent
transferees as to the foregoing;
(iv) the acquisition or purchase by an employee benefit plan or
other retirement arrangements ("Plan") of a Class A-5a Note will not
constitute or otherwise result in: (A) in the case of a Plan subject to
Section 406 of Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 4975 of the Code, a non-exempt prohibited
C-2
transaction in violation of Section 406 of ERISA or Section 4975 of the
Code which is not covered by a class or other applicable exemption and
(B) in the case of a Plan subject to a substantially similar federal,
state, local or foreign law ("Similar Law"), a non-exempt violation of
such substantially Similar Law; and
(v) it is aware that, except as otherwise provided in the
indenture, any Class A-5a Notes being sold to it in reliance on
Regulation S will be represented by one or more Regulation S
Certificates and that beneficial interests therein may be held only
through DTC for the respective accounts of Euroclear or Clearstream.
6. By acceptance of a Class A-5a Note, whether upon original issuance or
subsequent transfer, each Registered Owner of such Class A-5a Note (or a
beneficial interest therein), acknowledges or is deemed to acknowledge, as the
case may be, the restrictions on the transfer of such Class A-5a Note and that
the following securities legend (the "Securities Legend") shall be affixed to
each Rule 144A Certificate, each Regulation S Certificate and each Definitive
Certificate unless determined otherwise in accordance with applicable law:
THIS CLASS A-5a NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), ANY UNITED STATES STATE SECURITIES OR "BLUE SKY" LAWS
OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION, AND, AS A MATTER OF
U.S. LAW, MAY NOT BE OFFERED OR SOLD IN VIOLATION OF THE SECURITIES ACT
OR SUCH OTHER LAWS. THIS NOTE MAY BE TRANSFERRED ONLY IN MINIMUM
DENOMINATIONS OF NOT LESS THAN [$5,000 AND ANY INTEGRAL MULTIPLE OF
$1,000 IN EXCESS THEREOF] [$50,000 AND ANY INTEGRAL MULTIPLE THEREOF].
THE HOLDER HEREOF, BY PURCHASING OR ACCEPTING THIS CLASS A-5a NOTE IS
HEREBY DEEMED TO HAVE AGREED FOR THE BENEFIT OF THE ISSUER AND THE
INITIAL PURCHASERS THAT IT WILL RESELL, PLEDGE OR OTHERWISE TRANSFER
THIS NOTE, AS A MATTER OF U.S. LAW, ONLY (A)(1) SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE, PURSUANT TO RULE 144A PROMULGATED UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, AS DEFINED IN RULE 144A (A
"QUALIFIED INSTITUTIONAL BUYER"), THAT IS ACQUIRING THIS CLASS A-5a NOTE
FOR ITS OWN ACCOUNT OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS
MUST ALSO BE QUALIFIED INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN
THAT THE RESALE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (2) TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED IN REGULATION
S PROMULGATED UNDER THE SECURITIES ACT ) OUTSIDE THE UNITED STATES OF
AMERICA ACQUIRING THIS CLASS A-5a NOTE IN ACCORDANCE WITH RULE 903 OR
RULE 904 OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH CASE IN ACCORDANCE WITH ANY UNITED STATES STATE SECURITIES
OR "BLUE SKY" LAWS OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION.
C-3
UPON ACQUISITION OR TRANSFER OF A CLASS A-5a NOTE OR A BENEFICIAL
INTEREST IN A CLASS A-5a NOTE, AS THE CASE MAY BE, BY, FOR OR WITH THE
ASSETS OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT (A
"PLAN"), SUCH CLASS A-5a NOTE OWNER SHALL BE DEEMED TO HAVE REPRESENTED
THAT SUCH ACQUISITION OR PURCHASE WILL NOT CONSTITUTE OR OTHERWISE
RESULT IN: (I) IN THE CASE OF A PLAN SUBJECT TO SECTION 406 OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), A NON-EXEMPT PROHIBITED TRANSACTION IN VIOLATION OF SECTION 406
OF ERISA OR SECTION 4975 OF THE CODE WHICH IS NOT COVERED BY A CLASS OR
OTHER APPLICABLE EXEMPTION AND (II) IN THE CASE OF A PLAN SUBJECT TO A
SUBSTANTIALLY SIMILAR FEDERAL, STATE, LOCAL OR FOREIGN LAW ("SIMILAR
LAW"), A NON-EXEMPT VIOLATION OF SUCH SUBSTANTIALLY SIMILAR LAW. ANY
TRANSFER FOUND TO HAVE BEEN MADE IN VIOLATION OF SUCH DEEMED
REPRESENTATION SHALL BE NULL AND VOID AND OF NO EFFECT.
THIS CLASS A-5a NOTE AND RELATED DOCUMENTATION MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON AND
PROCEDURES UNDERTAKEN OR REPRESENTED BY THE HOLDER, FOR RESALES AND
OTHER TRANSFERS OF THIS CLASS A-5a NOTE, TO REFLECT ANY CHANGE IN
APPLICABLE LAWS OR REGULATIONS (OR THE INTERPRETATION THEREOF) OR IN
PRACTICES RELATING TO RESALES OR OTHER TRANSFERS OF RESTRICTED
SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND ANY BENEFICIAL OWNER
OF ANY INTEREST THEREIN SHALL BE DEEMED, BY ITS ACCEPTANCE OR PURCHASE
HEREOF, TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT (EACH OF
WHICH SHALL BE CONCLUSIVE AND BINDING ON THE HOLDER HEREOF AND ALL
FUTURE HOLDERS OF THIS CLASS A-5a NOTE AND ANY CLASS A-5a NOTE ISSUED IN
EXCHANGE OR SUBSTITUTION HEREFOR, WHETHER OR NOT ANY NOTATION THEREOF IS
MADE HEREON) AND AGREES TO TRANSFER THIS CLASS A-5a NOTE ONLY IN
ACCORDANCE WITH ANY SUCH AMENDMENT OR SUPPLEMENT IN ACCORDANCE WITH
APPLICABLE LAW IN EFFECT AT THE DATE OF SUCH TRANSFER.
Upon the transfer, exchange or replacement of a Rule 144A Certificate or
a Regulation S Certificate bearing the legend set forth above, or upon specific
request for removal of the legends, the Issuer or the Indenture Trustee will
deliver only replacement Rule 144A Certificates or Regulation S Certificates, as
the case may be, that bear such applicable legends, or will refuse to remove
such applicable legends, unless there is delivered to the Issuer and the
Indenture Trustee such satisfactory evidence (which may include a legal opinion)
as may reasonably be required by the Trust and the Indenture Trustee that
neither the applicable legends nor the restrictions on transfer set forth
therein are required to ensure compliance with the provisions of the Securities
Act.
C-4
Whenever a Global Certificate is to be exchanged for Definitive
Certificates, such Definitive Certificates will be issued within five business
days of delivery to the Indenture Trustee of the information and any required
certification described in the preceding paragraph against the surrender of the
relevant Global Certificate at the specified office of the Indenture Trustee.
Such exchange shall be effected in accordance with the regulations concerning
the transfer and registration from time to time relating to the Class A-5a Notes
and shall be effected without charge, but against such indemnity as the
Indenture Trustee may require in respect of any tax or other duty of whatsoever
nature which may be levied or imposed in connection with such exchange.
Each Registered Owner of such Class A-5a Note, by its acceptance of a
Class A-5a Note or a beneficial interest therein, respectively, also agrees that
it will transfer such Class A-5a Note or beneficial interest therein, as the
case may be, only as provided in this Appendix C and in accordance with the
Indenture. In addition, by acceptance of any Class A-5a Note or beneficial
interest therein, as applicable, each proposed transferee thereof is hereby
deemed to have agreed with the conditions set forth in the Securities Legend and
agreed, by virtue of its acceptance of such Class A-5a Note or beneficial
interest therein, as the case may be, to indemnify the Administrator, the
Servicer, the Indenture Trustee the Eligible Lender Trustee, the Remarketing
Agents (in the event such transfer is made pursuant to a successful remarketing
on a Reset Date) and the Issuer against any and all liability that may result if
such transfer is not made in a manner consistent with the restrictions set forth
in the Securities Legend. In addition to any applicable restrictions in the
Indenture, with respect to the transfer and registration of transfer of any
Class A-5a Note registered in the name of a Registered Owner other than DTC or
its nominee, to a transferee that takes delivery in the form of a Definitive
Certificate, in a transaction other than pursuant to an effective registration
statement under the Securities Act, the Indenture Trustee shall register the
transfer of such Definitive Certificate if (i)(A) the requested transfer is
being made to a transferee who has provided the Indenture Trustee and the Issuer
with a Rule 144A and Related Matters Certificate, substantially in the form
attached as Annex 1 to this Appendix C, (B) such transferee has provided
comparable evidence as to its Qualified Institutional Buyer status, or (C) such
transfer is being made in compliance with Regulation S and such transferee has
provided the Indenture Trustee and the Issuer with a Regulation S and Related
Matters Certificate, substantially in the form attached as Annex 2 to this
Appendix C, and (ii) the applicable transferor has provided the Indenture
Trustee and the Issuer with a Transferor Letter, substantially in the form of
Annex 3 to this Appendix C.
C-5
ANNEX 1 TO APPENDIX C
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
[Date]
Wells Fargo Bank, National Association,
as Indenture Trustee
Sixth and Marquette, N9303-110
Minneapolis, Minnesota 55479
Attention: Corporate Trust Department
Nelnet Education Loan Funding, Inc.
121 South 13th Street, Suite 201
Lincoln, Nebraska 68508
Re: Nelnet Education Loan Funding, Inc., Student Loan Asset-Backed
Notes, Class 2004-2A-5a [Reset Rate Notes][Auction Rate Notes].
Ladies and Gentlemen:
In connection with our purchase of the Class A-5a Notes of the
above-referenced series, the undersigned certifies to each of the parties to
whom this letter is addressed that it is a Qualified Institutional Buyer (as
defined in Rule 144A under the Securities Act of 1933, as amended (the "Act"))
as follows:
(A) It owned and/or invested on a discretionary
basis eligible securities (excluding
affiliate's securities, bank deposit notes
and CD's, loan participations, repurchase
agreements, securities owned but subject to
a repurchase agreement and swaps), as
described below:
Date: ______________, 20__ (must be on or after the close of its most
recent fiscal year)
Amount: $_________________; and
(B) The dollar amount set forth above is:
1. [ ] greater than $100 million and the undersigned is one of the
following entities:
[ ] an insurance company as defined in Section 2(13) of the
Securities Act; or
[ ] an investment company registered under the Investment
Company Act or any business development company as
defined in Section 2(a)(48) of the Investment Company
Act of 1940; or
[ ] a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958; or
C-A-1-1
[ ] a plan (i) established and maintained by a state, its
political subdivisions, or any agency or instrumentality
of a state or its political subdivisions, the laws of
which permit the purchase of securities of this type,
for the benefit of its employees and (ii) the governing
investment guidelines of which permit the purchase of
securities of this type; or
[ ] a business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940; or
[ ] a corporation (other than a U.S. bank, savings and loan
association or equivalent foreign institution),
partnership, Massachusetts or similar business trust, or
an organization described in Section 501(c)(3) of the
Internal Revenue Code; or
[ ] a U.S. bank, savings and loan association or equivalent
foreign institution, which has an audited net worth of
at least $25 million as demonstrated in its latest
annual financial statements; or
[ ] an investment adviser registered under the Investment
Advisers Act; or
2. [ ] greater than $10 million, and the undersigned is a broker-dealer
registered with the SEC; or
3. [ ] less than $10 million, and the undersigned is a broker-dealer
registered with the SEC and will only purchase Rule 144A securities in
transactions in which it acts as a riskless principal (as defined in Rule 144A);
or
4. [ ] less than $100 million, and the undersigned is an investment
company registered under the Investment Company Act of 1940, which, together
with one or more registered investment companies having the same or an
affiliated investment adviser, owns at least $100 million of eligible
securities; or
5. [ ] less than $100 million, and the undersigned is an entity, all the
equity owners of which are Qualified Institutional Buyers.
C-A-1-2
The undersigned further certifies that it is purchasing the Class A-5a
Notes for its own account or for the account of others that independently
qualify as "Qualified Institutional Buyers" as defined in Rule 144A (a
"Qualified Institutional Buyer"). It is aware that the sale of the Class A-5a
Notes is being made in reliance on its continued compliance with Rule 144A. It
is aware that the transferor may rely on the exemption from the provisions of
Section 5 of the Securities Act provided by Rule 144A. The undersigned
understands that the Class A-5a Notes may transferred only (A) so long as such
Class A-5a Notes are eligible for resale pursuant to Rule 144A, to a person whom
the seller reasonably believes is a Qualified Institutional Buyer acquiring the
Class A-5a Notes for its own account or as a fiduciary or agent for others
(which others must also be Qualified Institutional Buyers) to whom notice is
given that the transfer is being made in reliance on Rule 144A, (B) pursuant to
an effective registration statement under the Securities Act, or (C) with
respect to Class A-5a Notes, to a purchaser who is a Non-U.S. Person (as defined
in Regulation S) outside the United States of America, acquiring the Class A-5a
Notes pursuant to an exemption from registration under the Securities Act in
accordance with Rule 903 or Rule 904 of Regulation S, in each case in accordance
with any applicable United States state securities or "blue sky" laws or any
securities laws of any other jurisdiction.
The undersigned agrees that if at some future time it wishes to dispose
of or exchange any of the Class A-5a Notes, it will not transfer or exchange any
of the Class A-5a Notes unless: (1) the sale is to an Eligible Purchaser (as
defined below), (2) all offers or solicitations in connection with the sale,
whether directly or through any agent acting on our behalf, are limited only to
Eligible Purchasers and are not made by means of any form of general
solicitation or general advertising whatsoever, and (3) such transferee shall
deliver a Rule 144A and Related Matters Certificate to substantially the same
effect as this letter to the addressees hereof or a Regulation S and Related
Matters Certificate substantially in the same form as Annex 2 to Appendix C to
the Indenture, or such other evidence as may be reasonably acceptable to the
Issuer.
The undersigned hereby represents and warrants that the undersigned is
accepting ownership of the Class A-5a Notes in compliance with the restrictions
set forth in Section 5 of Appendix C to the Indenture of Trust, dated as of
April 1, 2004 (the "Indenture"), among Nelnet Education Loan Funding, Inc.,
Wells Fargo Bank, National Association, as eligible lender trustee, and Wells
Fargo Bank, National Association, as indenture trustee, and acknowledges that
the Class A-5a Notes will be issued with the legends set forth in Section 6 of
Appendix C to the Indenture.
"Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (A)(i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is a Qualified Institutional Buyer as
defined under Rule 144A of the Securities Act or any entity in which all of the
equity owners come within such paragraphs, (B) can make representations with
respect to itself to substantially the same effect as the representations set
forth in the Regulation S and Related Matters Certificate in the same form as
Annex 2 to Appendix C to the Indenture, or (C)(i) can make representations with
respect to itself substantially to the same effect as the representations set
forth herein (other than to its status as a Qualified Institutional Buyer), and
(ii) is acquiring such Class A-5a Notes in reliance on an exemption to the
Securities Act other than Rule 144A in accordance with any applicable United
States state securities or "Blue Sky" laws.
C-A-1-3
If the Purchaser proposes that its Class A-5a Notes be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any): _____________________
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Qualified
Institutional Buyer on the ____ day of ___________, 20__.
Name of Institution
-------------------------------------
Signature
-------------------------------------
Name
-------------------------------------
Title
NOMINEE ACKNOWLEDGMENT
The undersigned hereby acknowledges and agrees that as to the Class A-5a
Notes being registered in its name, the sole beneficial owner thereof is and
shall be the Purchaser identified above, for whom the undersigned is acting as
nominee.
By:
------------------------------------
Duly Authorized
C-A-1-4
ANNEX 2 TO APPENDIX C
FORM OF REGULATION S AND RELATED MATTERS CERTIFICATE
[Date]
Wells Fargo Bank, National Association,
as Indenture Trustee
Sixth and Marquette, N9303-110
Minneapolis, Minnesota 55479
Attention: Corporate Trust Department
Nelnet Education Loan Funding, Inc.
121 South 13th Street, Suite 201
Lincoln, Nebraska 68508
Re: Nelnet Education Loan Funding, Inc., Student Loan
Asset-Backed Notes, Class 2004-2A-5a [Reset Rate
Notes][Auction Rate Notes].
Ladies and Gentlemen:
In connection with our purchase of the Class A-5a Notes of the
above-referenced series, the undersigned certifies to each of the parties to
whom this letter is addressed that it is a Non-U.S. Person (as defined in
Regulation S) outside the United States of America, acquiring the Class A-5a
Notes pursuant to an exemption from registration in accordance with Rule 903 or
Rule 904 of Regulation S.
The undersigned further certifies that it is purchasing the Class A-5a
Notes for its own account or for the account of others that independently
qualify as Non-U.S. Persons (as defined in Regulation S) outside the United
States of America. It is aware that the sale of the Class A-5a Notes is being
made in reliance on its continued compliance with Rule 903 or Rule 904 of
Regulation S. The undersigned understands that the Class A-5a Notes may resold
or transferred only (A) so long as such Class A-5a Notes are eligible for resale
pursuant to Rule 144A, to a person whom the seller reasonably believes is a
Qualified Institutional Buyer acquiring the Class A-5a Notes for its own account
or as a fiduciary or agent for others (which others must also be Qualified
Institutional Buyers) to whom notice is given that the resale or other transfer
is being made in reliance on Rule 144A, (B) pursuant to an effective
registration statement under the Securities Act, or (C) to a purchaser who is a
Non-U.S. Person (as defined in Regulation S) outside the United States of
America, acquiring the Class A-5a Notes pursuant to an exemption from
registration under the Securities Act in accordance with Rule 903 or Rule 904 of
Regulation S, in each case in accordance with any applicable United States state
securities or "blue sky" laws or any securities laws of any other jurisdiction.
The undersigned agrees that if at some future time it wishes to dispose
of or exchange any of the Class A-5a Notes, it will not transfer or exchange any
of the Class A-5a Notes unless: (1) the sale is to an Eligible Purchaser (as
defined below), (2) all offers or solicitations in connection with the sale,
C-A-2-1
whether directly or through any agent acting on our behalf, are limited only to
Eligible Purchasers and are not made by means of any form of general
solicitation or general advertising whatsoever, and (3) such transferee shall
deliver a Rule 144A and Related Matters Certificate substantially in the same
form as Annex 1 to Appendix C to the Indenture, or a Regulation S and Related
Matters Certificate to substantially the same effect as this letter to the
addressees hereof or such other evidence as may be reasonably acceptable to the
Issuer and the Indenture Trustee.
The undersigned hereby represents and warrants that the undersigned is
accepting ownership of the Class A-5a Notes in compliance with the restrictions
set forth in Section 5 of Appendix C to the Indenture of Trust, dated as of
April 1, 2004 (the "Indenture"), among Nelnet Education Loan Funding, Inc.,
Wells Fargo Bank, National Association, as eligible lender trustee, and Wells
Fargo Bank, National Association, as indenture trustee, and acknowledges that
the Class A-5a Notes will be issued with the legends set forth in Section 6 to
Appendix C to the Indenture.
"Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (A)(i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is a Qualified Institutional Buyer as
defined under Rule 144A of the Securities Act or any entity in which all of the
equity owners come within such paragraphs, (B)(i) can make representations with
respect to itself to substantially the same effect as the representations set
forth in the Regulation S and Related Matters Certificate in the same form as
Annex 2 to Appendix C to the Indenture, and (ii) is acquiring such Class A-5a
Notes pursuant to an exemption from registration in accordance with Rule 903 or
Rule 904 of Regulation S, or (C)(i) can make representations with respect to
itself substantially to the same effect as the representations set forth herein
(other than to its status as a Qualified Institutional Buyer), and (ii) is
acquiring such Class A-5a Notes in reliance on an exemption to the Securities
Act other than Rule 144A in accordance with any applicable United States state
securities or "Blue Sky" laws.
If the Purchaser proposes that its Class A-5a Notes be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete the Nominee Acknowledgment at the
end of this letter.
Name of Nominee (if any): _____________________
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Qualified
Institutional Buyer on the ____ day of ___________, 20__.
Name of Institution
---------------------------------
Signature
---------------------------------
Name
---------------------------------
Title
C-A-2-2
Nominee Acknowledgment
NOMINEE ACKNOWLEDGMENT
The undersigned hereby acknowledges and agrees that as to the Class A-5a
Notes being registered in its name, the sole beneficial owner thereof is and
shall be the Purchaser identified above, for whom the undersigned is acting as
nominee.
By:
----------------------------------
Duly Authorized
C-A-2-3
ANNEX 3 TO APPENDIX C
FORM OF TRANSFEROR LETTER
[Date]
Wells Fargo Bank, National Association,
as Indenture Trustee
Sixth and Marquette, N9303-110
Minneapolis, Minnesota 55479
Attention: Corporate Trust Department
Nelnet Education Loan Funding, Inc.
121 South 13th Street, Suite 201
Lincoln, Nebraska 68508
Re: Nelnet Education Loan Funding, Inc., Student Loan
Asset-Backed Notes, Class 2004-2A-5a [Reset Rate
Notes][Auction Rate Notes].
Ladies and Gentlemen:
In connection with our disposition of the Class A-5a Notes of the
above-referenced class owned by us, we certify that (a) we understand that the
Class A-5a Notes have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), and are being disposed by us in a transaction
that is exempt from the registration requirements of the Securities Act, and (b)
we have not offered or sold any Class A-5a Notes to, or solicited offers to buy
any Class A-5a Notes from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action would result in, a violation of Section 5 of the Securities
Act.
Very truly yours,
Print Name of Transferor
By:
---------------------------------
Authorized Officer
C-A-3-1
EXHIBIT A
FORM OF LIBOR RATE NOTES
EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE, THIS GLOBAL NOTE
MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF
THE SECURITIES DEPOSITORY OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO
A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY
NELNET EDUCATION LOAN FUNDING, INC.
STUDENT LOAN ASSET-BACKED NOTE
SENIOR CLASS 2004-2A-[1][2][3][4]
LIBOR RATE NOTES
REGISTERED NO. R-__ REGISTERED $________________
MATURITY DATE INTEREST RATE ORIGINAL ISSUE CUSIP NO. ISIN NO.
DATE
Quarterly Distribution Three-Month April 29, 2004 64031R__ US64031R__
Date in ____ LIBOR + ____%
PRINCIPAL SUM: **__________________________________ AND 00/100 DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
NELNET EDUCATION LOAN FUNDING, INC., a corporation organized under the
corporation laws of the State of Nebraska (the "Issuer," which term includes any
successor corporation under the Indenture of Trust, dated as of April 1, 2004
(the "Indenture"), among the Issuer, Wells Fargo Bank, National Association, as
eligible lender trustee, and Wells Fargo Bank, National Association, as trustee
(the "Indenture Trustee," which term includes any successor trustee under the
Indenture)) for value received, hereby promises to pay to the Registered Owner
(stated above) or registered assigns, the Principal Sum hereof (payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is the Principal Sum hereof and denominator of
which is $167,000,000 by (ii) the aggregate amount, if any, payable on the Class
A-[1][2][3][4] Notes on such Quarterly Distribution Date in accordance with the
Indenture), but solely from the revenues and receipts hereinafter specified and
not otherwise, on the Maturity Date specified above (subject to the right of
prior redemption hereinafter described), at the designated corporate trust
office of the Indenture Trustee, as paying agent, trustee, authenticating agent
and registrar for the Series 2004-2 Notes, or a duly appointed successor paying
agent, and to pay interest in arrears on said Principal Sum, but solely from the
revenues and receipts hereinafter specified and not otherwise, to the Registered
Owner hereof from the most recent Quarterly Distribution Date to which interest
has been paid hereon, until the payment of said principal sum in full.
A-1
Any capitalized words and terms used as defined words and terms in this
note and not otherwise defined herein shall have the meanings given them in the
Indenture.
The Issuer shall pay interest on this note at a per annum rate equal to
Three-Month LIBOR plus ____%, on each Quarterly Distribution Date until the
principal of this note is paid or made available for payment, on the principal
amount of this note outstanding on the preceding Quarterly Distribution Date
(after giving effect to all payments of principal made on the preceding
Quarterly Distribution Date); provided, however, the interest rate on the Class
A-[1][2][3][4] Notes until the first Quarterly Payment Date shall be the rate
set forth in the Indenture. Interest on this note shall accrue from and
including the preceding Quarterly Distribution Date (or, in the case of the
first Accrual Period, the Closing Date) to but excluding the following Quarterly
Distribution Date (each an "Accrual Period") computed a 360-day year and actual
days elapsed. LIBOR shall be determined on the second Business Day preceding
each Accrual Period and shall become effective on the first day of such Accrual
Period.
The principal of and interest on this note are payable in lawful money
of the United States of America. If the specified date for any payment of
principal or interest accrued to such specified date shall be a day other than a
Business Day then such payment may be made on the next succeeding Business Day,
with the same force and effect as if made on the specified date for such payment
without additional interest.
Principal of the Class A-[1][2][3][4] Notes shall be allocable on each
Quarterly Distribution Date and payable to the extent moneys have been allocated
therefor pursuant to the Indenture. "Quarterly Distribution Date" means the 25th
day of each February, May, August and November, commencing August 25, 2004, or,
if any such date is not a Business Day, the next succeeding Business Day. All
principal payments on the Class A-[1][2][3][4] Notes shall be made pro rata to
the registered owners thereof.
This note is one of a class of notes of the Issuer designated Student
Loan Asset-Backed Notes, Senior Class 2004-2A-[1][2][3][4] LIBOR Rate Notes,
dated the Original Issue Date, in the aggregate original principal amount of
$_______________ (the "Class A-[1][2][3][4] Notes") which have been authorized
by the Issuer under a certain resolution, and issued by the Issuer pursuant to
the Indenture. The Issuer is, simultaneously with the Class A-[1][2][3][4]
Notes, issuing $_______________ of its Student Loan Asset-Backed Notes, Senior
[Class 2004-2A-1, Class 2004-2A-2, Class 2004-2A-3, Class 2004-2A-4] LIBOR Rate
Notes, Class 2004-2A-5a [Reset Rate Notes and][,] Class 2004-2A-5b and Class
2004-2A-5c Auction Rate Notes (together with the Class A-[1][2][3][4] Notes, the
"Class A Notes") and $__________ of its Student Loan Asset-Backed Notes,
Subordinate Class 2004-2B-1 and Class 2004-2B-2 Auction Rate Notes
(collectively, the "Class B Notes," and together with the Class A Notes, the
"Series 2004-2 Notes"). The proceeds of such notes have been used by the Issuer,
together with other moneys of the Issuer, for the purpose of providing funds to
finance the acquisition of student loans, fund a reserve fund and to pay certain
costs and expenses in connection with such notes.
OPTIONAL AND MANDATORY PRINCIPAL REDUCTION PAYMENTS AND EXTRAORDINARY
REDEMPTION. This note is subject to mandatory redemption, mandatory Principal
Reduction Payments and extraordinary redemption, all as described in the
Indenture.
A-2
NOTICE OF REDEMPTION OR PRINCIPAL REDUCTION PAYMENTS. All Series 2004-2
Notes called for redemption will cease to bear interest after the specified
redemption or purchase date, provided funds for their payment are on deposit at
the place of payment at the time. Preferably five, but not less than two
Business Days prior to each Quarterly Distribution Date on which Principal
Reduction Payments will be made on the Class A-[1][2][3][4] Notes or on which
the Class A-[1][2][3][4] Notes are to be redeemed, the Indenture Trustee shall
cause notice of any Principal Reduction Payments or redemption to be given by
mailing a copy of the notice by first class mail to the Administrator and
registered owners of the Class A-[1][2][3][4] Notes designated for reduction or
redemption in whole or in part, at their address as the same shall last appear
upon the registration books on such date; provided, however, that failure to
give such notice, or any defect therein, shall not affect the validity of any
proceedings for the reduction or redemption of such Class A-[1][2][3][4] Notes.
In addition, preferably five, but not less than two Business Days prior
to each Quarterly Distribution Date, the Indenture Trustee shall send the
Securities Depository written notice with respect to the dollar amount per
$1,000 original principal amount of the Class of the Class A-[1][2][3][4] Notes
that the Indenture Trustee will be paying to the Securities Depository on the
Quarterly Distribution Date. The Indenture Trustee may, to the extent necessary
to avoid payments of fractional cents, reduce scheduled payments by up to $1,000
for the Class A-[1][2][3][4] Notes.
The Indenture provides that the Issuer may enter into a derivative
product (a "Derivative Product") between the Issuer and a derivative provider (a
"Counterparty"), as originally executed and as amended or supplemented, or other
interest rate hedge agreement between the Issuer and a Counterparty, as
originally executed and as amended or supplemented. Payments due to a
Counterparty from the Issuer pursuant to the applicable Derivative Product are
referred to herein as "Issuer Derivative Payments," and may be paid on a parity
with interest on any class of Series 2004-2 Notes.
The principal of and interest on the Class A Notes and any Issuer
Derivative Payments which are paid on a parity with interest on the Class A
Notes are payable on a superior basis to such payments on the Class B Notes and
any Issuer Derivative Payments which are paid on a parity with interest on the
Class B Notes; provided, however, that current principal and interest may be
paid on the Class B Notes and any Issuer Derivative Payments which are paid on a
parity with interest on the Class B Notes if all principal and interest payments
due and owing at such time on the Class A Notes and any Issuer Derivative
Payments which are paid on a parity with interest on the Class A Notes have been
previously made or provided for as provided in the Indenture. Except as provided
in the Indenture, principal allocated to pay the Class A Notes will be use to
provide for payment of the Class A-1 Notes, then to provide for payment of the
Class A-2 Notes, then to provide for payment of the Class A-3 Notes, then to
provide for payment of the Class A-4 Notes, then, on a pro rata basis, to
provide for payment of the Class A-5a Notes, the Class A-5b Notes and Class A-5c
Notes, and then, on a pro rata basis to provide for payment of the Class B-1
Notes and Class B-2 Notes.
Reference is hereby made to the Indenture, copies of which are on file
at the designated corporate trust office of the Indenture Trustee, and to all of
the provisions of which any Registered Owner of this note by his acceptance
hereof hereby assents, for definitions of terms; the description of and the
A-3
nature and extent of the security for the Series 2004-2 Notes; the Issuer's
student loan origination and acquisition program; the revenues and other money
pledged to the payment of the principal of and interest on the Series 2004-2
Notes; the nature and extent and manner of enforcement of the pledge; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Registered Owners of the Series 2004-2 Notes and any
Counterparty; the rights and remedies of the Registered Owner hereof with
respect hereto and thereto, including the limitations upon the right of a
Registered Owner hereof to institute any suit, action, or proceeding in equity
or at law with respect hereto and thereto; the rights, duties, and obligations
of the Issuer and the Indenture Trustee thereunder; the terms and provisions
upon which the liens, pledges, charges, trusts, and covenants made therein may
be discharged at or prior to the stated maturity or earlier redemption of this
note, and this note thereafter shall no longer be secured by the Indenture or be
deemed to be Outstanding, as defined in the Indenture, thereunder; and for the
other terms and provisions thereof.
THE SERIES 2004-2 NOTES ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE
SOLELY FROM, AND FURTHER SECURED BY, THE TRUST ESTATE, AS DEFINED IN THE
INDENTURE.
No recourse, either directly or indirectly, shall be had for the payment
of the principal of and interest on this note or any claim based hereon or in
respect hereof or of the Indenture, against the Indenture Trustee, or any
incorporator, director, officer, employee, or agent of the Issuer, nor against
the State of Nebraska, or any official thereof, but the obligation to pay all
amounts required by the Indenture securing this note and the obligation to do
and perform the covenants and acts required of the Issuer therein and herein
shall be and remain the responsibility and obligation of said Issuer, limited as
herein set forth.
Subject to the restrictions specified in the Indenture, this note is
transferable on the note register kept for that purpose by the Indenture
Trustee, as registrar, upon surrender of this note for transfer at the
designated corporate trust office of the Indenture Trustee, duly endorsed by, or
accompanied by a written instrument of transfer, in form satisfactory to the
Indenture Trustee duly executed by, the Registered Owner hereof or his attorney
duly authorized in writing, and thereupon one or more new Series 2004-2 Notes of
the same class, Stated Maturity, of authorized denominations, bearing interest
at the same rate, and for the same aggregate principal amount will be issued to
the designated transferee or transferees. At the option of the Registered Owner,
any Series 2004-2 Note may be exchanged for other Series 2004-2 Notes in
authorized denominations upon surrender of the Series 2004-2 Note to be
exchanged at the designated corporate trust office of the Indenture Trustee.
Upon any such presentation for exchange, one or more new Series 2004-2 Notes of
the same class, Stated Maturity, in authorized denominations, bearing interest
at the same rate, and for the same aggregate principal amount as the Series
2004-2 Note or Series 2004-2 Notes so surrendered will be issued to the
Registered Owner of the Series 2004-2 Note or Series 2004-2 Notes so
surrendered; and the Series 2004-2 Note or Series 2004-2 Notes so surrendered
shall thereupon be cancelled by the Indenture Trustee.
A-4
Notwithstanding the foregoing, so long as the ownership of the Series
2004-2 Notes is maintained in book-entry form by The Depository Trust Company
(the "Securities Depository") or a nominee thereof, this note may be transferred
in whole but not in part only to the Securities Depository or a nominee thereof
or to a successor Securities Depository or its nominee.
The Issuer, the Indenture Trustee, and any agent of either of them shall
treat the Person in whose name this note is registered as the Registered Owner
hereof (a) on the record date for purposes of receiving timely payment of
interest hereon, and (b) on the date of surrender of this note for purposes of
receiving payment of principal hereof at its stated maturity and (c) for all
other purposes, whether or not this note is overdue, and none of the Issuer, the
Indenture Trustee, or any such agent shall be affected by notice to the
contrary.
To the extent permitted by the Indenture, modifications or alterations
of the Indenture and any supplemental indenture may be made with the consent of
less than all of the Registered Owners of the Series 2004-2 Notes then
outstanding or without the consent of any of such Registered Owners (by reason
of a change in the Higher Education Act or Regulation or to cure ambiguities or
conflicts), but such modification or alteration is not permitted to affect the
maturity date, Stated Maturity, amount, Quarterly Distribution Date, or rate of
interest on any outstanding Series 2004-2 Notes or affect the rights of the
Registered Owners of less than all of the Series 2004-2 Notes outstanding.
The Registered Owner hereof shall not have the right to demand payment
of this note or any interest hereon out of funds raised or to be raised by
taxation.
Any capitalized term used herein and not otherwise defined herein shall
have the same meaning ascribed to such term in the Indenture unless the context
shall clearly indicate otherwise.
It is hereby certified and recited that all acts and things required by
the laws of the State of Nebraska to happen, exist, and be performed precedent
to and in the issuance of this note, and the passage of said resolution and the
execution of said Indenture, have happened, exist and have been performed as so
required.
A-5
IN TESTIMONY WHEREOF, the Board of Directors of NELNET EDUCATION LOAN
FUNDING, INC. has caused this note to be executed by the manual or facsimile
signatures of the President and Secretary of the Issuer all as of the Original
Issue Date.
NELNET EDUCATION LOAN FUNDING, INC.
By
--------------------------------------
President
By
--------------------------------------
Secretary
A-6
CERTIFICATE OF AUTHENTICATION
This note is one of the Class A-[1][2][3][4] Notes designated therein
and described in the within-mentioned Indenture.
WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Indenture Trustee
By
----------------------------------------
Authorized Signatory
Authentication Date:
- ----------------------------------------
A-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto __________ (Social Security or other identifying number __________) the
within note and all rights thereunder and hereby irrevocably appoints __________
attorney to transfer the within note on the books kept for registration thereof,
with full power of substitution in the premises.
Dated: SIGNED:
------------------ ------------------------------------
NOTICE: The signature on this Assignment must
correspond with the name of the Registered Owner
as it appears on the face of the within note in
every particular.
Signature Guaranteed by:
- -----------------------------------
Signature(s) must be guaranteed by an
eligible guarantor institution pursuant
to Securities and Exchange Commission
Rule 17Ad-15 that is a participant in a
signature guarantor program recognized
by the Indenture Trustee
A-8
EXHIBIT B
FORM OF RESET RATE NOTES
THIS CLASS A-5a NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), ANY UNITED STATES STATE SECURITIES OR "BLUE SKY" LAWS
OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION, AND, AS A MATTER OF
U.S. LAW, MAY NOT BE OFFERED OR SOLD IN VIOLATION OF THE SECURITIES ACT
OR SUCH OTHER LAWS. THIS NOTE MAY BE TRANSFERRED ONLY IN MINIMUM
DENOMINATIONS OF NOT LESS THAN $5,000 AND ANY INTEGRAL MULTIPLE OF
$1,000 IN EXCESS THEREOF. THE HOLDER HEREOF, BY PURCHASING OR ACCEPTING
THIS CLASS A-5a NOTE IS HEREBY DEEMED TO HAVE AGREED FOR THE BENEFIT OF
THE ISSUER AND THE INITIAL PURCHASERS THAT IT WILL RESELL, PLEDGE OR
OTHERWISE TRANSFER THIS NOTE, AS A MATTER OF U.S. LAW, ONLY (A)(1) SO
LONG AS THIS NOTE IS ELIGIBLE FOR RESALE, PURSUANT TO RULE 144A
PROMULGATED UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, AS
DEFINED IN RULE 144A (A "QUALIFIED INSTITUTIONAL BUYER"), THAT IS
ACQUIRING THIS CLASS A-5a NOTE FOR ITS OWN ACCOUNT OR AS A FIDUCIARY OR
AGENT FOR OTHERS (WHICH OTHERS MUST ALSO BE QUALIFIED INSTITUTIONAL
BUYERS) TO WHOM NOTICE IS GIVEN THAT THE RESALE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (2) TO A PERSON WHO IS NOT A U.S.
PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT
) OUTSIDE THE UNITED STATES OF AMERICA ACQUIRING THIS CLASS A-5a NOTE IN
ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S PROMULGATED UNDER
THE SECURITIES ACT OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
UNITED STATES STATE SECURITIES OR "BLUE SKY" LAWS OR ANY SECURITIES LAWS
OF ANY OTHER JURISDICTION.
UPON ACQUISITION OR TRANSFER OF A CLASS A-5a NOTE OR A BENEFICIAL
INTEREST IN A CLASS A-5a NOTE, AS THE CASE MAY BE, BY, FOR OR WITH THE
ASSETS OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT (A
"PLAN"), SUCH CLASS A-5a NOTE OWNER SHALL BE DEEMED TO HAVE REPRESENTED
THAT SUCH ACQUISITION OR PURCHASE WILL NOT CONSTITUTE OR OTHERWISE
RESULT IN: (I) IN THE CASE OF A PLAN SUBJECT TO SECTION 406 OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), A NON-EXEMPT PROHIBITED TRANSACTION IN VIOLATION OF SECTION 406
B-1
OF ERISA OR SECTION 4975 OF THE CODE WHICH IS NOT COVERED BY A CLASS OR
OTHER APPLICABLE EXEMPTION AND (II) IN THE CASE OF A PLAN SUBJECT TO A
SUBSTANTIALLY SIMILAR FEDERAL, STATE, LOCAL OR FOREIGN LAW ("SIMILAR
LAW"), A NON-EXEMPT VIOLATION OF SUCH SUBSTANTIALLY SIMILAR LAW. ANY
TRANSFER FOUND TO HAVE BEEN MADE IN VIOLATION OF SUCH DEEMED
REPRESENTATION SHALL BE NULL AND VOID AND OF NO EFFECT.
THIS CLASS A-5a NOTE AND RELATED DOCUMENTATION MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON AND
PROCEDURES UNDERTAKEN OR REPRESENTED BY THE HOLDER, FOR RESALES AND
OTHER TRANSFERS OF THIS CLASS A-5a NOTE, TO REFLECT ANY CHANGE IN
APPLICABLE LAWS OR REGULATIONS (OR THE INTERPRETATION THEREOF) OR IN
PRACTICES RELATING TO RESALES OR OTHER TRANSFERS OF RESTRICTED
SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND ANY BENEFICIAL OWNER
OF ANY INTEREST THEREIN SHALL BE DEEMED, BY ITS ACCEPTANCE OR PURCHASE
HEREOF, TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT (EACH OF
WHICH SHALL BE CONCLUSIVE AND BINDING ON THE HOLDER HEREOF AND ALL
FUTURE HOLDERS OF THIS CLASS A-5a NOTE AND ANY CLASS A-5a NOTE ISSUED IN
EXCHANGE OR SUBSTITUTION HEREFOR, WHETHER OR NOT ANY NOTATION THEREOF IS
MADE HEREON) AND AGREES TO TRANSFER THIS CLASS A-5a NOTE ONLY IN
ACCORDANCE WITH ANY SUCH AMENDMENT OR SUPPLEMENT IN ACCORDANCE WITH
APPLICABLE LAW IN EFFECT AT THE DATE OF SUCH TRANSFER.
EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE, THIS GLOBAL NOTE
MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF
THE SECURITIES DEPOSITORY OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO
A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY
NELNET EDUCATION LOAN FUNDING, INC.
STUDENT LOAN ASSET-BACKED NOTE
SENIOR CLASS 2004-2A-5A
RESET RATE NOTES
REGISTERED NO. R-__ REGISTERED $200,000,000
MATURITY DATE INTEREST RATE ORIGINAL ISSUE CUSIP NO. ISIN NO.
DATE
Quarterly Distribution Reset Rate April 29, 2004
Date in February, 2039
PRINCIPAL SUM: **TWO HUNDRED MILLION AND 00/100 DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
B-2
NELNET EDUCATION LOAN FUNDING, INC., a corporation organized under the
corporation laws of the State of Nebraska (the "Issuer," which term includes any
successor corporation under the Indenture of Trust, dated as of April 1, 2004
(the "Indenture"), among the Issuer, Wells Fargo Bank, National Association, as
eligible lender trustee, and Wells Fargo Bank, National Association, as trustee
(the "Indenture Trustee," which term includes any successor trustee under the
Indenture)) for value received, hereby promises to pay to the Registered Owner
(stated above) or registered assigns, the Principal Sum hereof (payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is the Principal Sum hereof (as modified by
Annex 2 attached hereto) and denominator of which is $200,000,000 by (ii) the
aggregate amount, if any, payable on the Class A-5a Notes on such Quarterly
Distribution Date in accordance with the Indenture), but solely from the
revenues and receipts hereinafter specified and not otherwise, on the Maturity
Date specified above (subject to the right of prior redemption hereinafter
described), at the designated corporate trust office of the Indenture Trustee,
as paying agent, trustee, authenticating agent and registrar for the Series
2004-2 Notes, or a duly appointed successor paying agent, and to pay interest in
arrears on said Principal Sum, but solely from the revenues and receipts
hereinafter specified and not otherwise, to the Registered Owner hereof from the
most recent Quarterly Distribution Date to which interest has been paid hereon,
until the payment of said principal sum in full.
Any capitalized words and terms used as defined words and terms in this
note and not otherwise defined herein shall have the meanings given them in the
Indenture.
The Issuer shall pay interest on this note at the rate set forth in
Annex 1, on each Quarterly Distribution Date until the principal of this note is
paid or made available for payment, on the principal amount of this note
outstanding on the preceding Quarterly Distribution Date (after giving effect to
all payments of principal made on the preceding Quarterly Distribution Date).
Interest on this note shall accrue from and including the preceding Quarterly
Distribution Date (or, in the case of the first Accrual Period, the Closing
Date) to but excluding the following Quarterly Distribution Date (each an
"Accrual Period") as set forth in Annex 1.
The principal of and interest on this note are payable in lawful money
of the United States of America. If the specified date for any payment of
principal or interest accrued to such specified date shall be a day other than a
Business Day then such payment may be made on the next succeeding Business Day,
with the same force and effect as if made on the specified date for such payment
without additional interest.
Principal of the Class A-5a Notes shall be allocable on each Quarterly
Distribution Date and payable as set forth in Annex 1 to the extent moneys have
been allocated therefor pursuant to the Indenture and as set forth in Annex 1.
"Quarterly Distribution Date" means the 25th day of each February, May, August
and November, commencing August 25, 2004, or, if any such date is not a Business
Day, the next succeeding Business Day.
B-3
If during any Reset Period (including the initial Reset Period) the
Class A-5a Notes constitute Non-Amortizing Reset Rate Notes (as defined in the
Indenture and as set forth in Annex 1), the registered owners of the Class A-5a
Notes will not be paid principal on any related Quarterly Distribution Date when
principal is allocated to the Class A-5a Notes. All such allocated principal
will be deposited into the related Class A-5a Redemption Account for payment on
the Class A-5a Notes, generally, on the next related Reset Date in accordance
with the procedures set forth in Appendix A to the Indenture. All principal
payments on the Class A-5a Notes shall be made pro rata to the registered owners
thereof.
Interest on the Class A-5a Notes shall be payable on each Quarterly
Distribution Date on the principal amount outstanding of the Class A-5a Notes
until the principal amount thereof is paid in full, at a rate equal to the Class
A-5a Notes Interest Rate. The Class A-5a Notes Interest Rate will be reset on
each related Reset Date set forth in Annex 1 in accordance with the provisions
of Appendix A to the Indenture. The initial Reset Date for the Class A-5a Notes
is the Quarterly Distribution Date in May of 2009. The "Class A-5a Notes
Interest Rate" for each Accrual Period during the initial Reset Period, shall be
equal to an annual rate of Three-Month LIBOR + ____%, calculated on the basis of
the actual number of days elapsed and a 360 day year.
On each Reset Date for the Class A-5a Notes, the Indenture Trustee, in
its capacity as DTC Custodian, will attach (or will send to the Registered Owner
of this note if not then held in book-entry form) a revised Annex 1 setting
forth the reset terms of this note and copies of the related Remarketing Terms
Notice and Spread Determination Notice, which shall be considered an integral
part of this note applicable during the related Reset Period. If the Class A-5a
Notes are reset to bear interest as an Auction Rate, a replacement note will be
provided to the Indenture Trustee, in its capacity as DTC Custodian.
This note is one of a class of notes of the Issuer designated Student
Loan Asset-Backed Notes, Senior Class 2004-2A-5a Reset Rate Notes, dated the
Original Issue Date, in the aggregate original principal amount of $200,000,000
(the "Class A-5a Notes") which have been authorized by the Issuer under a
certain resolution, and issued by the Issuer pursuant to the Indenture. The
Issuer is, simultaneously with the Class A-5a Notes, issuing $787,100,000 of its
Student Loan Asset-Backed Notes, Senior Class 2004-2A-1, Class 2004-2A-2, Class
2004-2A-3 and Class 2004-2A-4 LIBOR Rate Notes and Class 2004-2A-5b and Class
2004-2A-5c Auction Rate Notes (together with the Class A-5a Notes, the "Class A
Notes") and $30,600,000 of its Student Loan Asset-Backed Notes, Subordinate
Class 2004-2B-1 and Class 2004-2B-2 Auction Rate Notes (collectively, the "Class
B Notes," and together with the Class A Notes, the "Series 2004-2 Notes"). The
proceeds of such notes have been used by the Issuer, together with other moneys
of the Issuer, for the purpose of providing funds to finance the acquisition of
student loans, fund a reserve fund and to pay certain costs and expenses in
connection with such notes.
OPTIONAL AND MANDATORY PRINCIPAL REDUCTION PAYMENTS AND EXTRAORDINARY
REDEMPTION. This note is subject to optional and mandatory redemption, mandatory
Principal Reduction Payments and extraordinary redemption, all as described in
the Indenture.
B-4
NOTICE OF REDEMPTION OR PRINCIPAL REDUCTION PAYMENTS. All Series 2004-2
Notes called for redemption will cease to bear interest after the specified
redemption or purchase date, provided funds for their payment are on deposit at
the place of payment at the time. Preferably five, but not less than two
Business Days prior to each Quarterly Distribution Date on which Principal
Reduction Payments will be made on the Class A-5a Notes or on which the Class
A-5a Notes are to be redeemed, the Indenture Trustee shall cause notice of any
Principal Reduction Payments or redemption to be given by mailing a copy of the
notice by first class mail to the Administrator and registered owners of the
Class of the Class A-5a Notes designated for reduction or redemption in whole or
in part, at their address as the same shall last appear upon the registration
books on such date; provided, however, that failure to give such notice, or any
defect therein, shall not affect the validity of any proceedings for the
reduction or redemption of such Class A-5a Notes.
In addition, preferably five, but not less than two Business Days prior
to each Quarterly Distribution Date, the Indenture Trustee shall send the
Securities Depository written notice with respect to the dollar amount per
$1,000 original principal amount of the Class A-5a Notes that the Indenture
Trustee will be paying to the Securities Depository on the Quarterly
Distribution Date. The Indenture Trustee may, to the extent necessary to avoid
payments of fractional cents, reduce scheduled payments by up to $1,000 for the
Class A-5a Notes.
The Indenture provides that the Issuer may enter into a derivative
product (a "Derivative Product") between the Issuer and a derivative provider (a
"Counterparty"), as originally executed and as amended or supplemented, or other
interest rate hedge agreement between the Issuer and a Counterparty, as
originally executed and as amended or supplemented. Payments due to a
Counterparty from the Issuer pursuant to the applicable Derivative Product are
referred to herein as "Issuer Derivative Payments," and may be paid on a parity
with interest on any class of Series 2004-2 Notes.
The principal of and interest on the Class A Notes and any Issuer
Derivative Payments which are paid on a parity with interest on the Class A
Notes are payable on a superior basis to such payments on the Class B Notes and
any Issuer Derivative Payments which are paid on a parity with interest on the
Class B Notes; provided, however, that current principal and interest may be
paid on the Class B Notes and any Issuer Derivative Payments which are paid on a
parity with interest on the Class B Notes if all principal and interest payments
due and owing at such time on the Class A Notes and any Issuer Derivative
Payments which are paid on a parity with interest on the Class A Notes have been
previously made or provided for as provided in the Indenture. Except as provided
in the Indenture, principal allocated to pay the Class A Notes will be use to
provide for payment of the Class A-1 Notes, then to provide for payment of the
Class A-2 Notes, then to provide for payment of the Class A-3 Notes, then to
provide for payment of the Class A-4 Notes, then, on a pro rata basis, to
provide for payment of the Class A-5a Notes, the Class A-5b Notes and Class A-5c
Notes, and then, on a pro rata basis, to provide for payment of the Class B-1
Notes and Class B-2 Notes.
Reference is hereby made to the Indenture, copies of which are on file
at the designated corporate trust office of the Indenture Trustee, and to all of
the provisions of which any Registered Owner of this note by his acceptance
hereof hereby assents, for definitions of terms; the description of and the
B-5
nature and extent of the security for the Series 2004-2 Notes; the Issuer's
student loan origination and acquisition program; the revenues and other money
pledged to the payment of the principal of and interest on the Series 2004-2
Notes; the nature and extent and manner of enforcement of the pledge; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Registered Owners of the Series 2004-2 Notes and any
Counterparty; the rights and remedies of the Registered Owner hereof with
respect hereto and thereto, including the limitations upon the right of a
Registered Owner hereof to institute any suit, action, or proceeding in equity
or at law with respect hereto and thereto; the rights, duties, and obligations
of the Issuer and the Indenture Trustee thereunder; the terms and provisions
upon which the liens, pledges, charges, trusts, and covenants made therein may
be discharged at or prior to the stated maturity or earlier redemption of this
note, and this note thereafter shall no longer be secured by the Indenture or be
deemed to be Outstanding, as defined in the Indenture, thereunder; and for the
other terms and provisions thereof.
THE SERIES 2004-2 NOTES ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE
SOLELY FROM, AND FURTHER SECURED BY, THE TRUST ESTATE, AS DEFINED IN THE
INDENTURE.
No recourse, either directly or indirectly, shall be had for the payment
of the principal of and interest on this note or any claim based hereon or in
respect hereof or of the Indenture, against the Indenture Trustee, or any
incorporator, director, officer, employee, or agent of the Issuer, nor against
the State of Nebraska, or any official thereof, but the obligation to pay all
amounts required by the Indenture securing this note and the obligation to do
and perform the covenants and acts required of the Issuer therein and herein
shall be and remain the responsibility and obligation of said Issuer, limited as
herein set forth.
Subject to the restrictions specified in the Indenture, this note is
transferable on the note register kept for that purpose by the Indenture
Trustee, as registrar, upon surrender of this note for transfer at the
designated corporate trust office of the Indenture Trustee, duly endorsed by, or
accompanied by a written instrument of transfer, including Annex 1 and Annex 3
to Appendix C to the Indenture, in form satisfactory to the Indenture Trustee
duly executed by, the Registered Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Series 2004-2 Notes of the same class,
Stated Maturity, of authorized denominations, bearing interest at the same rate,
and for the same aggregate principal amount will be issued to the designated
transferee or transferees. At the option of the Registered Owner, any Series
2004-2 Note may be exchanged for other Series 2004-2 Notes in authorized
denominations upon surrender of the Series 2004-2 Note to be exchanged at the
designated corporate trust office of the Indenture Trustee. Upon any such
presentation for exchange, one or more new Series 2004-2 Notes of the same
class, Stated Maturity, in authorized denominations, bearing interest at the
same rate, and for the same aggregate principal amount as the Series 2004-2 Note
or Series 2004-2 Notes so surrendered will be issued to the Registered Owner of
the Series 2004-2 Note or Series 2004-2 Notes so surrendered; and the Series
2004-2 Note or Series 2004-2 Notes so surrendered shall thereupon be cancelled
by the Indenture Trustee.
The Class A-5a Notes have not been registered or qualified under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities law. No transfer, sale, pledge or other disposition of any Class A-5a
Note, or any interest therein, shall be made unless the transfer is made
B-6
pursuant to an effective registration statement under the Securities Act, or
qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. In the
event that a transfer is made without registration or qualification, the
Indenture Trustee shall require, in order to assure compliance with such laws,
that the prospective transferor and transferee each certify to the Issuer and
the Indenture Trustee in writing the facts surrounding the transfer. Such
certifications shall be substantially in the forms of Annex 1 and Annex 3 to
Appendix C to the Indenture. Such certifications shall be deemed to have been
made by the transferor and transferee with respect to any transfer of an
interest in a Class A-5a Note that is in book-entry form. None of the Issuer,
the Administrator, the Eligible Lender Trustee or the Indenture Trustee is
obligated to register or qualify the Class A-5a Notes under the Securities Act
or any other securities law or to take any action not otherwise required under
the Indenture to permit the transfer of Class A-5a Notes, or interests therein,
without registration or qualification. Any registered owner of a Class A-5a Note
desiring to effect such transfer is hereby deemed to have indemnified the
Issuer, the Administrator, the Eligible Lender Trustee and the Indenture Trustee
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such applicable federal or state laws.
Notwithstanding the foregoing, so long as the ownership of the Series
2004-2 Notes is maintained in book-entry form by The Depository Trust Company
(the "Securities Depository") or a nominee thereof, this note may be transferred
in whole but not in part only to the Securities Depository or a nominee thereof
or to a successor Securities Depository or its nominee.
The Issuer, the Indenture Trustee, and any agent of either of them shall
treat the Person in whose name this note is registered as the Registered Owner
hereof (a) on the record date for purposes of receiving timely payment of
interest hereon, and (b) on the date of surrender of this note for purposes of
receiving payment of principal hereof at its stated maturity and (c) for all
other purposes, whether or not this note is overdue, and none of the Issuer, the
Indenture Trustee, or any such agent shall be affected by notice to the
contrary.
To the extent permitted by the Indenture, modifications or alterations
of the Indenture and any supplemental indenture may be made with the consent of
less than all of the Registered Owners of the Series 2004-2 Notes then
outstanding or without the consent of any of such Registered Owners (by reason
of a change in the Higher Education Act or Regulation or to cure ambiguities or
conflicts), but such modification or alteration is not permitted to affect the
maturity date, Stated Maturity, amount, Quarterly Distribution Date, or rate of
interest on any outstanding Series 2004-2 Notes or affect the rights of the
Registered Owners of less than all of the Series 2004-2 Notes outstanding.
The Registered Owner hereof shall not have the right to demand payment
of this note or any interest hereon out of funds raised or to be raised by
taxation.
Any capitalized term used herein and not otherwise defined herein shall
have the same meaning ascribed to such term in the Indenture unless the context
shall clearly indicate otherwise.
B-7
It is hereby certified and recited that all acts and things required by
the laws of the State of Nebraska to happen, exist, and be performed precedent
to and in the issuance of this note, and the passage of said resolution and the
execution of said Indenture, have happened, exist and have been performed as so
required.
B-8
IN TESTIMONY WHEREOF, the Board of Directors of NELNET EDUCATION LOAN
FUNDING, INC. has caused this note to be executed by the manual or facsimile
signatures of the President and Secretary of the Issuer all as of the Original
Issue Date.
NELNET EDUCATION LOAN FUNDING, INC.
By
-----------------------------------------
President
By
-----------------------------------------
Secretary
B-9
CERTIFICATE OF AUTHENTICATION
This note is one of the Class A-5a Notes designated therein and
described in the within-mentioned Indenture.
WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Indenture Trustee
By
----------------------------------------
Authorized Signatory
Authentication Date:
- -------------------------------
B-10
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto __________ (Social Security or other identifying number __________) the
within note and all rights thereunder and hereby irrevocably appoints __________
attorney to transfer the within note on the books kept for registration thereof,
with full power of substitution in the premises.
Dated: SIGNED:
------------------ ------------------------------------
NOTICE: The signature on this Assignment must
correspond with the name of the Registered Owner
as it appears on the face of the within note in
every particular.
Signature Guaranteed by:
- --------------------------------
Signature(s) must be guaranteed by an
eligible guarantor institution pursuant
to Securities and Exchange Commission
Rule 17Ad-15 that is a participant in a
signature guarantor program
recognized by the Indenture Trustee
B-11
ANNEX 1
REMARKETING TERMS NOTICE AND
SPREAD DETERMINATION NOTICE
B-12
ANNEX 2
SCHEDULE OF EXCHANGES IN GLOBAL NOTE
The following exchanges of a part of this Global Certificate have been
made:
- --------- -------------------- ----------------- -------------------- ------------------
Amount of Principal Amount of
Amount of Decrease Increase in this Global Signature of
in Principal Amount Principal Amount Certificate Authorized
of this Global of this Global following such Officer of
Date of Certificate Certificate Decrease (or Indenture Trustee
Exchange Increase)
- --------- -------------------- ----------------- -------------------- ------------------
B-13
EXHIBIT C
FORM OF AUCTION RATE NOTES
[THIS CLASS A-5a NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), ANY UNITED STATES STATE SECURITIES OR "BLUE SKY" LAWS
OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION, AND, AS A MATTER OF
U.S. LAW, MAY NOT BE OFFERED OR SOLD IN VIOLATION OF THE SECURITIES ACT
OR SUCH OTHER LAWS. THIS NOTE MAY BE TRANSFERRED ONLY IN MINIMUM
DENOMINATIONS OF NOT LESS THAN $50,000 AND ANY INTEGRAL MULTIPLE
THEREOF. THE HOLDER HEREOF, BY PURCHASING OR ACCEPTING THIS CLASS A-5a
NOTE IS HEREBY DEEMED TO HAVE AGREED FOR THE BENEFIT OF THE ISSUER AND
THE INITIAL PURCHASERS THAT IT WILL RESELL, PLEDGE OR OTHERWISE TRANSFER
THIS NOTE, AS A MATTER OF U.S. LAW, ONLY (A)(1) SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE, PURSUANT TO RULE 144A PROMULGATED UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, AS DEFINED IN RULE 144A (A
"QUALIFIED INSTITUTIONAL BUYER"), THAT IS ACQUIRING THIS CLASS A-5a NOTE
FOR ITS OWN ACCOUNT OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS
MUST ALSO BE QUALIFIED INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN
THAT THE RESALE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (2) TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED IN REGULATION
S PROMULGATED UNDER THE SECURITIES ACT ) OUTSIDE THE UNITED STATES OF
AMERICA ACQUIRING THIS CLASS A-5a NOTE IN ACCORDANCE WITH RULE 903 OR
RULE 904 OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH CASE IN ACCORDANCE WITH ANY UNITED STATES STATE SECURITIES
OR "BLUE SKY" LAWS OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION.
UPON ACQUISITION OR TRANSFER OF A CLASS A-5a NOTE OR A BENEFICIAL
INTEREST IN A CLASS A-5a NOTE, AS THE CASE MAY BE, BY, FOR OR WITH THE
ASSETS OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT (A
"PLAN"), SUCH CLASS A-5a NOTE OWNER SHALL BE DEEMED TO HAVE REPRESENTED
THAT SUCH ACQUISITION OR PURCHASE WILL NOT CONSTITUTE OR OTHERWISE
RESULT IN: (I) IN THE CASE OF A PLAN SUBJECT TO SECTION 406 OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), A NON-EXEMPT PROHIBITED TRANSACTION IN VIOLATION OF SECTION 406
OF ERISA OR SECTION 4975 OF THE CODE WHICH IS NOT COVERED BY A CLASS OR
OTHER APPLICABLE EXEMPTION AND (II) IN THE CASE OF A PLAN SUBJECT TO A
SUBSTANTIALLY SIMILAR FEDERAL, STATE, LOCAL OR FOREIGN LAW ("SIMILAR
LAW"), A NON-EXEMPT VIOLATION OF SUCH SUBSTANTIALLY SIMILAR LAW. ANY
TRANSFER FOUND TO HAVE BEEN MADE IN VIOLATION OF SUCH DEEMED
REPRESENTATION SHALL BE NULL AND VOID AND OF NO EFFECT.
THIS CLASS A-5a NOTE AND RELATED DOCUMENTATION MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON AND
PROCEDURES UNDERTAKEN OR REPRESENTED BY THE HOLDER, FOR RESALES AND
OTHER TRANSFERS OF THIS CLASS A-5a NOTE, TO REFLECT ANY CHANGE IN
APPLICABLE LAWS OR REGULATIONS (OR THE INTERPRETATION THEREOF) OR IN
PRACTICES RELATING TO RESALES OR OTHER TRANSFERS OF RESTRICTED
SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND ANY BENEFICIAL OWNER
OF ANY INTEREST THEREIN SHALL BE DEEMED, BY ITS ACCEPTANCE OR PURCHASE
HEREOF, TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT (EACH OF
WHICH SHALL BE CONCLUSIVE AND BINDING ON THE HOLDER HEREOF AND ALL
FUTURE HOLDERS OF THIS CLASS A-5a NOTE AND ANY CLASS A-5a NOTE ISSUED IN
EXCHANGE OR SUBSTITUTION HEREFOR, WHETHER OR NOT ANY NOTATION THEREOF IS
MADE HEREON) AND AGREES TO TRANSFER THIS CLASS A-5a NOTE ONLY IN
ACCORDANCE WITH ANY SUCH AMENDMENT OR SUPPLEMENT IN ACCORDANCE WITH
APPLICABLE LAW IN EFFECT AT THE DATE OF SUCH TRANSFER.]
EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE, THIS GLOBAL NOTE
MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF
THE SECURITIES DEPOSITORY OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO
A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY
NELNET EDUCATION LOAN FUNDING, INC.
STUDENT LOAN ASSET-BACKED NOTE
[SENIOR CLASS 2004-2A[-5A][-5B][-5C]]
[SUBORDINATE CLASS 2004-2B[-1][-2]]
AUCTION RATE NOTES
REGISTERED NO. R-__ REGISTERED $__________
MATURITY DATE INTEREST RATE ORIGINAL ISSUE DATE CUSIP NO. ISIN NO.
_________ 25, ____ Auction Rate April 29, 2004 64031R__ US64031R__
PRINCIPAL SUM: **___________________ DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
C-2
NELNET EDUCATION LOAN FUNDING, INC., a corporation organized under the
corporation laws of the State of Nebraska (the "Issuer," which term includes any
successor corporation under the Indenture of Trust, dated as of April 1, 2004
(the "Indenture"), among the Issuer, Wells Fargo Bank, National Association, as
eligible lender trustee, and Wells Fargo Bank, National Association, as trustee
(the "Indenture Trustee," which term includes any successor trustee under the
Indenture)) for value received, hereby promises to pay to the Registered Owner
(stated above) or registered assigns, the Principal Sum (stated above) [(as
modified by Annex 1 attached hereto)], but solely from the revenues and receipts
hereinafter specified and not otherwise, on the Maturity Date specified above
(subject to the right of prior redemption hereinafter described), upon
presentation and surrender of this note at the designated corporate trust office
of the Indenture Trustee, as paying agent, trustee, authenticating agent and
registrar for the Series 2004-2 Notes, or a duly appointed successor paying
agent, and to pay interest in arrears on said Principal Sum, but solely from the
revenues and receipts hereinafter specified and not otherwise, to the Registered
Owner hereof from the most recent Auction Rate Distribution Date to which
interest has been paid hereon, until the payment of said principal sum in full.
Any capitalized words and terms used as defined words and terms in this
note and not otherwise defined herein shall have the meanings given them in the
Indenture.
This note shall bear interest at an Auction Rate, all as determined in
Appendix B to the Indenture.
The principal of and interest on this note are payable in lawful money
of the United States of America. If the specified date for any payment of
principal or interest accrued to such specified date shall be a day other than a
Business Day then such payment may be made on the next succeeding Business Day,
with the same force and effect as if made on the specified date for such payment
without additional interest.
Interest payable on this note shall be computed on the assumption that
each year contains 360 days and actual days elapsed.
This note is one of a class of notes of the Issuer designated Student
Loan Asset-Backed Notes, [Senior Class 2004-2A[-5a][-5b][-5c]] [Subordinate
Class 2004-2B[-1][-2]] Auction Rate Notes, dated the Original Issue Date, in the
aggregate original principal amount of __________ (the ["Class A[-5a][-5b][-5c]
Notes"] ["Class B[-1][-2] Notes"]) which have been authorized by the Issuer
under a certain resolution, and issued by the Issuer pursuant to the Indenture.
The Issuer is, simultaneously with the [Class A[-5a][-5b][-5c] Notes] [Class
B[-1][-2] Notes], issuing $__________ of its Student Loan Asset-Backed Notes,
Subordinate [Class 2004-2B-1 and Class 2004-2B-2] Auction Rate Notes ([the
"Class B[-1][-2] Notes, and together with the Class B[-1][-2] Notes,] the "Class
B Notes")] and $__________ of its Student Loan Asset-Backed Notes, Senior Class
2004-2A-1, Class 2004-2A-2, Class 2004-2A-3 and Class 2004-2A-4 LIBOR Rate
Notes, Class 2004-2A-5a [Reset Rate Notes and][, Class 2004-2A-5b and Class
2004-2A-5c] Auction Rate Notes (collectively, [together with the Class
A[-5a][-5b][-5c] Notes,] the "Class A Notes," and together with the Class B
Notes, the "Series 2004-2 Notes"). The proceeds of such notes have been used by
the Issuer, together with other moneys of the Issuer, for the purpose of
providing funds to finance the acquisition of student loans, fund a reserve fund
and to pay certain costs and expenses in connection with such notes.
C-3
OPTIONAL, MANDATORY AND EXTRAORDINARY REDEMPTION. This note is subject
to optional, mandatory and extraordinary redemption, all as described in the
Indenture.
NOTICE OF REDEMPTION. Notice of the call for redemption shall be given
by the Indenture Trustee by mailing a copy of the notice at least 10 days prior
to the redemption date to the Registered Owners of the [Class A[-5a][-5b][-5c]
Notes] [Class B[-1][-2] Notes] to be redeemed in whole or in part at the address
of such Registered Owner last showing on the registration books. Failure to give
such notice or any defect therein shall not affect the validity of any
proceedings for the redemption of such Class B Notes for which no such failure
or defect occurs. All [Class A[-5a][-5b][-5c] Notes] [Class B[-1][-2] Notes]
called for redemption will cease to bear interest after the specified redemption
date, provided funds for their payment are on deposit at the place of payment at
the time. If less than all [Class A[-5a][-5b][-5c] Notes] [Class B[-1][-2]
Notes] are to be redeemed, [Class A[-5a][-5b][-5c] Notes] [Class B[-1][-2]
Notes] shall be selected for redemption or purchase as provided in the
Indenture.
The Indenture provides that the Issuer may enter into a derivative
product (a "Derivative Product") between the Issuer and a derivative provider (a
"Counterparty"), as originally executed and as amended or supplemented, or other
interest rate hedge agreement between the Issuer and a Counterparty, as
originally executed and as amended or supplemented. Payments due to a
Counterparty from the Issuer pursuant to the applicable Derivative Product are
referred to herein as "Issuer Derivative Payments," and may be paid on a parity
with interest on any class of Series 2004-2 Notes.
The principal of and interest on the Class A Notes and any Issuer
Derivative Payments which are paid on a parity with interest on the Class A
Notes are payable on a superior basis to such payments on the Class B Notes and
any Issuer Derivative Payments which are paid on a parity with interest on the
Class B Notes; provided, however, that current principal and interest may be
paid on the Class B Notes and any Issuer Derivative Payments which are paid on a
parity with interest on the Class B Notes if all principal and interest payments
due and owing at such time on the Class A Notes and any Issuer Derivative
Payments which are paid on a parity with interest on the Class A Notes have been
previously made or provided for as provided in the Indenture. Except as provided
in the Indenture, principal allocated to pay the Class A Notes will be use to
provide for payment of the Class A-1 Notes, then to provide for payment of the
Class A-2 Notes, then to provide for payment of the Class A-3 Notes, then to
provide for payment of the Class A-4 Notes, then, on a pro rata basis, to
provide for payment of the Class A-5a Notes, the Class A-5b Notes and Class A-5c
Notes, and then to provide for payment of the Class B-1 Notes and Class B-2
Notes.
Reference is hereby made to the Indenture, copies of which are on file
at the designated corporate trust office of the Indenture Trustee, and to all of
the provisions of which any Registered Owner of this note by his acceptance
hereof hereby assents, for definitions of terms; the description of and the
nature and extent of the security for the Series 2004-2 Notes; the Issuer's
student loan origination and acquisition program; the revenues and other money
pledged to the payment of the principal of and interest on the Series 2004-2
Notes; the nature and extent and manner of enforcement of the pledge; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Registered Owners of the Series 2004-2 Notes and any
C-4
Counterparty; the rights and remedies of the Registered Owner hereof with
respect hereto and thereto, including the limitations upon the right of a
Registered Owner hereof to institute any suit, action, or proceeding in equity
or at law with respect hereto and thereto; the rights, duties, and obligations
of the Issuer and the Indenture Trustee thereunder; the terms and provisions
upon which the liens, pledges, charges, trusts, and covenants made therein may
be discharged at or prior to the stated maturity or earlier redemption of this
note, and this note thereafter shall no longer be secured by the Indenture or be
deemed to be Outstanding, as defined in the Indenture, thereunder; and for the
other terms and provisions thereof.
THE SERIES 2004-2 NOTES ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE
SOLELY FROM, AND FURTHER SECURED BY, THE TRUST ESTATE, AS DEFINED IN THE
INDENTURE.
No recourse, either directly or indirectly, shall be had for the payment
of the principal of and interest on this note or any claim based hereon or in
respect hereof or of the Indenture, against the Indenture Trustee, or any
incorporator, director, officer, employee, or agent of the Issuer, nor against
the State of Nebraska, or any official thereof, but the obligation to pay all
amounts required by the Indenture securing this note and the obligation to do
and perform the covenants and acts required of the Issuer therein and herein
shall be and remain the responsibility and obligation of said Issuer, limited as
herein set forth.
Subject to the restrictions specified in the Indenture, this note is
transferable on the note register kept for that purpose by the Indenture
Trustee, as registrar, upon surrender of this note for transfer at the
designated corporate trust office of the Indenture Trustee, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Registered Owner hereof or his attorney
duly authorized in writing, and thereupon one or more new Series 2004-2 Notes of
the same class, Stated Maturity, of authorized denominations, bearing interest
at the same rate, and for the same aggregate principal amount will be issued to
the designated transferee or transferees. At the option of the Registered Owner,
any Series 2004-2 Note may be exchanged for other Series 2004-2 Notes in
authorized denominations upon surrender of the Series 2004-2 Note to be
exchanged at the designated corporate trust office of the Indenture Trustee.
Upon any such presentation for exchange, one or more new Series 2004-2 Notes of
the same class, Stated Maturity, in authorized denominations, bearing interest
at the same rate, and for the same aggregate principal amount as the Series
2004-2 Note or Series 2004-2 Notes so surrendered will be issued to the
Registered Owner of the Series 2004-2 Note or Series 2004-2 Notes so
surrendered; and the Series 2004-2 Note or Series 2004-2 Notes so surrendered
shall thereupon be cancelled by the Indenture Trustee.
[The Class A-5a Notes have not been registered or qualified under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities law. No transfer, sale, pledge or other disposition of any Class A-5a
Note, or any interest therein, shall be made unless the transfer is made
pursuant to an effective registration statement under the Securities Act, or
qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. In the
event that a transfer is made without registration or qualification, the
C-5
Indenture Trustee shall require, in order to assure compliance with such laws,
that the prospective transferor and transferee each certify to the Issuer and
the Indenture Trustee in writing the facts surrounding the transfer. Such
certifications shall be substantially in the forms of Annex 1 and Annex 3 to
Appendix C to the Indenture. Such certifications shall be deemed to have been
made by the transferor and transferee with respect to any transfer of an
interest in a Class A-5a Note that is in book-entry form. None of the Issuer,
the Administrator, the Eligible Lender Trustee or the Indenture Trustee is
obligated to register or qualify the Class A-5a Notes under the Securities Act
or any other securities law or to take any action not otherwise required under
the Indenture to permit the transfer of Class A-5a Notes, or interests therein,
without registration or qualification. Any registered owner of a Class A-5a Note
desiring to effect such transfer is hereby deemed to have indemnified the
Issuer, the Administrator, the Eligible Lender Trustee and the Indenture Trustee
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such applicable federal or state laws.]
Notwithstanding the foregoing, so long as the ownership of the Series
2004-2 Notes is maintained in book-entry form by The Depository Trust Company
(the "Securities Depository") or a nominee thereof, this note may be transferred
in whole but not in part only to the Securities Depository or a nominee thereof
or to a successor Securities Depository or its nominee.
The Issuer, the Indenture Trustee, and any agent of either of them shall
treat the Person in whose name this note is registered as the Registered Owner
hereof (a) on the record date for purposes of receiving timely payment of
interest hereon, and (b) on the date of surrender of this note for purposes of
receiving payment of principal hereof at its stated maturity and (c) for all
other purposes, whether or not this note is overdue, and none of the Issuer, the
Indenture Trustee, or any such agent shall be affected by notice to the
contrary.
To the extent permitted by the Indenture, modifications or alterations
of the Indenture and any supplemental indenture may be made with the consent of
less than all of the Registered Owners of the Series 2004-2 Notes then
outstanding or without the consent of any of such Registered Owners (by reason
of a change in the Higher Education Act or Regulation or to cure ambiguities or
conflicts), but such modification or alteration is not permitted to affect the
maturity date, Stated Maturity, amount, Auction Rate Distribution Date, or rate
of interest on any outstanding Series 2004-2 Notes or affect the rights of the
Registered Owners of less than all of the Series 2004-2 Notes outstanding.
The Registered Owner hereof shall not have the right to demand payment
of this note or any interest hereon out of funds raised or to be raised by
taxation.
Any capitalized term used herein and not otherwise defined herein shall
have the same meaning ascribed to such term in the Indenture unless the context
shall clearly indicate otherwise.
It is hereby certified and recited that all acts and things required by
the laws of the State of Nebraska to happen, exist, and be performed precedent
to and in the issuance of this note, and the passage of said resolution and the
execution of said Indenture, have happened, exist and have been performed as so
required.
C-6
IN TESTIMONY WHEREOF, the Board of Directors of NELNET EDUCATION LOAN
FUNDING, INC. has caused this note to be executed by the manual or facsimile
signatures of the President and Secretary of the Issuer all as of the Original
Issue Date.
NELNET EDUCATION LOAN FUNDING, INC.
By
---------------------------------------
President
By
---------------------------------------
Secretary
C-7
CERTIFICATE OF AUTHENTICATION
This note is one of the [Class A[-5a][-5b][-5c] Notes] [Class
2004-2B[-1][-2] Notes] designated therein and described in the within-mentioned
Indenture.
WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Indenture Trustee
By
---------------------------------------
Authorized Signatory
Authentication Date:
C-8
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto __________ (Social Security or other identifying number __________) the
within note and all rights thereunder and hereby irrevocably appoints __________
attorney to transfer the within note on the books kept for registration thereof,
with full power of substitution in the premises.
Dated: SIGNED:
----------------- ------------------------------------
NOTICE: The signature on this Assignment must
correspond with the name of the Registered Owner
as it appears on the face of the within note in
every particular.
Signature Guaranteed by:
- ----------------------------
Signature(s) must be guaranteed by an eligible
guarantor institution pursuant to Securities and
Exchange Commission Rule 17Ad-15 that is a
participant in a signature guarantor program
recognized by the Indenture Trustee
C-9
[ANNEX 1
SCHEDULE OF EXCHANGES IN GLOBAL NOTE
The following exchanges of a part of this Global Certificate have been
made:
- ---------- ------------------- ---------------- -------------------- ------------
Amount of Principal Amount of
Amount of Decrease Increase in this Global Signature of
in Principal Amount Principal Amount Certificate Authorized
of this Global of this Global following such Officer of
Date of Certificate Certificate Decrease (or Indenture
Exchange Increase) Trustee]
- ---------- ------------------- ---------------- -------------------- ------------
C-10
EXHIBIT D
NOTICE OF PAYMENT DEFAULT
NELNET EDUCATION LOAN FUNDING, INC.
STUDENT LOAN ASSET-BACKED NOTES
[SENIOR CLASS 2004-2A[-5A][-5B][-5C]]
[SUBORDINATE CLASS 2004-2B[-1][-2]]
AUCTION RATE NOTES
NOTICE IS HEREBY GIVEN that a Payment Default has occurred and is
continuing with respect to the Auction Rate Notes identified above. The next
Auction for the Auction Rate Notes will not be held. The Auction Rate for the
Auction Rate Notes for the next succeeding Accrual Period shall be the
Non-Payment Rate.
WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Indenture Trustee
Dated: By
--------------- ------------------------------------
EXHIBIT E
NOTICE OF CURE OF PAYMENT DEFAULT
NELNET EDUCATION LOAN FUNDING, INC.
STUDENT LOAN ASSET-BACKED NOTES
[SENIOR CLASS 2004-2A[-5A][-5B][-5C]]
[SUBORDINATE CLASS 2004-2B[-1][-2]]
AUCTION RATE NOTES
NOTICE IS HEREBY GIVEN that a Payment Default with respect to the
Auction Rate Notes identified above has been waived or cured. The next Auction
Rate Distribution Date is __________________________ and the Auction Date is
__________________________.
WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Indenture Trustee
Dated: By
-------------- ---------------------------------------
EXHIBIT F
NOTICE OF PROPOSED CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
NELNET EDUCATION LOAN FUNDING, INC.
STUDENT LOAN ASSET-BACKED NOTES
[SENIOR CLASS 2004-2A[-5A][-5B][-5C]]
[SUBORDINATE CLASS 2004-2B[-1][-2]]
AUCTION RATE NOTES
Notice is hereby given that the Issuer proposes to change the length of
one or more Auction Periods pursuant to the Indenture of Trust, as amended (the
"Indenture") as follows:
1. The change shall take effect on _______________, the Interest Rate
Adjustment Date for the next Auction Period (the "Effective Date").
2. The Auction Period Adjustment in Paragraph 1 shall take place only if
(a) the Indenture Trustee and the Auction Agent receive, by 11:00 a.m., eastern
time, on the Business Day before the Auction Date for the Auction Period
commencing on the Effective Date, a certificate from the Issuer, as required by
the Indenture authorizing the change in length of one or more Auction Periods
and (b) Sufficient Bids exist on the Auction Date for the Auction Period
commencing on the Effective Date.
3. If the condition referred to in (a) above is not met, the Auction
Rate for the Auction Period commencing on the Effective Date will be determined
pursuant to the Auction Procedures and the Auction Period shall be the Auction
Period determined without reference to the proposed change. If the condition
referred to in (a) is met but the condition referred to in (b) above is not met,
the Auction Rate for the Auction Period commencing on the Effective Date shall
be the Maximum Rate and the Auction Period shall be the Auction Period
determined without reference to the proposed change.
4. It is hereby represented, upon advice of the Auction Agent for the
[Class 2004-2A[-5a][-5b][-5c]] [Class 2004-2B[-1][-2] Notes] described herein,
that there were Sufficient Bids for such [Class 2004-2A[-5a][-5b][-5c]] [Class
2004-2B[-1][-2] Notes] Notes at the Auction immediately preceding the date of
this Notice.
5. Terms not defined in this Notice shall have the meanings set forth in
the Indenture entered into in connection with the [Class 2004-2A[-5a][-5b][-5c]]
[Class 2004-2B[-1][-2] Notes].
NELNET EDUCATION LOAN FUNDING, INC.
Dated: By
-------------------- ----------------------------------------
EXHIBIT G
NOTICE ESTABLISHING CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
NELNET EDUCATION LOAN FUNDING, INC.
STUDENT LOAN ASSET-BACKED NOTES
[SENIOR CLASS 2004-2A[-5A][-5B][-5C]]
[SUBORDINATE CLASS 2004-2B[-1][-2]]
AUCTION RATE NOTES
Notice is hereby given that the Issuer hereby establishes new lengths
for one or more Auction Periods pursuant to the Indenture of Trust, as amended:
1. The change shall take effect on _______________, the Interest Rate
Adjustment Date for the next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, the Interest
Rate Adjustment Date shall be _______________, or the next succeeding Business
Day if such date is not a Business Day.
3. For Auction Periods occurring after the Auction Period commencing on
the Effective Date, the Interest Rate Adjustment Date shall be
[_______________(date) and every ______________(number) ______________(day of
week) thereafter] [every ______________(number) ______________(day of week)
after the date set forth in paragraph 2 above], or the next Business Day if any
such day is not a Business Day; provided, however, that the length of subsequent
Auction Periods shall be subject to further change hereafter as provided in the
Indenture of Trust.
4. The changes described in paragraphs 2 and 3 above shall take place
only upon delivery of this Notice and the satisfaction of other conditions set
forth in the Indenture of Trust and our prior notice dated _______________
regarding the proposed change.
5. Terms not defined in this Notice shall have the meanings set forth in
the Indenture of Trust relating to the [Class 2004-2A[-5a][-5b][-5c]] [Class
2004-2B[-1][-2] Notes].
NELNET EDUCATION LOAN FUNDING, INC.
Dated: By
------------------- --------------------------------------------
EXHIBIT H
NOTICE OF CHANGE IN AUCTION DATE
NELNET EDUCATION LOAN FUNDING, INC.
STUDENT LOAN ASSET-BACKED NOTES
[SENIOR CLASS 2004-2A[-5A][-5B][-5C]]
[SUBORDINATE CLASS 2004-2B[-1][-2]]
AUCTION RATE NOTES
Notice is hereby given by [ ], as Broker-Dealer for the Auction Rate
Notes, that with respect to the Auction Rate Notes, the Auction Date is hereby
changed as follows:
1. With respect to [Class 2004-2A[-5a][-5b][-5c]] [Class 2004-2B[-1][-2]
Notes], the definition of "Auction Date" shall be deemed amended by substituting
"_______________(number) Business Day" in the second line thereof and by
substituting "_______________(number) Business Days" for "two Business Days" in
subsection (d) thereof.
2. This change shall take effect on _______________ which shall be the
Auction Date for the Auction Period commencing on _______________.
3. The Auction Date for the [Class 2004-2A[-5a][-5b][-5c]] [Class
2004-2B[-1][-2] Notes] shall be subject to further change hereafter as provided
in the Indenture of Trust.
4. Terms not defined in this Notice shall have the meaning set forth in
the Indenture of Trust, as amended, relating to the [Class
2004-2A[-5a][-5b][-5c]] [Class 2004-2B[-1][-2] Notes].
[BROKER-DEALER], as Broker-Dealer
Dated: By
----------------------- --------------------------------------
EXHIBIT I
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 April 1, 2004,
as amended (the "Indenture"), among Nelnet Student Loan Funding, Inc. (the
"Issuer"), Wells Fargo Bank, National Association, as indenture trustee (the
"Indenture Trustee"), and Wells Fargo Bank, National Association, as 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
and the Student Loan Purchase Agreement. 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 paragraphs (a), (c), (d), (e), (g) and (h)
have been received and are being retained, on your behalf, by the Issuer or a
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;
I-1
(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 corresponding Guarantee Agreement is in effect
with respect thereto; (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; (iv) the acquisition of the Acquired Eligible Loans does
not contravene the provisions of Section 5.02 of the Indenture; and (v)
the purchase price paid for the Acquired Eligible Loans is reasonably
equal to the fair market value of such 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.
I-2
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 corresponding Guarantee Agreement is in
effect with respect thereto.
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 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
-----------------------------------
I-3
SCHEDULE A
ELIGIBLE LOANS TO BE ACQUIRED
I-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 April 1, 2004
(as amended, the "Indenture"), among Nelnet Education Loan Funding, Inc. as
issuer (the "Issuer"), Wells Fargo Bank, National Association, as indenture
trustee (the "Indenture Trustee") and Wells Fargo Bank, National Association, as
eligible lender trustee (the "Eligible Lender 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 Indenture 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 Indenture Trustee to release the Acquired
Eligible Loans from the security interest granted by the Issuer to Wells Fargo
Bank, National Association 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, National Association,
as trustee under the Prior Financing (the "Prior Financing Trustee"). The Issuer
has satisfied the applicable conditions for release of such Eligible Loans from
the Prior Financing. The Prior Financing 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 Indenture Trustee to acquire the Acquired Eligible Loans as
Financed Eligible Loans pursuant to the Indenture immediately upon their release
from the Prior Financing. The Indenture 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 Series
2004-2 Notes issued under the Indenture.
I-A-1
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, NATIONAL
ASSOCIATION, as the Prior
Financing Trustee under the Prior
Financing and as Indenture
Trustee under the Indenture
By:
------------------------------------
Title:
---------------------------------
Date:
---------------------------
I-2
EXHIBIT J
FORM OF MONTHLY SERVICING
PAYMENT DATE CERTIFICATE
This Monthly Servicing Payment Date Certificate (this "Certificate") is
being provided by [Nelnet Education Loan Funding, Inc. (the "Issuer")] [National
Education Loan Network, Inc., as Administrator (the "Administrator") to Nelnet
Education Loan Funding, Inc. (the "Issuer")] pursuant to Section 5.05(b) of the
Indenture of Trust, dated as of April 1, 2004 (the "Indenture"), among the
Issuer, Wells Fargo Bank, National Association, as eligible lender trustee, and
Wells Fargo Bank, National Association, as trustee (the "Indenture Trustee").
All capitalized terms used in this Certificate and not otherwise defined shall
have the same meanings as assigned to such terms in the Indenture.
Pursuant to this Certificate, the [Issuer] [Administrator] hereby
directs the Indenture Trustee to distribute to ____________________, by 1:00
p.m. (New York time) on __________, __________ (the "Monthly Servicing Payment
Date"), from and to the extent of the Revenues on deposit in the Collection
Fund, the $__________ Servicing Fee due with respect to the preceding calendar
month.
The Revenues available to pay the Servicing Fee on this Monthly
Servicing Payment Date are equal to $__________.
The [Issuer] [Administrator] hereby certifies that the information
herein is true and accurate in all material respects and that the Indenture
Trustee may conclusively rely on this Certificate with no further duty to
examine or determine the information contained herein.
IN WITNESS WHEREOF, the [Issuer] [Administrator] has caused this
Certificate to be duly executed and delivered as of the date written below.
[NELNET EDUCATION LOAN FUNDING, INC]
[NATIONAL EDUCATION LOAN NETWORK, INC., as
Administrator]
By
---------------------------------------
Authorized Signatory
[DATE]
EXHIBIT K
FORM OF DISTRIBUTION DATE CERTIFICATE
This Distribution Date Certificate (this "Certificate") is being
provided by [Nelnet Education Loan Funding, Inc. (the "Issuer")] [National
Education Loan Network, Inc., as Administrator (the "Administrator") to Nelnet
Education Loan Funding, Inc. (the "Issuer")] pursuant to Section 5.05(c) of the
Indenture of Trust, dated as of April 1, 2004 (the "Indenture"), among the
Issuer, Wells Fargo Bank, National Association, as eligible lender trustee, and
Wells Fargo Bank, National Association, as trustee (the "Indenture Trustee").
All capitalized terms used in this Certificate and not otherwise defined shall
have the same meanings as assigned to such terms in the Indenture.
Pursuant to this Certificate, the [Issuer] [Administrator] hereby
directs the Indenture Trustee to make the following deposits and distributions
to the Persons or to the account specified below by 1:00 p.m. (New York time) on
__________ __, _____ (the "Distribution Date"), to the extent of (1) the amount
of Revenues in the Collection Fund, (2) the amount, if any, required to be
transferred from the Capitalized Interest Fund pursuant to Section 5.03(b) of
the Indenture, (3) the amount, if any, required to be transferred to the
Collection Fund from the Class B Supplemental Reserve Fund pursuant to Section
5.04(b) of the Indenture, (4) the amount, if any, required to be transferred to
the Collection Fund from the Note Payment Fund pursuant to Section 5.06(b) of
the Indenture, (5) the amount, if any, required to be transferred to the
Collection Fund from the Remarketing Fee Fund pursuant to Section 5.07(b) of the
Indenture, (6) the amount, if any, required to be transferred to the Collection
Fund from the Reserve Fund pursuant to Section 5.08(b) of the Indenture and (7)
the amount, if any, required to be transferred to the Collection Fund from the
Supplemental Interest Fund pursuant to Section 5.09(b) of the Indenture. The
Indenture Trustee shall make the following deposits and distributions in the
following order of priority, and the Indenture Trustee shall comply with such
instructions:
(i) (a)The Servicing Fee to the Servicer, $ -
--------------
(b)The Indenture Trustee Fee to the Indenture Trustee, $ -
--------------
(c)The Eligible Lender Trustee Fee to the Eligible Lender Trustee, $ -
--------------
(d)The Auction Agent Fee to the Auction Agent, $ -
--------------
(e)The Broker-Dealer Fees to the Broker-Dealers, $ -
--------------
(f)The Remarketing Fees to the Remarketing Agents; $ -
--------------
(g)Other Program Expenses to the Person due such Program Expenses; and $ -
--------------
(h)The Quarterly Funding Amount to the Remarketing Fee Fund; $ -
--------------
(ii) (a)The Administration Fee to the Administrator; and $ -
--------------
(b)Any unpaid Administration Fees, if any, from prior Quarterly $ -
Distribution Date; --------------
(iii) (a)The Class A-1 Notes Interest Distribution Amount accrued since the $ -
prior Distribution Date to the Class A-1 Interest Account, --------------
(b)The Class A-2 Notes Interest Distribution Amount accrued since the $ -
prior Distribution Date to the Class A-2 Interest Account, --------------
(c)The Class A-3 Notes Interest Distribution Amount accrued since the $ -
prior Distribution Date to the Class A-3 Interest Account, --------------
(d)The Class A-4 Notes Interest Distribution Amount accrued since the $ -
prior Distribution Date to the Class A-4 Interest Account, --------------
(e)The Class A-5a Notes Interest Distribution Amount accrued since the $ -
prior Distribution Date to the Class A-5a Interest Account, --------------
(f)The Class A-5b Notes Interest Distribution Amount accrued since the $ -
prior Distribution Date to the Class A-5b Interest Account, --------------
(g)The Class A-5c Notes Interest Distribution Amount accrued since the $ -
prior Distribution Date to the Class A-5c Interest Account, and --------------
(h)The Issuer Derivative Payments which are paid on a parity with $ -
interest on the Class A Notes which have accrued on each Derivative --------------
Product since the prior Distribution Date to the corresponding
Counterparty Payment Account;
(iv) (a)The Outstanding Amount of the Class A-1 Notes to the Class A-1 $ -
Redemption Account on its Stated Maturity less any amounts on --------------
deposit in the Class A-1 Redemption Account;
(b)The Outstanding Amount of the Class A-2 Notes to the Class A-2 $ -
Redemption Account on its Stated Maturity less any amounts on --------------
deposit in the Class A-2 Redemption Account;
(c)The Outstanding Amount of the Class A-3 Notes to the Class A-3 $ -
Redemption Account on its Stated Maturity less any amounts on --------------
deposit in the Class A-3 Redemption Account;
(d)The Outstanding Amount of the Class A-4 Notes to the Class A-4 $ -
Redemption Account on its Stated Maturity less any amounts on --------------
deposit in the Class A-4 Redemption Account;
(e)The Outstanding Amount of the Class A-5a Notes to the Class A-5a $ -
Redemption Account on its Stated Maturity less any amounts on --------------
deposit in the Class A-5a Redemption Account;
(f)The Outstanding Amount of the Class A-5b Notes to the Class A-5b $ -
Redemption Account on its Stated Maturity less any amounts on --------------
deposit in the Class A-5b Redemption Account; and
(g)The Outstanding Amount of the Class A-5c Notes to the Class A-5c $ -
Redemption Account on its Stated Maturity less any amounts on --------------
deposit in the Class A-5c Redemption Account;
(v) (a)The Class B-1 Notes Interest Distribution Amount accrued since the $ -
prior Distribution Date to the Class B-1 Interest Account, --------------
(b)The Class B-2 Notes Interest Distribution Amount accrued since the $ -
prior Distribution Date to the Class B-2 Interest Account, and --------------
(c)The Issuer Derivative Payments which are paid on a parity with $ -
interest on the Class B Notes which have accrued on each Derivative --------------
Product since the prior Distribution Date to the corresponding
Counterparty Payment Account;
K-2
(vi) The Outstanding Amount of the Class B-1 Notes and the Class B-2 Notes
to the Class B Redemption Account on their Stated Maturity less any $ -
amounts on deposit in the Class B Redemption Account; --------------
(vii) The amount to be distributed to the appropriate Seller or trust
estate from which Eligible Loans were purchased or transferred, an
amount equal to the unpaid interest accrued on such Eligible Loans
Financed with the proceeds of the Series 2004-2 Notes subsequent to $ -
the cut off date for such Eligible Loans but prior to the Closing --------------
Date, until such amount has been paid in full;
(viii) The Supplemental Interest Deposit Amount to the Supplemental Interest $ -
Fund, --------------
(ix) Amounts to be deposited to the Reserve Fund (if necessary to
reinstate the balance of the Reserve Fund up to the Reserve Fund $ -
Requirement); --------------
(x) if the Total Parity Ratio is less than 100.5% or such other
percentage that satisfies the Rating Agency Condition, to the Note $ -
Payment Fund; --------------
(xi) (a)The Reset Rate Notes Carry-over Amount (or if the Class A-5a Notes
have been reset to bear interest at an Auction Rate, the Auction
Rate Notes Carry-over Amount) (and any accrued interest thereon) due $ -
and payable on the Class A-5a Notes to the Class A-5a Interest --------------
Account,
(b)The Auction Rate Notes Carry-over Amount (and any accrued interest
thereon) due and payable on the Class A-5b Notes to the Class A-5b $ -
Interest Account, and --------------
(c)The Auction Rate Notes Carry-over Amount (and any accrued interest
thereon) due and payable on the Class A-5c Notes to the Class A-5c $ -
Interest Account; --------------
(xii) (a)The Auction Rate Notes Carry-over Amount (and any accrued interest
thereon) due and payable on the Class B-1 Notes to the Class B-1 $ -
Interest Account, and --------------
(b)The Auction Rate Notes Carry-over Amount (and any accrued interest
thereon) due and payable on the Class B-2 Notes to the Class B-2 $ -
Interest Account; --------------
(xiii) The unpaid amounts (including any unpaid Termination Payments) due on
any Derivative Products on which Issuer Derivative Payments are paid $ -
on a parity with interest on the Class A Notes Amounts to the --------------
corresponding Counterparty Payment Account;
(xiv) The unpaid amounts (including any unpaid Termination Payments) due on
any Derivative Products on which Issuer Derivative Payments are paid $ -
on a parity with interest on the Class B Notes Amounts to the --------------
corresponding Counterparty Payment Account;
(xv) The amount to be distributed to Nelnet, Inc. to reimburse it for any
payments made by it to the Remarketing Agents for remarketing fees and $ -
expenses; --------------
K-3
(xvi) The amount to be distributed to the Servicer, to repurchase Eligible
Loans that the Issuer is required to repurchase from the Servicer in $ -
accordance with the terms of the Servicing Agreement; --------------
(xvii) Amounts to be deposited to the Class B Supplemental Reserve Fund, the
amount, if any, required by Section 5.04(a) of the Indenture; $ -
(xviii) The amount to be distributed to the Issuer pursuant to Section 5.10 of --------------$
the Indenture; and
(xix) The amount to be transferred to the Note Payment Fund. $ -
--------------
Total Distributions $ -
--------------
Amount on deposit in the Collection Fund on this Distribution Date. $ -
---------------
Current Pool Balance. $ -
---------------
Pursuant to this Certificate, if applicable, the [Issuer]
[Administrator] further hereby directs the Indenture Trustee to withdraw (a)
from the Capitalized Interest Fund for deposit to the Collection Fund pursuant
to Section 5.03(b) of the Indenture an amount equal to $__________, representing
the amount of insufficient Revenues in the Collection Account to make the
transfers required by Section 5.05(c)(i), (ii), (iii), (iv), (v), (viii) and
(ix) of the Indenture, (b) from the Class B Supplemental Reserve Fund for
deposit to the Collection Fund pursuant to Section 5.04(b) of the Indenture an
amount equal to $__________, representing the amount of insufficient Revenues in
the Collection Account to make the transfers required by Section 5.05(c)(v) and
(vi) of the Indenture, (c) from the Note Payment Fund for deposit to the
Collection Fund pursuant to Section 5.06(b) of the Indenture an amount equal to
$__________, representing the amount of insufficient Revenues in the Collection
Account to make the transfers required by Section 5.05(c)(i), (ii), (iii), (iv),
(v), (vi), (viii) and (ix) and (d) from the Reserve Fund for deposit to the
Collection Fund pursuant to Section 5.08(b) of the Indenture an amount equal to
$__________, representing the amount of insufficient Revenues in the Collection
Account to make the transfers required by Section 5.05(c)(i), (ii), (iii) and
(v) of the Indenture.
K-4
The [Issuer] [Administrator] hereby certifies that the information
herein is true and accurate in all material respects and that the Indenture
Trustee may conclusively rely on this Certificate with no further duty to
examine or determine the information contained herein.
IN WITNESS WHEREOF, the [Issuer] [Administrator] has caused this
Certificate to be duly executed and delivered as of the date written below.
[NELNET EDUCATION LOAN FUNDING, INC]
[NATIONAL EDUCATION LOAN NETWORK, INC., as
Administrator]
By
-----------------------------------------
Authorized Signatory
Date
----------------------
K-5
EXHIBIT L
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
L-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, NATIONAL
ASSOCIATION, not individually but as Eligible Lender Trustee (the "Eligible
Lender 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 Eligible Lender Trustee,
desires to purchase from the Seller certain FFELP Loans, title to which will be
held by the Eligible Lender 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 Eligible Lender 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 Eligible Lender 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 April 1, 2004, between the Eligible Lender Trustee and
the Corporation, as amended and supplemented pursuant to the terms thereof.
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"ELIGIBLE LENDER TRUSTEE" means Wells Fargo Bank, National Association,
acting in its capacity as eligible lender trustee or successor eligible lender
trustee under the Trust Agreement or Eligible Lender Trust Agreement, as
applicable, and not in its individual capacity.
"ELIGIBLE LOAN" means a FFELP Loan authorized to be acquired by the
Corporation by and through the Indenture 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 Guaranty 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
Guaranty Agency and federal interest subsidy payments and Special Allowance
Payments, if applicable, to holders of qualifying student loans guaranteed by
any Guaranty Agency.
"FFELP LOANS" means those specific loans acquired by the Eligible Lender
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 Higher Education Act or insured by the Secretary of Health and Human
Services pursuant to the Public Health Services 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 Eligible Lender 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 Eligible Lender Trustee, as eligible lender trustee and indenture trustee
thereunder, YC SUSI Trust, 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, 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, National Association, as
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successor trustee; (e) Trust Indenture between NEBHELP, INC. as assignee and
Wells Fargo Bank, National Association, as successor trustee, dated as of
November 15, 1985; (f) Trust Indenture between NEBHELP, INC. as assignee and
Wells Fargo Bank, National Association, as successor trustee, dated as of July
1, 1988; (g) Trust Indenture between NEBHELP, INC. as assignee and Wells Fargo
Bank, National Association, as successor trustee, dated as of September 1, 1993;
(h) Trust Indenture between NEBHELP, INC. as assignee and Wells Fargo Bank,
National Association, as successor trustee, dated as of May 1, 1997; and (i) the
Indenture of Trust, dated as of June 1, 2003, among the Corporation, Wells Fargo
Bank, National Association, as indenture trustee, and Wells Fargo Bank, National
Association, as eligible lender trustee; 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 a Guaranty Agency, in accordance with the terms and conditions of
the Guaranty Agency's 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 a Guaranty 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.
"GUARANTY 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 Eligible Lender Trustee on
behalf of the Corporation.
"GUARANTEE AGREEMENT" means the Federal Contracts, an agreement between
a Guaranty Agency and either the Eligible Lender Trustee or the Seller providing
for the Guarantee by such Guaranty Agency of the principal of and accrued
interest on Eligible Loans to Borrowers, made or acquired by the Eligible Lender
Trustee or the Seller from time to time, and any other similar guarantee or
agreement issued by a Guaranty Agency to the Corporation or the Eligible Lender
Trustee pertaining to Financed Eligible Loans.
"GUARANTEED LOANS" means FFELP Loans that are Guaranteed.
"GUARANTEE PROGRAM" means a Guaranty Agency's student loan guaranty
program pursuant to which such Guaranty 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.
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"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 Eligible Lender 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 Guaranty 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.
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"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 Eligible Lender 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 Eligible Lender 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, 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, National Association, as successor trustee; (e) Trust Indenture
between NEBHELP, INC. as assignee and Wells Fargo Bank, National Association, as
successor trustee, dated as of November 15, 1985; (f) Trust Indenture between
NEBHELP, INC. as assignee and Wells Fargo Bank, National Association, as
successor trustee, dated as of July 1, 1988; (g) Trust Indenture between
NEBHELP, INC. as assignee and Wells Fargo Bank, National Association, as
trustee, dated as of September 1, 1993; (h) Trust Indenture between NEBHELP,
INC. as assignee and Wells Fargo Bank, National Association, as successor
trustee, dated as of May 1, 1997; and (i) the Indenture of Trust, dated as of
June 1, 2003, among the Corporation, Wells Fargo Bank, National Association, as
indenture trustee, and Wells Fargo Bank Minnesota, National Association, as
eligible lender trustee.
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 Eligible Lender Trustee, acting on behalf of the
Corporation, and the Corporation, acting by and through the Eligible
Lender Trustee under the applicable Trust Agreement or Eligible Loan
Trust Agreement, has purchased from the Seller the FFELP Loans which are
Eligible Loans and specified in Annex I to this Loan Purchase Agreement;
and (ii) agrees to sell to the Eligible Lender Trustee, acting on behalf
of the Corporation, and the Corporation, acting by and through the
Eligible Lender 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
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portfolios of FFELP Loans may be purchased from the Seller hereunder by
the Corporation by and through the Eligible Lender 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
Eligible Lender 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 in the related Loan Transfer Addendum. 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 Eligible Lender 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 hereto. 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 Eligible Lender
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
Eligible Lender 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 Eligible
Lender 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 Guaranty 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.
(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.
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(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 Eligible
Lender Trustee with respect to the Trust Agreement or Zions First
National Bank as Eligible Lender 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 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 Eligible Lender 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 Eligible Lender 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 April 29, 2004.
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 repurchased by the Seller and 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 Eligible Lender Trustee to be
endorsed by the Eligible Lender 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 Guaranty 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 Eligible Lender
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
Eligible Lender 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 Eligible Lender 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 Eligible Lender 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 Eligible Lender
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 Eligible Lender 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
L-13
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
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
Eligible Lender 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 is 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 Eligible
Lender Trustee at: Wells Fargo Bank, 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.
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(m) Acts to be taken by the Corporation with respect to acquiring
and holding title to FFELP Loans hereunder shall be taken by the
Eligible Lender Trustee as directed by the Corporation, which qualifies
as an "eligible lender" trustee under the Higher Education Act, and all
references herein to the Corporation shall incorporate by this reference
the fact that the Eligible Lender 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 Eligible Lender
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 Eligible Lender 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 Eligible Lender 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 Eligible Lender
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 Eligible Lender 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 Eligible Lender
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 Eligible
Lender 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 Eligible Lender 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 Eligible Lender 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 Eligible Lender 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 Eligible Lender 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 Eligible Lender
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.
L-16
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 Eligible Lender 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 Guaranty Agency;
(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
L-17
(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).
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.
L-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
------------------------------------
L-19
EXHIBIT A TO EXHIBIT L
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 Eligible Lender Trustee, as eligible
lender 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.
L-20
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
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
------------------------------------
L-21
EXHIBIT B TO EXHIBIT L
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 Guaranty 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 Guaranty 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 Guaranty 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 Guaranty Agency.
L-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]
L-23
EXHIBIT C TO EXHIBIT L
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, National Association, as
eligible lender trustee (the "Eligible Lender Trustee") under the Trust
Agreement between the Eligible Lender 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 Eligible Lender 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 Eligible Lender 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]
L-24
EXHIBIT D TO EXHIBIT L
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, National Association,
solely in its capacity as eligible lender trustee (the "Eligible Lender
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 Guaranty 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 Guaranty 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 Eligible Lender 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
-------------------------------------
L-25
EXHIBIT E TO EXHIBIT L
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 Eligible
Lender 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 Guaranty 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.
L-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 Guaranty 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 Guaranty
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.
L-27
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
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, [sss], 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, [sss], 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.
L-28
EXHIBIT F TO EXHIBIT L
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]
-----------------------------------
L-29