Exhibit 4.1
INDENTURE OF TRUST
by and between
NELNET STUDENT LOAN TRUST 2007-2
and
ZIONS FIRST NATIONAL BANK,
as Trustee and as Eligible Lender Trustee
Dated as of August 1, 2007
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND USE OF PHRASES.................................................3
ARTICLE II
NOTE DETAILS AND FORM OF NOTES
Section 2.01. Note Details................................................28
Section 2.02. Execution, Authentication and Delivery of Notes.............28
Section 2.03. Registration, Transfer and Exchange of Notes; Persons
Treated as Registered Owners................................29
Section 2.04. Lost, Stolen, Destroyed and Mutilated Notes.................30
Section 2.05. Trustee's Authentication Certificate........................30
Section 2.06. Cancellation and Destruction of Notes by the Trustee........30
Section 2.07. Temporary Notes.............................................30
Section 2.08. Issuance of Notes...........................................31
Section 2.09. Definitive Notes............................................31
Section 2.10. Payment of Principal and Interest...........................32
Section 2.11. Redemption of the Notes.....................................33
Section 2.12. Book-Entry Notes............................................35
Section 2.13. Notices to Clearing Agency..................................38
Section 2.14. Transfer Restrictions.......................................38
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.........................................43
ARTICLE IV
PROVISIONS APPLICABLE TO THE NOTES; DUTIES OF THE ISSUER
Section 4.01. Payment of Principal and Interest...........................44
Section 4.02. Covenants as to Additional Conveyances......................44
Section 4.03. Further Covenants of the Issuer.............................44
Section 4.04. Enforcement of Master Servicing Agreement and Subservicing
Agreements..................................................45
Section 4.05. Procedures for Transfer of Funds............................46
Section 4.06. Additional Covenants with Respect to the Higher
Education Act...............................................47
Section 4.07. Financed Eligible Loans; Collections Thereof;
Assignment Thereof..........................................48
Section 4.08. Appointment of Agents, Direction to Trustee, Etc............48
Section 4.09. Capacity to Sue.............................................49
Section 4.10. Continued Existence; Successor to Issuer....................49
Section 4.11. Amendment of Student Loan Purchase Agreements...............49
Section 4.12. Representations; Negative Covenants.........................49
Section 4.13. Additional Covenants........................................55
Section 4.14. Providing of Notice.........................................56
Section 4.15. Certain Reports.............................................56
Section 4.16. Statement as to Compliance..................................56
Section 4.17. Representations of the Issuer Regarding the Trustee's
Security Interest...........................................56
Section 4.18. Further Covenants of the Issuer Regarding the Trustee's
Security Interest...........................................58
Section 4.19. Borrower Incentive Programs.................................58
Section 4.20. Statements to Noteholders...................................58
ARTICLE V
FUNDS
Section 5.01. Creation and Continuation of Funds and Accounts.............59
Section 5.02. Acquisition Fund............................................59
Section 5.03. Capitalized Interest Fund...................................61
Section 5.04. Collection Fund.............................................61
Section 5.05. Reserve Fund................................................64
Section 5.06. Administration Fund.........................................66
Section 5.07. Debt Service Fund...........................................66
Section 5.08. Department Rebate Fund......................................69
Section 5.09. Investment of Funds Held by Trustee.........................69
Section 5.10. Release.....................................................70
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default Defined...................................71
Section 6.02. Remedy on Default; Possession of Trust Estate...............72
Section 6.03. Remedies on Default; Advice of Counsel......................73
Section 6.04. Remedies on Default; Sale of Trust Estate...................73
Section 6.05. Appointment of Receiver.....................................74
Section 6.06. Restoration of Position.....................................75
Section 6.07. Application of Sale Proceeds................................75
Section 6.08. Acceleration of Maturity; Rescission and Annulment..........75
Section 6.09. Remedies Not Exclusive......................................76
Section 6.10. Collection of Indebtedness and Suits for Enforcement
by Trustee..................................................76
Section 6.11. Direction of Trustee........................................76
Section 6.12. Right to Enforce in Trustee.................................77
Section 6.13. Physical Possession of Obligations Not Required.............77
Section 6.14. Waivers of Events of Default................................78
ARTICLE VII
THE TRUSTEE
Section 7.01. Acceptance of Trust.........................................78
Section 7.02. Recitals of Others..........................................79
Section 7.03. As to Filing of Indenture...................................79
Section 7.04. Trustee May Act Through Agents..............................79
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Section 7.05. Indemnification of Trustee..................................79
Section 7.06. Trustee's Right to Reliance.................................80
Section 7.07. Compensation of Trustee.....................................81
Section 7.08. Resignation of Trustee......................................81
Section 7.09. Removal of Trustee..........................................82
Section 7.10. Successor Trustee...........................................82
Section 7.11. Manner of Vesting Title in Trustee..........................83
Section 7.12. Additional Covenants by the Trustee to Conform to the
Higher Education Act........................................83
Section 7.13. Right of Inspection.........................................83
Section 7.14. Limitation with Respect to Examination of Reports...........83
Section 7.15. Servicing Agreements........................................84
Section 7.16. Additional Covenants of Trustee.............................84
Section 7.17. Notices to Rating Agencies..................................84
Section 7.18. Merger of the Trustee.......................................85
Section 7.19. Receipt of Funds from Master Servicer or a Subservicer......85
Section 7.20. Special Circumstances Leading to Resignation of Trustee.....85
Section 7.21. Survival of Trustee's Rights to Receive Compensation,
Reimbursement and Indemnification...........................85
Section 7.22. Corporate Trustee Required; Eligibility; Conflicting
Interests...................................................86
Section 7.23. Trustee May File Proofs of Claim............................86
Section 7.24. No Petition.................................................87
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.01. Supplemental Indentures Not Requiring Consent of
Registered Owners...........................................87
Section 8.02. Supplemental Indentures Requiring Consent of
Registered Owners...........................................88
Section 8.03. Rights of Trustee...........................................89
Section 8.04. Consent of Auction Agents...................................89
Section 8.05. Consent of Broker-Dealers...................................89
Section 8.06. Additional Limitation on Modification of Indenture..........89
ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Notices.....................................................90
Section 9.02. Covenants Bind Issuer.......................................91
Section 9.03. Lien Created................................................91
Section 9.04. Severability of Lien........................................91
Section 9.05. Consent of Registered Owners Binds Successors...............91
Section 9.06. Nonliability of Persons; No General Obligation..............92
Section 9.07. Nonpresentment of Notes or Interest Checks..................92
Section 9.08. Security Agreement..........................................92
Section 9.09. Laws Governing..............................................92
Section 9.10. Severability................................................92
Section 9.11. Exhibits....................................................92
Section 9.12. Non-Business Days...........................................93
Section 9.13. Parties Interested Herein...................................93
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Section 9.14. Obligations Are Limited Obligations.........................93
Section 9.15. Limitations on Counterparty Rights..........................93
Section 9.16. Aggregate Principal Amount of Obligations...................93
Section 9.17. Financed Eligible Loans.....................................93
Section 9.18. Concerning the Delaware Trustee.............................93
ARTICLE X
PAYMENT AND CANCELLATION OF NOTES AND SATISFACTION OF INDENTURE
Section 10.01. Trust Irrevocable...........................................94
Section 10.02. Satisfaction of Indenture...................................94
Section 10.03. Optional Purchase of All Financed Eligible Loans............96
Section 10.04. Auction of Financed Eligible Loans..........................96
Section 10.05. Cancellation of Paid Notes..................................97
APPENDIX A CERTAIN TERMS AND PROVISIONS OF THE AUCTION RATE NOTES
ATTACHMENT A NOTICE OF PAYMENT DEFAULT
ATTACHMENT B NOTICE OF CURE OF PAYMENT DEFAULT
ATTACHMENT C NOTICE OF PROPOSED CHANGE IN LENGTH OF ONE OR MORE
AUCTION PERIODS
ATTACHMENT D NOTICE ESTABLISHING CHANGE IN LENGTH OF ONE OR MORE
AUCTION PERIODS
ATTACHMENT E NOTICE OF CHANGE IN AUCTION DATE
EXHIBIT A ELIGIBLE LOAN ACQUISITION CERTIFICATE
EXHIBIT B-1 FORM OF [REGULATION S] [RULE 144A] CLASS A-1L NOTE
EXHIBIT B-2 FORM OF [REGULATION S] [RULE 144A] CLASS A-2L NOTE
EXHIBIT B-3 FORM OF [REGULATION S] [RULE 144A] CLASS A-3L NOTE
EXHIBIT B-4 FORM OF CLASS A-4AR-1 NOTE
EXHIBIT B-5 FORM OF CLASS A-4AR-2 NOTE
EXHIBIT B-6 FORM OF CLASS B-1 NOTE
EXHIBIT B-7 FORM OF CLASS B-2 NOTE
EXHIBIT C FORM OF ADMINISTRATOR'S MONTHLY DISTRIBUTION DATE CERTIFICATE
EXHIBIT D REPORT TO REGISTERED OWNERS
EXHIBIT E FORM OF INVESTMENT LETTER FOR QUALIFIED INSTITUTIONAL BUYERS
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST, dated as of August 1, 2007 (this "Indenture"),
is by and between NELNET STUDENT LOAN TRUST 2007-2 (the "Issuer"), a statutory
trust duly organized and existing under the laws of the State of Delaware (the
"State"), and ZIONS FIRST NATIONAL BANK, a national banking association duly
organized and operating under the laws of the United States of America, as
trustee hereunder (together with its successors, the "Trustee") and as eligible
lender trustee (together with its successors, the "Eligible Lender Trustee")
under the Eligible Lender Trust Agreement (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 statutory
trust under the laws of the State and that by proper action has duly authorized
the execution and delivery of this Indenture, which Indenture provides for the
payment of student loan asset-backed notes (the "Notes") and the payments to any
Counterparty; and
WHEREAS, the 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 Notes (the Registered Owners evidencing their consent by their
acceptance of the Notes) and any Counterparty (the Counterparty evidencing its
consent by its execution and delivery of a Derivative Product) 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 as applicable the Eligible Lender
Trustee, in consideration of the premises and acceptance by the Trustee of the
trusts herein created, of the purchase and acceptance of the Notes by the
Registered Owners thereof, of the execution and delivery of any Derivative
Product by a Counterparty and the Issuer and the acknowledgement thereof by the
Trustee, of the acknowledgement by the Trustee of the Granting Clauses set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, do hereby GRANT, CONVEY, PLEDGE,
TRANSFER, ASSIGN AND DELIVER to the Trustee, for the benefit of the Registered
Owners of the 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 the moneys, rights and properties
described in the granting clauses A through F below (the "Trust Estate"), as
follows:
GRANTING CLAUSE A
The Available Funds (other than moneys 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 under
Section 5.01 hereof, including all proceeds thereof and all income thereon;
GRANTING CLAUSE C
The Financed Eligible Loans (other than Financed Eligible Loans released
from the lien of the Trust Estate as provided herein) and all obligations of the
obligors thereunder including all moneys accrued and paid thereunder on or after
the Cutoff Date;
GRANTING CLAUSE D
The rights of the Issuer and/or the Eligible Lender Trustee, as
applicable, in and to the Eligible Lender Trust Agreement, the Master Servicing
Agreement, the Subservicing Agreements, the Student Loan Purchase Agreements,
the Administration Agreement, the Custodian Agreements, the Auction Agent
Agreement, the Broker-Dealer Agreements and the Guarantee Agreements as the same
relate to the Financed Eligible Loans;
GRANTING CLAUSE E
The rights of the Issuer in and to any Derivative Product; provided,
however, that this Granting Clause E shall not be for the benefit of a
Counterparty with respect to its Derivative Product; and
GRANTING CLAUSE F
All proceeds from any property described in these Granting Clauses and
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 Trustee as additional security hereunder.
TO HAVE AND TO HOLD the Trust Estate, whether now owned or held or
hereafter acquired, unto the Trustee and its successors or assigns;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for
the equal and proportionate benefit and security of all present and future
Registered Owners of the Notes, without preference of any Note over any other,
except as provided herein, and for enforcement of the payment of the Notes in
accordance with their terms, and all other sums payable hereunder (including
payments due and payable to any Counterparty) or on the Notes, and for the
performance of and compliance with the obligations, covenants and conditions of
this Indenture, as if all the Notes and other Obligations (as defined herein) at
any time Outstanding had been executed and delivered simultaneously with the
execution and delivery of this Indenture;
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall
well and truly pay, or cause to be paid, the principal of the Notes and the
interest due and to become due thereon, or provide fully for payment thereof as
herein provided, at the times and in the manner mentioned in the Notes according
to the true intent and meaning thereof, and shall make all required payments
into the Funds and Accounts as required under Article V hereof, or shall
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provide, as permitted hereby, for the payment thereof by depositing with the
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 (other than Sections 4.12, 4.13 (for a
period of 90 days after the Issuer has paid or provided for the payments of the
amounts described herein) and 7.05 hereof) 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
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth below or in Appendix A, as applicable, unless the context
clearly requires otherwise:
"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 the Costs
of Issuance Account, the Prefunding Account and any additional Accounts and
Subaccounts created therein.
"ADJUSTED POOL BALANCE" shall mean, for any Quarterly Distribution Date
as determined by the Administrator, (a) if the Pool Balance as of the last day
of the preceding Collection Period is greater than 40% of the Initial Pool
Balance, the sum of such Pool Balance and the Specified Reserve Fund Balance for
that Quarterly Distribution Date; or (b) if the Pool Balance as of the last day
of the preceding Collection Period is less than or equal to 40% of the Initial
Pool Balance, that Pool Balance.
"ADMINISTRATION AGREEMENT" shall mean the Administration Agreement,
dated as of August 1, 2007, among the Issuer, the Administrator, the Trustee and
the Delaware Trustee, as supplemented and amended.
"ADMINISTRATION FEE" shall mean an amount equal to 0.05% per annum,
based on the aggregate principal amount of the Pool Balance at any time, as
determined by the Administrator.
"ADMINISTRATION FUND" shall mean the Fund by that name created in
Section 5.01(b) hereof and further described in Section 5.06 hereof, including
any additional Accounts and Subaccounts created therein.
"ADMINISTRATOR" shall mean National Education Loan Network, Inc. in its
capacity as administrator of the Issuer and the Financed Eligible Loans, or any
successor thereto in accordance with the Administration Agreement.
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"AFFILIATE" shall mean, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AUCTION RATE NOTES" shall mean, collectively, the Class A-4AR-1 Notes,
the Class A-4AR-2 Notes, the Class B-1 Notes and the Class B-2 Notes.
"AUTHORIZED DENOMINATIONS" means (a) with respect to a Class of the
LIBOR Rate Notes, minimum denominations of $100,000 plus integral multiples of
$1,000 in excess thereof and (b) with respect to a Class of the Auction Rate
Notes, $50,000 and any integral multiple thereof.
"AUTHORIZED REPRESENTATIVE" shall mean, when used with reference to the
Issuer, the Administrator and any Person duly authorized by the Trust Agreement
to act on the Issuer's behalf.
"AVAILABLE FUNDS" shall mean, with respect to a Monthly Distribution
Date, the sum of the following amounts received to the extent not previously
distributed: (a) all collections received by the Master Servicer or any
Subservicer on the Financed Eligible Loans (including late fees received by the
Master Servicer or any Subservicer with respect to the Financed Eligible Loans
and payments from any Guaranty Agency received with respect to the Financed
Eligible Loans but net of (i) any collections in respect of principal on the
Financed Eligible Loans applied by the Issuer to repurchase guaranteed loans
from the Guaranty Agencies or the Master Servicer or any Subservicer in
accordance with its Guarantee Agreement, the Master Servicing Agreement or the
related Subservicing Agreement, as applicable; (ii) amounts required by the
Higher Education Act to be paid to the Department (including, but not limited
to, rebate fees owed with respect to consolidation loans and any Department
Rebate Interest Amounts to be deposited into the Department Rebate Fund or paid
directly to the Department) 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; and (iii) any proceeds used to purchase
Eligible Loans which constitute "add-on consolidation loans" (to the extent
funds are not available therefore in the Prefunding Account of the Acquisition
Fund); (b) any Interest Benefit Payments and Special Allowance Payments received
by the Trustee or the Eligible Lender Trustee with respect to Financed Eligible
Loans; (c) all Liquidation Proceeds; (d) the aggregate Purchase Amounts received
for Financed Eligible Loans repurchased by the Seller or purchased by the Master
Servicer or a Subservicer or for serial loans sold to another eligible lender
pursuant to the Master Servicing Agreement or the related Subservicing
Agreement; (e) the aggregate amounts, if any, received from the Seller, the
Master Servicer or any Subservicer, as the case may be, as reimbursement of
non-guaranteed interest amounts, or lost Interest Benefit Payments and Special
Allowance Payments, with respect to the Financed Eligible Loans pursuant to a
Student Loan Purchase Agreement, the Master Servicing Agreement or a
Subservicing Agreement, respectively; (f) other amounts received by the Master
Servicer or a Subservicer pursuant to its role as Master Servicer or Subservicer
under the Master Servicing Agreement or the related Subservicing Agreement,
respectively, and payable to the Issuer in connection therewith; (g) all
interest earned or gain realized from the investment of amounts in any Fund or
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Account; (h) any payments received under the Derivative Products from the
Counterparties in respect of such Monthly Distribution Date and (i) any other
amounts deposited to the Collection Fund. "Available Funds" shall be determined
pursuant to the terms of this definition by the Administrator and reported to
the Trustee. Amounts described in clause (a)(i), (ii) and (iii) hereof shall be
paid by the Trustee upon receipt of a written direction from the Administrator.
The Trustee may conclusively rely on such determinations without further duty to
review or examine such information.
"BASIC DOCUMENTS" shall mean the Trust Agreement, this Indenture, the
Master Servicing Agreement, the Subservicing Agreements, the Administration
Agreement, the Student Loan Purchase Agreements, the Custodian Agreements, the
Guarantee Agreements, the Eligible Lender Trust Agreement, the Derivative
Products, the Auction Agent Agreement, the Broker-Dealer Agreements and other
documents and certificates delivered in connection with any thereof.
"BENEFICIAL OWNER" means the owner of a Beneficial Ownership Interest in
the Notes.
"BENEFICIAL OWNERSHIP INTEREST" means the right to receive payments and
notices with respect to a Class of the Notes which are held by a Clearing Agency
under a Book-Entry System.
"BUSINESS DAY" shall mean (a) for purposes of the LIBOR Rate Notes, (i)
for purposes of calculating LIBOR, any day on which banks in New York, New York
and London, England are open for the transaction of international business; and
(ii) for all other purposes, any day other than a Saturday, a Sunday, a holiday
or any other day on which banks located in New York, New York or the city in
which the principal office of the Trustee is located, are authorized or
permitted by law, regulation or executive order to close; and (b) for the
purposes of the Auction Rate Notes, the definition of "Business Day" set forth
in Appendix A hereto.
"CAPITALIZED INTEREST FUND" shall mean the Fund by that name created in
Section 5.01(c) hereof and further described in Section 5.03 hereof.
"CARRYOVER SERVICING FEES" shall have the meaning assigned to such term
in the Master Servicing Agreement.
"CERTIFICATE OF INSURANCE" shall mean any Certificate evidencing that a
Financed Eligible Loan is Insured pursuant to a Contract of Insurance.
"CERTIFICATE OF TRUST" shall mean the certificate filed with the
Secretary of State of the State establishing the Issuer under Delaware law.
"CLASS" shall mean, as appropriate, the Class A-1L Notes, the Class A-2L
Notes, the Class A-3L Notes, the Class A-4AR-1 Notes, the Class A-4AR-2 Notes,
the Class B-1 Notes or the Class B-2 Notes.
"CLASS A NOTEHOLDER" shall mean the Person in whose name a Class A Note
is registered in the Note registration books of the Trustee.
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"CLASS A NOTES" shall mean, collectively, the Class A-1L Notes, the
Class A-2L Notes, the Class A-3L Notes, the Class A-4AR-1 Notes and the Class
A-4AR-2 Notes secured on a senior priority to the Class B Notes.
"CLASS A OBLIGATIONS" shall mean Class A Notes and any Derivative
Product.
"CLASS A PERCENTAGE" shall mean, for any Quarterly Distribution Date,
100% less the Class B Percentage.
"CLASS A PRINCIPAL DISTRIBUTION AMOUNT" shall mean, for any Quarterly
Distribution Date, the product of the Principal Distribution Amount and the
Class A Percentage.
"CLASS A-1L MATURITY DATE" shall mean the September 2013 Quarterly
Distribution Date.
"CLASS A-1L NOTE INTEREST SHORTFALL" shall mean, with respect to any
Quarterly Distribution Date, the excess, if any, of (a) the Class A-1L
Noteholders' Interest Distribution Amount on the immediately preceding Quarterly
Distribution Date over (b) the amount of interest actually distributed to the
Class A-1L Noteholders on such preceding Quarterly Distribution Date, plus
interest on the amount of such excess interest due to the Class A-1L
Noteholders, to the extent permitted by law, at the interest rate borne by the
Class A-1L Notes from such immediately preceding Quarterly Distribution Date to
the current Quarterly Distribution Date, as determined by the Administrator.
"CLASS A-1L NOTEHOLDER" shall mean the Person in whose name a Class A-1L
Note is registered in the Note registration books maintained by the Trustee.
"CLASS A-1L NOTEHOLDERS' INTEREST DISTRIBUTION AMOUNT" shall mean, with
respect to any Quarterly Distribution Date, the sum of (a) the amount of
interest accrued at the Class A-1L Rate for the related Interest Accrual Period
on the Outstanding Amount of the Class A-1L Notes immediately prior to such
Quarterly Distribution Date; and (b) the Class A-1L Note Interest Shortfall for
such Quarterly Distribution Date, as based on the actual number of days in such
Interest Accrual Period divided by 360 and rounding the resultant figure to the
fifth decimal place, as determined by the Administrator.
"CLASS A-1L NOTES" shall mean the $181,000,000 Student Loan Asset-Backed
Notes, Senior Class A-1L issued by the Issuer pursuant to this Indenture,
substantially in the form of Exhibit B-1 hereto.
"CLASS A-1L RATE" shall mean, for any Interest Accrual Period, other
than the first Interest Accrual Period, the applicable Three-Month LIBOR, plus
0.18%, as determined by the Administrator. For the first Interest Accrual
Period, the Class A-1L Rate shall be determined by reference to the following
formula:
x + [29/30 * (y-x)] plus 0.18%, as determined by the Administrator.
where:
x = Three-Month LIBOR, and
y = Four-Month LIBOR.
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"CLASS A-2L MATURITY DATE" shall mean the September 2018 Quarterly
Distribution Date.
"CLASS A-2L NOTE INTEREST SHORTFALL" shall mean, with respect to any
Quarterly Distribution Date, the excess, if any, of (a) the Class A-2L
Noteholders' Interest Distribution Amount on the immediately preceding Quarterly
Distribution Date over (b) the amount of interest actually distributed to the
Class A-2L Noteholders on such preceding Quarterly Distribution Date, plus
interest on the amount of such excess interest due to the Class A-2L
Noteholders, to the extent permitted by law, at the interest rate borne by the
Class A-2L Notes from such immediately preceding Quarterly Distribution Date to
the current Quarterly Distribution Date, as determined by the Administrator.
"CLASS A-2L NOTEHOLDER" shall mean the Person in whose name a Class A-2L
Note is registered in the Note registration books maintained by the Trustee.
"CLASS A-2L NOTEHOLDERS' INTEREST DISTRIBUTION AMOUNT" shall mean, with
respect to any Quarterly Distribution Date, the sum of (a) the amount of
interest accrued at the Class A-2L Rate for the related Interest Accrual Period
on the Outstanding Amount of the Class A-2L Notes immediately prior to such
Quarterly Distribution Date; and (b) the Class A-2L Note Interest Shortfall for
such Quarterly Distribution Date, as based on the actual number of days in such
Interest Accrual Period divided by 360 and rounding the resultant figure to the
fifth decimal place, as determined by the Administrator.
"Class A-2L NOTES" shall mean the $567,000,000 Student Loan Asset-Backed
Notes, Senior Class A-2L issued by the Issuer pursuant to this Indenture,
substantially in the form of Exhibit B-2 hereto.
"Class A-2L RATE" shall mean, for any Interest Accrual Period, other
than the first Interest Accrual Period, the applicable Three-Month LIBOR, plus
0.25%, as determined by the Administrator. For the first Interest Accrual
Period, the Class A-2L Rate shall be determined by reference to the following
formula:
x + [29/30 * (y-x)] plus 0.25%, as determined by the Administrator.
where:
x = Three-Month LIBOR, and
y = Four-Month LIBOR.
"CLASS A-3L MATURITY DATE" shall mean the March 2026 Quarterly
Distribution Date.
"CLASS A-3L NOTE INTEREST SHORTFALL" shall mean, with respect to any
Quarterly Distribution Date, the excess, if any, of (a) the Class A-3L
Noteholders' Interest Distribution Amount on the immediately preceding Quarterly
Distribution Date over (b) the amount of interest actually distributed to the
Class A-3L Noteholders on such preceding Quarterly Distribution Date, plus
interest on the amount of such excess interest due to the Class A-3L
Noteholders, to the extent permitted by law, at the interest rate borne by the
Class A-3L Notes from such immediately preceding Quarterly Distribution Date to
the current Quarterly Distribution Date, as determined by the Administrator.
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"CLASS A-3L NOTEHOLDER" shall mean the Person in whose name a Class A-3L
Note is registered in the Note registration books maintained by the Trustee.
"CLASS A-3L NOTEHOLDERS' INTEREST DISTRIBUTION AMOUNT" shall mean, with
respect to any Quarterly Distribution Date, the sum of (a) the amount of
interest accrued at the Class A-3L Rate for the related Interest Accrual Period
on the Outstanding Amount of the Class A-3L Notes immediately prior to such
Quarterly Distribution Date; and (b) the Class A-3L Note Interest Shortfall for
such Quarterly Distribution Date, as based on the actual number of days in such
Interest Accrual Period divided by 360 and rounding the resultant figure to the
fifth decimal place, as determined by the Administrator.
"Class A-3L NOTES" shall mean the $570,000,000 Student Loan Asset-Backed
Notes, Senior Class A-3L issued by the Issuer pursuant to this Indenture,
substantially in the form of Exhibit B-3 hereto.
"Class A-3L RATE" shall mean, for any Interest Accrual Period, other
than the first Interest Accrual Period, the applicable Three-Month LIBOR, plus
0.35%, as determined by the Administrator. For the first Interest Accrual
Period, the Class A-3L Rate shall be determined by reference to the following
formula:
x + [29/30 * (y-x)] plus 0.35%, as determined by the Administrator.
where:
x = Three-Month LIBOR, and
y = Four-Month LIBOR.
"CLASS A-4AR-1 MATURITY DATE" shall mean June 25, 2035.
"CLASS A-4AR-1 NOTE INTEREST SHORTFALL" shall mean, with respect to any
Auction Rate Distribution Date, the excess, if any, of (a) the Class A-4AR-1
Noteholders' Interest Distribution Amount on the immediately preceding Auction
Rate Distribution Date for the Class A-4AR-1 Notes over (b) the amount of
interest actually distributed to the Class A-4AR-1 Noteholders on such preceding
Auction Rate Distribution Date, plus interest on the amount of such excess
interest due to the Class A-4AR-1 Noteholders, to the extent permitted by law,
at the Class A-4AR-1 Rate for the related Interest Accrual Period, from such
immediately preceding Auction Rate Distribution Date to the current Auction Rate
Distribution Date, as determined by the Administrator.
"CLASS A-4AR-1 NOTEHOLDER" shall mean the Person in whose name a Class
A-4AR-1 Note is registered in the Note registration books maintained by the
Trustee.
8
"CLASS A-4AR-1 NOTEHOLDERS' INTEREST DISTRIBUTION AMOUNT" shall mean,
with respect to each Auction Rate Distribution Date for the Class A-4AR-1 Notes,
the sum of (a) the amount of interest accrued at the Class A-4AR-1 Rate for the
related Interest Accrual Period on the aggregate outstanding principal balance
of the Class A-4AR-1 Notes immediately prior to such Auction Rate Distribution
Date; and (b) the Class A-4AR-1 Note Interest Shortfall for such Auction Rate
Distribution Date, as based on the actual number of days in such Interest
Accrual Period divided by 360, as determined by the Administrator.
"CLASS A-4AR-1 NOTES" shall mean the $53,500,000 Student Loan
Asset-Backed Notes, Senior Class A-4AR-1 issued by the Issuer pursuant to this
Indenture, substantially in the form of Exhibit B-4 hereto.
"CLASS A-4AR-1 RATE" shall mean, for any Interest Accrual Period for the
Class A-4AR-1 Notes, other than the first Interest Accrual Period, the Auction
Note Interest Rate applicable to such Class for such Interest Accrual Period,
and for the first Interest Accrual Period, the Initial Rate for such Class.
"CLASS A-4AR-2 MATURITY DATE" shall mean June 25, 2035.
"CLASS A-4AR-2 NOTE INTEREST SHORTFALL" shall mean, with respect to any
Auction Rate Distribution Date, the excess, if any, of (a) the Class A-4AR-2
Noteholders' Interest Distribution Amount on the immediately preceding Auction
Rate Distribution Date for the Class A-4AR-2 Notes over (b) the amount of
interest actually distributed to the Class A-4AR-2 Noteholders on such preceding
Auction Rate Distribution Date, plus interest on the amount of such excess
interest due to the Class A-4AR-2 Noteholders, to the extent permitted by law,
at the Class A-4AR-2 Rate for the related Interest Accrual Period, from such
immediately preceding Auction Rate Distribution Date to the current Auction Rate
Distribution Date, as determined by the Administrator.
"CLASS A-4AR-2 NOTEHOLDER" shall mean the Person in whose name a Class
A-4AR-2 Note is registered in the Note registration books maintained by the
Trustee.
"CLASS A-4AR-2 NOTEHOLDERS' INTEREST DISTRIBUTION AMOUNT" shall mean,
with respect to each Auction Rate Distribution Date for the Class A-4AR-2 Notes,
the sum of (a) the amount of interest accrued at the Class A-4AR-2 Rate for the
related Interest Accrual Period on the aggregate outstanding principal balance
of the Class A-4AR-2 Notes immediately prior to such Auction Rate Distribution
Date; and (b) the Class A-4AR-2 Note Interest Shortfall for such Auction Rate
Distribution Date, as based on the actual number of days in such Interest
Accrual Period divided by 360, as determined by the Administrator.
"CLASS A-4AR-2 NOTES" shall mean the $53,500,000 Student Loan
Asset-Backed Notes, Senior Class A-4AR-2 issued by the Issuer pursuant to this
Indenture, substantially in the form of Exhibit B-5 hereto.
"CLASS A-4AR-2 RATE" shall mean, for any Interest Accrual Period for the
Class A-4AR-2 Notes, other than the first Interest Accrual Period, the Auction
Note Interest Rate applicable to such Class for such Interest Accrual Period,
and for the first Interest Accrual Period, the Initial Rate for such Class.
9
CLASS B NOTEHOLDER" shall mean the Person in whose name a Class B Note
is registered in the Note registration books maintained by the Trustee.
"CLASS B NOTES" shall mean, collectively, the Class B-1 Notes and the
Class B-2 Notes, secured on a junior priority to the Class A Obligations.
"CLASS B PERCENTAGE" shall mean, with respect to any Quarterly
Distribution Date, (a) prior to the Stepdown Date or with respect to any
Quarterly Distribution Date on which a Trigger Event is in effect, zero; or (b)
on and after the Stepdown Date and provided that no Trigger Event is in effect,
a fraction expressed as a percentage, the numerator of which is the aggregate
Outstanding Amount of the Class B Notes and the denominator of which is the
aggregate Outstanding Amount of all Notes, in each case determined on the
Determination Date by the Administrator for that Quarterly Distribution Date.
"CLASS B PRINCIPAL DISTRIBUTION AMOUNT" shall mean, for any Quarterly
Distribution Date, the product of the Principal Distribution Amount and the
Class B Percentage.
"CLASS B-1 MATURITY DATE" shall mean September 25, 2035.
"CLASS B-1 NOTE INTEREST SHORTFALL" shall mean, for each Auction Rate
Distribution Date for the Class B-1 Notes, the excess, if any, of (a) the Class
B-1 Noteholders' 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 Class B-1 Noteholders on such immediately
preceding Auction Rate Distribution Date, plus interest accrued on the amount of
such interest due to the Class B-1 Noteholders, to the extent permitted by law,
at the Class B-1 Rate for the related Interest Accrual Period, from such
immediately preceding Auction Rate Distribution Date to the current Auction Rate
Distribution Date, as determined by the Administrator.
"CLASS B-1 NOTEHOLDER" shall mean the Person in whose name a Class B-1
Note is registered in the Note registration books maintained by the Trustee.
"CLASS B-1 NOTEHOLDERS' 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 Rate for the related Interest
Accrual Period on the aggregate outstanding principal balance of the Class B-1
Notes immediately prior to such Auction Rate Distribution Date; and (b) the
Class B-1 Note Interest Shortfall for such Auction Rate Distribution Date, as
based on the actual number of days in such Interest Accrual Period divided by
360, as determined by the Administrator.
"CLASS B-1 NOTES" shall mean the $37,500,000 Student Loan Asset-Backed
Notes, Subordinate Class B-1 issued by the Issuer pursuant to this Indenture,
substantially in the form of Exhibit B-6 hereto.
"CLASS B-1 RATE" shall mean, for any Interest Accrual Period for the
Class B-1 Notes, other than the first Interest Accrual Period, the Auction Note
Interest Rate applicable to such Class for such Interest Accrual Period, and for
the first Interest Accrual Period, the Initial Rate for such Class.
10
"CLASS B-2 MATURITY DATE" shall mean September 25, 2035.
"CLASS B-2 NOTE INTEREST SHORTFALL" shall mean, for each Auction Rate
Distribution Date for the Class B-2 Notes, the excess, if any, of (a) the Class
B-2 Noteholders' 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 Class B-2 Noteholders on such immediately
preceding Auction Rate Distribution Date, plus interest accrued on the amount of
such interest due to the Class B-2 Noteholders, to the extent permitted by law,
at the Class B-2 Rate for the related Interest Accrual Period, from such
immediately preceding Auction Rate Distribution Date to the current Auction Rate
Distribution Date, as determined by the Administrator.
"CLASS B-2 NOTEHOLDER" shall mean the Person in whose name a Class B-2
Note is registered in the Note registration books maintained by the Trustee.
"CLASS B-2 NOTEHOLDERS' 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 Rate for the related Interest
Accrual Period on the aggregate outstanding principal balance of the Class B-2
Notes immediately prior to such Auction Rate Distribution Date; and (b) the
Class B-2 Note Interest Shortfall for such Auction Rate Distribution Date, as
based on the actual number of days in such Interest Accrual Period divided by
360, as determined by the Administrator.
"CLASS B-2 NOTES" shall mean the $37,500,000 Student Loan Asset-Backed
Notes, Subordinate Class B-2 issued by the Issuer pursuant to this Indenture,
substantially in the form of Exhibit B-7 hereto.
"CLASS B-2 RATE" shall mean, for any Interest Accrual Period for the
Class B-2 Notes, other than the first Interest Accrual Period, the Auction Note
Interest Rate applicable to such Class for such Interest Accrual Period, and for
the first Interest Accrual Period, the Initial Rate for such Class.
"CLEARING AGENCY" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The initial Clearing Agency
shall be The Depository Trust Company and its successor or assigns and the
initial nominee for the Clearing Agency shall be Cede & Co. If (a) the then
Clearing Agency resigns from its functions as depository of the Notes or (b) the
Issuer discontinues use of the Clearing Agency, any other securities depository
which agrees to follow the procedures required to be followed by a securities
depository in connection with the Notes and which is selected by the Issuer with
the consent of the Trustee.
"CLEARING AGENCY PARTICIPANT" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLEARSTREAM" means Clearstream Banking, societe anonyme or its
successors in interest.
11
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time. Each reference to a section of the Code herein shall be deemed to
include the United States Treasury Regulations, including applicable temporary
and proposed regulations relating to such section, which are applicable to the
Notes or the use of the proceeds thereof. A reference to any specific section of
the Code shall be deemed also to be a reference to the comparable provisions of
any enactment which supersedes or replaces the Code thereunder from time to
time.
"COLLECTION FUND" shall mean the Fund by that name created in Section
5.01(d) hereof and further described in Section 5.04 hereof.
"COLLECTION PERIOD" shall mean, with respect to the first Monthly
Distribution Date, the period beginning on August 23, 2007 and ending on August
31, 2007, and with respect to each subsequent Monthly Distribution Date, the
Collection Period shall mean the full calendar month immediately preceding such
Monthly Distribution Date.
"CONTRACT OF INSURANCE" shall mean the contract of insurance between the
Eligible Lender and the Secretary.
"COSTS OF ISSUANCE ACCOUNT" shall mean the Account by that name created
in Section 5.01(a) hereof within the Acquisition Fund and further described in
Section 5.02 hereof, including any Subaccounts created therein.
"COUNTERPARTY" shall mean the counterparties to any Derivative Product
entered into pursuant to Section 3.03 hereof.
"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, collectively or individually as the
context may require, the custodian agreements with the Subservicer or other
custodian or bailee related to Financed Eligible Loans.
"CUTOFF DATE" shall mean (i) with respect to the initial pool of
Financed Eligible Loans, August 22, 2007; and (ii) with respect to subsequently
acquired Eligible Loans, the date on which such loans are transferred to the
Issuer.
"DATE OF ISSUANCE" shall mean August 27, 2007.
"DEBT SERVICE FUND" shall mean the Fund by that name created in Section
5.01(e) hereof and further described in Section 5.07 hereof, including the
Interest Account, the Principal Account, the Retirement Account and any
additional Accounts and Subaccounts created therein.
"DELAWARE TRUSTEE" shall mean M&T Trust Company of Delaware, a Delaware
banking corporation, solely in its capacity as the trustee of the Issuer under
the Trust Agreement.
"DELAWARE TRUSTEE FEE" shall mean (a) the Delaware Trustee's initial
setup fee plus the initial $2,500 annual fee and (b) an annual fee equal to
$2,500, payable on each August Monthly Distribution Date, beginning on the
August 2008 Monthly Distribution Date.
12
"DEPARTMENT" shall mean the United States Department of Education, an
agency of the Federal government.
"DEPARTMENT REBATE FUND" shall mean the Fund by that name created in
Section 5.01(f) hereof and further described in Section 5.08 hereof, including
any Accounts and Subaccounts created therein.
"DEPARTMENT REBATE INTEREST AMOUNT" means, with respect to any date of
determination, the greater of (a)(i) the expected amount of interest paid by
borrowers on the Financed Student Loans first disbursed on or after April 1,
2006 that exceeds the Special Allowance Payment support levels applicable to
such Financed Student Loans under the Higher Education Act since the prior
Department Rebate Payment Date less (ii) the amount of accrued Interest Benefit
Payments or Special Allowance Payments due to the Issuer since the prior
Department Rebate Payment Date and (b) $0.00.
"DEPARTMENT REBATE PAYMENT DATE" means the quarterly date that (i) the
Department Rebate Interest Amount is due and payable to the Department or (ii)
the Department offsets the Department Rebate Interest Amount from Interest
Benefit Payments or Special Allowance Payments due to the Issuer.
"DEPOSITOR" shall mean Nelnet Student Loan Funding, LLC, and its
successors and assigns and any other Person or Persons as may become a Depositor
pursuant to the terms of the Trust Agreement.
"DERIVATIVE PRODUCT" shall mean any Derivative Product entered into
subsequent to the Date of Issuance subject to the provisions of Section 3.03
hereof.
"DERIVATIVE VALUE" shall mean the value of a Derivative Product, if any,
to the Counterparty, provided that such value is defined and calculated in
substantially the same manner as amounts are defined and calculated pursuant to
the applicable provisions of an ISDA Master Agreement.
"DETERMINATION DATE" shall mean, with respect to any Monthly
Distribution Date, the second Business Day preceding such Monthly Distribution
Date.
"DISTRIBUTION DATE" shall mean (i) each Auction Rate Distribution Date
and (ii) each Quarterly Distribution Date.
"DTC" means The Depository Trust Company or its successors in interest.
"ELIGIBLE LENDER" shall mean (i) Zions First National Bank, in its
capacity as eligible lender trustee hereunder and under the terms of the
Eligible Lender Trust Agreement, and (ii) 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.
13
"ELIGIBLE LENDER TRUST AGREEMENT" shall mean the Eligible Lender Trust
Agreement, dated as of August 1, 2007, between the Issuer and Zions First
National Bank, as eligible lender trustee, as amended from time to time.
"ELIGIBLE LOAN" shall mean any loan made to finance post-secondary
education that is made under the Higher Education Act, provided 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 so authorized prior
to such reauthorization or amendment, such loans authorized after such
reauthorization or amendment shall not constitute Eligible Loans unless a Rating
Confirmation is obtained.
"ELIGIBLE LOAN ACQUISITION CERTIFICATE" shall mean a certificate signed
by an Authorized Representative in substantially the form attached as Exhibit A
hereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EUROCLEAR" shall mean the Euroclear System operated by Euroclear Bank
S.A./N.V., or any successor thereto.
"EVENT OF BANKRUPTCY" shall mean (a) the Issuer shall have commenced a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall have made a general assignment for
the benefit of creditors, or shall have declared a moratorium with respect to
its debts or shall have failed generally to pay its debts as they become due, or
shall have taken any action to authorize any of the foregoing; or (b) an
involuntary case or other proceeding shall have been commenced against the
Issuer seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property provided such action or proceeding is not dismissed within 60 days.
"EVENT OF DEFAULT" shall have the meaning specified in Article VI
hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FINANCED" or "FINANCING" when used with respect to Eligible Loans,
shall mean or refer to Eligible Loans (a) acquired by the Issuer with balances
in the Acquisition 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 (initially
January 1 to December 31) as established from time to time.
14
"FITCH" shall mean Fitch Inc., its successors and assigns.
"FOREIGN CLEARING SYSTEMS" means Euroclear or Clearstream.
"FOUR-MONTH LIBOR" shall have the meaning ascribed to such term under
the definition of "Three-Month LIBOR."
"FUNDS" shall mean each of the Funds created pursuant to Section 5.01
hereof.
"GLOBAL CERTIFICATE" means any Note registered in the name of a Clearing
Agency 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 such Guaranty Agency for
payments made by it on defaulted Eligible Loans insured or guaranteed by such
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 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 Trustee or 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 at any time when Class A
Obligations are Outstanding, the Class A Obligations, and at any time when no
Class A Obligations are Outstanding, the Class B Notes.
"INDENTURE" shall mean this Indenture of Trust, including all
supplements and amendments hereto.
"INDEPENDENT" shall mean, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Seller and any Affiliate of any of the foregoing
Persons; (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller or
any Affiliate of any of the foregoing Persons; and (c) is not connected with the
Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, placement
agent, trustee, partner, director or person performing similar functions.
15
"INDEPENDENT CERTIFICATE" shall mean a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of this Indenture, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"INDEX MATURITY" shall mean (i) for Three-Month LIBOR, three months and
(ii) for Four-Month LIBOR, four months.
"INDIVIDUAL NOTE" means any Note registered in the name of a Noteholder
other than a Clearing Agency or its nominee.
"INITIAL PARITY RATIO" shall mean the Parity Ratio as of the Date of
Issuance.
"INITIAL POOL BALANCE" shall mean the Pool Balance as of the Date of
Issuance.
"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 ACCOUNT" shall mean the Account by that name created in
Section 5.01(e) hereof within the Debt Service Fund and further described in
Section 5.07(a) hereof, including any Subaccounts created therein.
"INTEREST ACCRUAL PERIOD" shall mean (a) with respect to each Class of
the LIBOR Rate Notes, initially, the period commencing on the Date of Issuance
and ending on December 25, 2007, and thereafter, with respect to each Quarterly
Distribution Date, the period beginning on and including the immediately
preceding Quarterly Distribution Date and ending on the day immediately
preceding such current Quarterly Distribution Date and (b) with respect to the
Auction Rate Notes, the period described as such in Appendix A hereto.
"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.
"INTEREST DISTRIBUTION AMOUNT" shall mean the Class A-1L Noteholders'
Interest Distribution Amount, the Class A-2L Noteholders' Interest Distribution
Amount, the Class A-3L Noteholders' Interest Distribution Amount, the Class
A-4AR-1 Noteholders' Interest Distribution Amount, the Class A-4AR-2
Noteholders' Interest Distribution Amount, the Class B-1 Noteholders' Interest
Distribution Amount and the Class B-2 Noteholders' Interest Distribution Amount,
as applicable.
16
"INVESTMENT AGREEMENT" shall mean, collectively or individually as the
context may require, any investment agreement approved by the Rating Agencies.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended.
"INVESTMENT SECURITIES" shall mean:
(a) direct obligations of, or obligations on which the timely
payment of the principal of and interest on which are unconditionally
and fully guaranteed by, the United States of America;
(b) interest-bearing time or demand deposits, certificates of
deposit or other similar banking arrangements with a maturity of 12
months or less with any bank, trust company, national banking
association or other depository institution, including those of the
Trustee, provided that, at the time of deposit or purchase such
depository institution has commercial paper which is rated "A-1+" by S&P
and "F1+" by Fitch and has the required ratings from Moody's
corresponding to the duration of such investment set forth below;
(c) interest-bearing time or demand deposits, certificates of
deposit or other similar banking arrangements with a maturity of 24
months or less, but more than 12 months, with any bank, trust company,
national banking association or other depository institution, including
those of the Trustee and any of its affiliates, provided that, at the
time of deposit or purchase such depository institution has senior debt
rated "A" or higher by S&P and "AA-" or higher by Fitch, if commercial
paper is outstanding, commercial paper which is rated "A-1+" by S&P and
"F1+" by Fitch and has the required ratings from Moody's corresponding
to the duration of such investment set forth below;
(d) interest-bearing time or demand deposits, certificates of
deposit or other similar banking arrangements with a maturity of more
than 24 months with any bank, trust company, national banking
association or other depository institution, including those of the
Trustee and any of its affiliates, provided that, at the time of deposit
or purchase such depository institution has senior debt rated "AA" or
higher by S&P and "AA" or higher by Fitch, if commercial paper is
outstanding, commercial paper which is rated "A-1+" by S&P, "P-1" by
Moody's and "F1+" by Fitch and has the required ratings from Moody's
corresponding to the duration of such investment set forth below;
(e) bonds, debentures, notes or other evidences of indebtedness
issued or guaranteed by any of the following agencies: Federal Farm
Credit Banks, Federal Home Loan Mortgage Corporation; the Export-Import
Bank of the United States; the Federal National Mortgage Association;
the Farmers Home Administration; Federal Home Loan Banks provided such
obligation is rated "AAA" by S&P, "Aaa" by Moody's and "AAA" by Fitch;
or any agency or instrumentality of the United States of America which
shall be established for the purposes of acquiring the obligations of
any of the foregoing or otherwise providing financing therefor;
17
(f) repurchase agreements and reverse repurchase agreements,
other than overnight repurchase agreements and overnight reverse
repurchase agreements, with banks, including the Trustee and any of its
affiliates, which are members of the Federal Deposit Insurance
Corporation or firms which are members of the Securities Investors
Protection Corporation, in each case whose outstanding, unsecured debt
securities are rated no lower than two subcategories below the highest
rating on any Class of Outstanding Notes by S&P and Fitch, if commercial
paper is outstanding, commercial paper which is rated "A-1+" by S&P and
"F1+" by Fitch and has the required ratings from Moody's corresponding
to the duration of such investment set forth below;
(g) overnight repurchase agreements and overnight reverse
repurchase agreements at least 101% collateralized by securities
described in subparagraph (a) of this definition and with a
counterparty, including the Trustee and any of its affiliates, that has
senior debt rated "AA" or higher by S&P and "AA-" or higher by Fitch, if
commercial paper is outstanding, commercial paper which is rated "A-1+"
by S&P and "F1+" by Fitch and has the required ratings from Moody's
corresponding to the duration of such investment set forth below, or a
counterparty approved in writing by S&P, Moody's and Fitch,
respectively;
(h) investment agreements or guaranteed investment contracts,
which may be entered into by and among the Issuer and/or the Trustee and
any bank, bank holding company, corporation or any other financial
institution, including the Trustee and any of its affiliates, whose
outstanding (i) commercial paper is rated "A-1+" by S&P and "F1+" by
Fitch for agreements or contracts with a maturity of 12 months or less
and has the required ratings from Moody's corresponding to the duration
of such investment set forth below; (ii) unsecured long-term debt is
rated no lower than two subcategories below the highest rating on any
Class of Outstanding Notes by S&P and Fitch and, if commercial paper is
outstanding, commercial paper which is rated "A-1+" by S&P and "F1+" by
Fitch for agreements or contracts with a maturity of 24 months or less,
but more than 12 months and has the required ratings from Moody's
corresponding to the duration of such investment set forth below, or
(iii) unsecured long-term debt which is rated no lower than two
subcategories below the highest rating on any Class of Outstanding Notes
by S&P and Fitch and, if commercial paper is outstanding, commercial
paper which is rated "A-1+" by S&P and "F1+" by Fitch for agreements or
contracts with a maturity of more than 24 months and has the required
ratings from Moody's corresponding to the duration of such investment
set forth below, or, in each case, by an insurance company whose
claims-paying ability is so rated;
(i) "tax exempt bonds" as defined in Section 150(a)(6) of the
Code, other than "specified private activity bonds" as defined in
Section 57(a)(5)(C) of the Code, that are rated in the highest category
by S&P and Fitch for long-term or short-term debt or shares of a
so-called money market or mutual fund rated "AAAm/AAAm-G" or higher by
S&P, and "AAA/F1+" by Fitch and has the required ratings from Moody's
corresponding to the duration of such investment set forth below, that
do not constitute "investment property" within the meaning of Section
148(b)(2) of the Code, provided that the fund has all of its assets
invested in obligations of such rating quality;
18
(j) commercial paper, including that of the Trustee and any of
its affiliates, which is rated in the single highest classification,
"A-1+" by S&P and "F1+" by Fitch and has the required ratings from
Moody's corresponding to the duration of such investment set forth
below, and which matures not more than 270 days after the date of
purchase;
(k) investments in a money market fund rated at least "AAAm" or
"AAAm-G" by S&P, "Aaa" by Moody's and "AAA/V1+" by Fitch, including
funds for which the Trustee or an affiliate thereof acts as investment
advisor or provides other similar services for a fee;
(l) any Investment Agreement; and
(m) any other investment with a Rating Confirmation from each
Rating Agency.
Each Investment Security or the provider of such Investment Security
(other than those described in paragraphs (a), (e), (k) and (l) of this
definition) shall have the following Moody's long-term and or short-term ratings
corresponding to the duration of such investment:
MAXIMUM MATURITY MINIMUM RATINGS
One Month "A2" or "Prime-1"
Three Months "A1" and "Prime-1"
Six Months "Aa3" and "Prime-1"
Greater than Six Months "Aaa" and "Prime-1"
"ISDA MASTER AGREEMENT" shall mean the ISDA Master Agreement, copyright
1992, as amended from time to time, and as in effect with respect to any
Derivative Product.
"ISSUER" shall mean Nelnet Student Loan Trust 2007-2, a statutory trust
organized and existing under the laws of the State, and any successor thereto.
"ISSUER DERIVATIVE PAYMENT" shall mean any payment required to be made
by or on behalf of the Issuer to a Counterparty pursuant to a Derivative
Product.
"ISSUER ORDER" shall mean a written order signed in the name of the
Issuer by an Authorized Representative.
"LIBOR" shall mean Three-Month LIBOR or Four-Month LIBOR, as applicable.
"LIBOR DETERMINATION DATE" shall mean, for each Interest Accrual Period,
the second Business Day before the beginning of that Interest Accrual Period.
"LIBOR RATE NOTES" shall mean the Class A-1L Notes, the Class A-2L Notes
and the Class A-3L Notes.
19
"LIQUIDATED FINANCED ELIGIBLE LOAN" shall mean any defaulted Financed
Eligible Loan liquidated by the Master Servicer or a Subservicer (which shall
not include any Financed Eligible Loan on which payments are received from a
Guaranty Agency) or which such Master Servicer's or Subservicer 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 in
accordance with the Master Servicer's or a Subservicer's customary servicing
procedures, the moneys collected in respect of the liquidation thereof from
whatever source, net of the sum of any amounts expended by such Master Servicer
or Subservicer 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 Master Promissory Note 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).
"MASTER SERVICER" shall mean National Education Loan Network, Inc. and
any other master servicer or successor master servicer selected by the Issuer,
including an affiliate of the Issuer, so long as the Issuer obtains a Rating
Confirmation as to each such other master servicer.
"MASTER SERVICING AGREEMENT" shall mean (a) the Master Servicing
Agreement, dated as of August 1, 2007, among the Issuer, the Depositor, the
Administrator and the Master Servicer, as amended from time to time, and (b) any
replacement master servicing agreement among the Issuer, the Administrator and
any other Master Servicer.
"MATURITY" when used with respect to any Note, shall mean the date on
which the principal thereof becomes due and payable as therein or herein
provided, whether at its Note Final Maturity Date, by earlier prepayment or
purchase, by declaration of acceleration, or otherwise.
"MINIMUM PURCHASE AMOUNT" shall mean, on any Quarterly Distribution
Date, an amount that would be sufficient to (a) reduce the Outstanding Amount of
each Class of Notes on such Quarterly Distribution Date to zero; (b) pay the
Interest Distribution Amount due and payable on each Class of the Notes on such
Quarterly Distribution Date; (c) pay any Servicing Fees and Carryover Servicing
Fees, Administration Fees, Trustee Fees, Delaware Trustee Fees, Broker-Dealer
Fees and Auction Agent Fees due and owing; (d) pay any Issuer Derivative
Payments due and owing; and (e) in the case of Auction Rate Notes, pay any
Carry-Over Amounts and interest on such amounts.
"MONTHLY DISTRIBUTION DATE" shall mean the twenty-fifth day of each
calendar month or, in the event such twenty-fifth day is not a Business Day, the
next succeeding Business Day, commencing on September 25, 2007.
"MOODY'S" shall mean Moody's Investors Service, Inc., its successors and
assigns.
20
"MPN LOAN" shall mean a loan originated pursuant to the Federal Family
Education Loan Program and the Higher Education Act and evidenced by a Master
Promissory Note.
"NON-U.S. PERSON" shall mean a Person who is not a U.S. Person, as
defined in Regulation S.
"NOTE FINAL MATURITY DATE" for a Class of Notes or for any Note of such
Class, as the context may require, shall mean the Class A-1L Maturity Date, the
Class A-2L Maturity Date, the Class A-3L Maturity Date, the Class A-4AR-1
Maturity Date, the Class A-4AR-2 Maturity Date, the Class B-1 Maturity Date or
the Class B-2 Maturity Date, as applicable.
"NOTEHOLDER" shall mean, (a) with respect to a book-entry Note, the
Person who is the owner of such book-entry Note, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such Clearing
Agency); and (b) with respect to Notes held in definitive form pursuant to
Section 2.09 hereof, the Person in whose name a Note is registered in the Note
registration books of the Trustee.
"NOTES" shall mean, collectively, the Class A Notes and the Class B
Notes.
"OBLIGATIONS" shall mean, collectively, the Class A Obligations and the
Class B Notes.
"OPINION OF COUNSEL" shall mean (a) with respect to the Issuer one or
more written opinions of counsel who may, except as otherwise expressly provided
in the Indenture, be employees of or counsel to the Delaware Trustee, the
Issuer, the Administrator, the Seller or an Affiliate of the Seller and who
shall be reasonably satisfactory to the Trustee, and which opinion or opinions
shall be addressed to the Trustee, as trustee, and shall be in form and
substance satisfactory to the Trustee; and (b) with respect to the Seller, the
Administrator, the Master Servicer or a Subservicer, one or more written
opinions of counsel who may be an employee of or counsel to the Seller, the
Administrator, the Master Servicer or a Subservicer, which counsel shall be
acceptable to the Trustee and the Delaware Trustee.
"OPTIONAL PURCHASE DATE" shall have the meaning set forth in Section
10.03 hereof.
"OUTSTANDING" shall mean, when used in connection with any Note, a Note
which has been executed and delivered pursuant to this Indenture which at such
time remains unpaid as to principal or interest, excluding Notes which have been
replaced pursuant to Section 2.03 or 2.04 hereof and 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, as of any date of determination, the
aggregate principal amount of all Notes Outstanding or the applicable Class or
Classes of Notes, as the case may be, Outstanding at such date of determination.
21
"PARITY RATIO" shall mean, on any Quarterly Distribution Date, (a) the
Pool Balance (including all accrued interest on the Financed Eligible Loans)
plus the amounts on deposit in the Reserve Fund as of the end of the prior
Collection Period divided by (b) the Outstanding Amount of the Notes, after
giving effect to distributions to be made on that Quarterly Distribution Date.
The Parity Ratio shall be calculated by the Administrator and certified to the
Trustee upon which the Trustee may conclusively rely with no duty to further
examine or determine such information.
"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" shall mean as of any date (a) the aggregate principal
balance of the Financed Eligible Loans on such date (including accrued interest
thereon to the extent such interest is expected to be capitalized), after giving
effect to the following, without duplication: (i) all payments received by the
Issuer through such date from or on behalf of obligors on such Financed Eligible
Loans; (ii) all Purchase Amounts on Financed Eligible Loans received by the
Issuer through such date from the Seller, the Master Servicer or a Subservicer;
(iii) all Liquidation Proceeds and Realized Losses on Financed Eligible Loans
liquidated through such date; (iv) the aggregate amount of adjustments to
balances of Financed Eligible Loans permitted to be effected by the Master
Servicer or a Subservicer under the Master Servicing Agreement or its related
Subservicing Agreement, if any, recorded through such date; and (v) the
aggregate amount by which reimbursements by Guarantee Agencies of the unpaid
principal balance of defaulted Financed Eligible Loans through such date are
reduced from 100% to 97%, or other applicable percentage as required by the risk
sharing provisions of the Higher Education Act; plus (b) moneys on deposit in
the Capitalized Interest Fund and the Prefunding Account of the Acquisition Fund
(excluding amounts that will become Available Funds on the next Monthly
Distribution Date). The Pool Balance shall be calculated by the Administrator
and certified to the Trustee, upon which the Trustee may conclusively rely with
no duty to further examine or determine such information.
"PREFUNDING ACCOUNT" shall mean the Account by that name created in
Section 5.01(a) hereof within the Acquisition Fund and further described in
Section 5.02 hereof, including any Subaccounts created therein.
"PRINCIPAL ACCOUNT" shall mean the Account by that name created in
Section 5.01(e) hereof within the Debt Service Fund and further described in
Section 5.07(b) hereof, including any Subaccounts created therein.
"PRINCIPAL DISTRIBUTION AMOUNT" shall mean, as determined by the
Administrator, (a) with respect to the initial Quarterly Distribution Date, the
amount by which the sum of the Outstanding Amount of the Notes exceeds the
Adjusted Pool Balance as of the last day of the Collection Period immediately
preceding such initial Quarterly Distribution Date; and (b) with respect to each
subsequent Quarterly Distribution Date, the excess of (i) the Adjusted Pool
Balance as of the last day of the Collection Period immediately preceding the
prior Quarterly Distribution Date, less (ii) the Adjusted Pool Balance as of the
last day of the Collection Period immediately preceding such Quarterly
Distribution Date, plus the amount, if any, of the Principal Distribution Amount
due on the prior Quarterly Distribution Date that was not paid. Further, on the
Note Final Maturity Date for a Class of Notes, the Principal Distribution Amount
on that date also shall include the amount needed to reduce the Outstanding
Amount of such Class of Notes to zero.
22
"PRINCIPAL OFFICE" shall mean the principal office of the party
indicated, as set forth in Section 9.01 hereof or elsewhere in this Indenture.
"PRIORITY TERMINATION PAYMENT" shall mean, with respect to a Derivative
Product, any termination payment payable by the Issuer under such Derivative
Product relating to an early termination of such Derivative Product by the
Counterparty, as the non-defaulting party, following (i) a default in the
payment of a regularly scheduled payment by the Issuer thereunder, (ii) the
occurrence of an Event of Default specified in Section 6.01(d) hereof or (iii)
the Trustee's taking any action hereunder to liquidate the Trust Estate
following an Event of Default and acceleration of the Notes pursuant to Section
6.04 hereof.
"PROGRAM" shall mean the Depositor's program for the origination and the
purchase of Eligible Loans, as the same may be modified from time to time.
"PRO RATA PORTION" shall mean a percentage determined by dividing the
Outstanding Amount of the Class of the Auction Rate Notes proposed to be
redeemed or paid (less, with respect to such Class of the Auction Rate Notes
proposed to be redeemed or paid, any amounts in the Retirement Account of the
Debt Service Fund) by the Outstanding Amount of all of the Notes (less any
amounts in the Retirement Account of the Debt Service Fund).
"PRO RATA MINIMUM PURCHASE AMOUNT" shall have the meaning ascribed to
such term in and Section 2.04 of Appendix A thereto with respect to the Auction
Rate Notes.
"PURCHASE AMOUNT" with respect to any Financed Eligible Loan shall mean
the amount required to prepay in full such Financed Eligible Loan under the
terms thereof including all accrued interest thereon and any unamortized
premium, it being acknowledged that any accrued and unpaid Interest Benefit
Payments or Special Allowance Payments will continue to be payable to the
Trustee and constitute part of the Trust Estate.
"QUALIFIED INSTITUTIONAL BUYER" means a "qualified institutional buyer"
within the meaning of Rule 144A.
"QUARTERLY DISTRIBUTION DATE" shall mean the twenty-fifth (25th) day of
March, June, September and December or, if such day is not a Business Day, the
immediately succeeding Business Day, commencing on December 26, 2007.
"RATING" shall mean one of the rating categories of Fitch, Moody's and
S&P or any other Rating Agency, provided Fitch, Moody's and S&P or any other
Rating Agency, as the case may be, is currently rating the Notes.
"RATING AGENCY" shall mean each of Fitch, Moody's and S&P and their
successors and assigns or any other rating agency requested by the Issuer to
maintain a Rating on any of the Notes.
23
"RATING CONFIRMATION" shall mean a letter from each Rating Agency then
providing a Rating for any of the Notes, confirming that a proposed action,
failure to act, or other event specified therein will not, in and of itself,
result in a downgrade of any of the Ratings then applicable to the Notes, or
cause any Rating Agency to suspend, withdraw or qualify the Ratings then
applicable to the Notes.
"REALIZED LOSS" shall mean the excess of the principal balance
(including any interest that had been or had been expected to be capitalized) of
any Liquidated Financed Eligible Loan over Liquidation Proceeds with respect to
such Financed Eligible Loan to the extent allocable to principal (including any
interest that had been or had been expected to be capitalized).
"RECORD DATE" shall mean, with respect to a Distribution Date, the close
of business on the day preceding such Distribution Date.
"REDEMPTION DATE" shall mean the date established pursuant to this
Indenture for the redemption of Notes.
"REFERENCE BANKS" shall mean, with respect to a determination of LIBOR
for any Interest Accrual Period by the Administrator or the Auction Agent, as
applicable, four major banks in the London interbank market selected by the
Administrator or the Auction Agent, as applicable.
"REGISTERED OWNER" shall mean any Noteholder, and, with respect to a
Derivative Product, any Counterparty, unless the context otherwise requires.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"REGULATION S CERTIFICATE" means a Regulation S global registered note
certificate representing Notes sold to Non-U.S. Persons outside the United
States of America in reliance on Regulation S.
"REGULATIONS" shall mean the Regulations promulgated from time to time
by the Secretary or any Guaranty Agency guaranteeing Financed Eligible Loans.
"RESERVE FUND" shall mean the Fund by that name created in Section
5.01(g) hereof and further described in Section 5.05 hereof, including any
Accounts and Subaccounts created therein.
"RETIREMENT ACCOUNT" shall mean the Account by that name created in
Section 5.01(e) hereof within the Debt Service Fund and further described in
Section 5.07(c) hereof, including any Subaccounts created therein.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 144A CERTIFICATE" means a Rule 144A global registered note
certificate representing Notes sold in reliance on Rule 144A.
"S&P" shall mean Standard & Poor's Ratings Group, a Division of The
McGraw-Hill Companies, Inc., its successors and assigns.
24
"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 LEGEND" "THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE.
THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (A) PURSUANT TO RULE 144A
PROMULGATED UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE
ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER,
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (B) 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 NOTE IN
ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S PROMULGATED UNDER THE
SECURITIES ACT; (C) PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES
ACT AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) PURSUANT
TO A VALID REGISTRATION STATEMENT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK LIMITED PURPOSE TRUST COMPANY ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY."
"SELLER" shall mean Nelnet Student Loan Funding, LLC, and its successors
and assigns.
"SENIOR PARITY RATIO" shall mean, on any Quarterly Distribution Date,
(a) the Pool Balance (including all accrued interest on the Financed Eligible
Loans) plus the amounts on deposit in the Reserve Fund as of the end of the
prior Collection Period divided by (b) the Outstanding Amount of the Class A
Notes, after giving effect to distributions to be made on that Quarterly
Distribution Date. The Senior Parity Ratio shall be calculated by the
Administrator and certified to the Trustee upon which the Trustee may
conclusively rely with no duty to further examine or determine such information.
25
"SERVICER'S REPORT" shall mean the servicer reports to be furnished to
the Issuer by the Master Servicer or a Subservicer pursuant to the Master
Servicing Agreement or its related Subservicing Agreement.
"SERVICING FEE" shall mean the fees and expenses due to the Master
Servicer and any Subservicer under the terms of the Master Servicing Agreement
or its related Subservicing 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.
"SPECIFIED RESERVE FUND BALANCE" shall mean, with respect to any
Quarterly Distribution Date, the greater of (a) 0.25% of the Pool Balance as of
the close of business on the last day of the preceding Collection Period; and
(b) 0.15% of the Initial Pool Balance, provided that in no event will such
balance exceed the sum of the Outstanding Amount of the Notes and provided
further, that such Specified Reserve Fund Balance may be reduced with a Rating
Confirmation. The Specified Reserve Fund Balance shall be calculated by the
Administrator and certified to the Trustee, upon which certification the Trustee
may conclusively rely with no duty to further examine or determine such
information.
"STATE" shall mean the State of Delaware.
"STEPDOWN DATE" shall mean the earlier to occur of (a) the September
2013 Quarterly Distribution Date and (b) the first date on which all of the
Class A Notes are no longer Outstanding.
"STUDENT LOAN PURCHASE AGREEMENT" shall mean, collectively or
individually as the context may require, (a) the Loan Purchase Agreement, dated
as of August 1, 2007, between the Issuer and the Seller and (b) each additional
student loan purchase agreement entered into between the Issuer and the Seller
for the purchase of Eligible Loans which constitute "add-on consolidation
loans."
"SUBACCOUNT" shall mean any of the subaccounts which may be created and
established within any Account by this Indenture.
"SUBSERVICER" shall mean Nelnet, Inc., and any other additional
subservicer or successor 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 subservicer.
"SUBSERVICING AGREEMENT" shall mean, collectively or individually as the
context may require, (a) the Nelnet, Inc. Subservicing Agreement, dated as of
August 1, 2007, between the Master Servicer and Nelnet, Inc., as subservicer;
and (b) any subservicing agreement between the Master Servicer and any other
Subservicer.
26
"SUPPLEMENTAL INDENTURE" shall mean an agreement supplemental hereto
executed pursuant to Article VIII hereof.
"TELERATE PAGE 3750" shall mean the display page so designated on the
Telerate Service or its successor or assign (or such other page as may replace
that page on that service for the purpose of displaying comparable rates or
prices).
"TERMINATION PAYMENT" shall mean, with respect to a Derivative Product,
any termination payment payable by the Issuer under such Derivative Product
relating to an early termination of such Derivative Product by the Counterparty,
as the non-affected party or non-defaulting party, after the occurrence of a
termination event or event of default specified in such Derivative Product,
including any Priority Termination Payment.
"THREE-MONTH LIBOR" or "FOUR-MONTH LIBOR" shall mean, with respect to
any Interest Accrual Period, the London interbank offered rate for deposits in
U.S. dollars having the applicable Index Maturity as it appears on Telerate Page
3750 as of 11:00 a.m., London time, on the related LIBOR Determination Date as
determined by the Administrator. 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 applicable 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 Administrator or the
Trustee, as applicable, 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 Administrator or the
Trustee, as applicable, 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 applicable 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 or Four-Month LIBOR, as the case may be, in effect
for the applicable Interest Accrual Period will be Three-Month LIBOR or
Four-Month LIBOR, as the case may be, in effect for the previous Interest
Accrual Period.
"TRIGGER EVENT" shall mean, on any Quarterly Distribution Date while any
of the Class A Notes are Outstanding, that (a) the Outstanding Amount of the
Notes, after giving effect to distributions to be made on that Quarterly
Distribution Date, would exceed the Pool Balance plus amounts on deposit in the
Reserve Fund as of the end of the preceding Collection Period or (b) the
Financed Eligible Loans have not been sold pursuant to Section 10.03 or 10.04
hereof when permitted or required herein.
"TRUST AGREEMENT" shall mean the Trust Agreement, dated as of August 1,
2007, by and between the Depositor and the Delaware Trustee, as may be amended
pursuant to the terms thereof.
"TRUST AUCTION DATE" shall have the meaning set forth in Section 10.04
hereof.
"TRUST ESTATE" shall mean the property described as such in the granting
clauses hereto.
27
"TRUSTEE" shall mean Zions First National Bank, acting in its capacity
as Trustee under this Indenture, or any successor trustee designated pursuant to
this Indenture.
"TRUSTEE FEE" shall mean an amount equal to the annual amount set forth
in the Trustee Fee Letter, dated August 1, 2007. Such fee shall be in
satisfaction of the Trustee's compensation as trustee under this Indenture and
as eligible lender trustee under the Eligible Lender Trust Agreement.
"U.S. PERSON" shall have the meaning assigned to such term in Regulation
S.
Words importing the masculine gender include the feminine gender, and
words importing the feminine gender include the masculine gender. Words
importing persons include firms, associations and corporations. Words importing
the singular number include the plural number and vice versa. Additional terms
are defined in the body of this Indenture.
ARTICLE II
NOTE DETAILS AND FORM OF NOTES
SECTION 2.01. NOTE DETAILS. The Notes, together with the Trustee's
certificate of authentication, shall be in substantially the forms set forth in
Exhibit B hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing the Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the Authorized Representatives executing
such Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the Date of Issuance. The terms of the Notes
set forth in Exhibit B hereto are part of the terms of this Indenture.
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY OF NOTES. The Notes
shall be executed in the name and on behalf of the Issuer by the manual or
facsimile signature of an Authorized Representative. Any Note may be signed
(manually or by facsimile) or attested on behalf of the Issuer by any person
who, at the date of such act, shall hold the proper office or position,
notwithstanding that at the date of authentication, issuance or delivery, such
person may have ceased to hold such office or position.
The Trustee shall upon Issuer Order authenticate and deliver Notes for
original issue in an aggregate principal amount of $1,500,000,000. The aggregate
principal amount of Notes Outstanding at any time may not exceed such amount
except as provided in Section 2.04 hereof.
28
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes in Authorized Denominations.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication in accordance with Section 2.05 hereof.
Each Class of Notes will be initially issued in Book-Entry Form and will
be represented by a book-entry note certificate deposited on the Date of
Issuance with Zions First National Bank, as custodian for the initial Clearing
Agency and registered in the name of "Cede & Co." as initial nominee for the
initial Clearing Agency.
SECTION 2.03. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; PERSONS
TREATED AS REGISTERED OWNERS. The Issuer shall cause books for the registration
and for the transfer of the Notes as provided in this Indenture to be kept by
the Trustee which is hereby appointed the transfer agent of the Issuer for the
Notes. Notwithstanding such appointment and with the prior written consent of
the Issuer, the Trustee is hereby authorized to make any arrangements with other
institutions which it deems necessary or desirable in order that such
institutions may perform the duties of transfer agent for the Notes. Upon
surrender for transfer of any Note at the Principal Office of the 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 Trustee shall authenticate and deliver in the name of the
transferee or transferees a new fully registered Note or Notes of the same
interest rate and for a like Class and aggregate principal amount of the same
Note Final Maturity Date.
Notes may be exchanged at the Principal Office of the Trustee for a like
aggregate principal amount of fully registered Notes of the same Class, interest
rate and Note Final Maturity Date in Authorized Denominations. The Issuer shall
execute and the Trustee shall authenticate and deliver Notes which the
Registered Owner making the exchange is entitled to receive, bearing numbers not
contemporaneously outstanding. The execution by the Issuer of any fully
registered Note of any Authorized Denomination shall constitute full and due
authorization of such denomination and the Trustee shall thereby be authorized
to authenticate and deliver such fully registered Note.
As to any Note, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on any fully registered Note shall be
made only to or upon the written order of the Registered Owner thereof or his
legal representative but such registration may be changed as hereinabove
provided. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Note to the extent of the sum or sums paid.
Each Registered Owner and each transferee of a Note shall be deemed to
represent and warrant that either (a) it is not acquiring the Note directly or
indirectly for, or on behalf of, an ERISA plan or any entity whose underlying
assets are deemed to be plan assets of such ERISA plan; or (b)(i) the
acquisition and holding of the Notes will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or similar
law and (ii) if the Notes are subsequently deemed to be "plan assets" pursuant
to the regulations set forth at 29 C.F.R. ss. 2510.3-101, it will promptly
dispose of the Notes.
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The Trustee shall require the payment by any Registered Owner requesting
exchange or transfer of any tax or other governmental charge required to be paid
with respect to such exchange or transfer. The applicant for any such transfer
or exchange may be required to pay all taxes and governmental charges in
connection with such transfer or exchange, other than exchanges pursuant to
Section 2.07 hereof.
SECTION 2.04. LOST, STOLEN, DESTROYED AND MUTILATED NOTES. Upon receipt
by the Trustee of evidence satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any Note and, in the case of a lost, stolen
or destroyed Note, of indemnity satisfactory to it, and upon surrender and
cancellation of the Note, if mutilated, (a) the Issuer shall execute, and the
Trustee shall authenticate and deliver, a replacement Note of the same Class,
interest rate, Note Final Maturity Date and denomination in lieu of such lost,
stolen, destroyed or mutilated Note or (b) if such lost, stolen, destroyed or
mutilated Note shall have matured or within 15 days shall be due and payable, in
lieu of executing and delivering a new Note as aforesaid, the Issuer may pay
such Note. Any such new Note shall bear a number not contemporaneously
outstanding. The applicant for any such new Note may be required to pay all
taxes and governmental charges and all expenses and charges of the Issuer and of
the Trustee in connection with the issuance of such Note. All Notes shall be
held and owned upon the express condition that, to the extent permitted by law,
the foregoing conditions are exclusive with respect to the replacement and
payment of mutilated, destroyed, lost or stolen Notes, negotiable instruments or
other securities.
SECTION 2.05. TRUSTEE'S AUTHENTICATION CERTIFICATE. The Trustee's
authentication certificate upon any Notes shall be substantially in the form
attached to the Notes. No Note shall be secured hereby or entitled to the
benefit hereof, or shall be valid or obligatory for any purpose, unless a
certificate of authentication, substantially in such form, has been duly
executed by the Trustee; and such certificate of the Trustee upon any Note shall
be conclusive evidence and the only competent evidence that such Note has been
authenticated and delivered hereunder. The Trustee's certificate of
authentication shall be deemed to have been duly executed by it if manually
signed by an authorized officer or signatory of the Trustee, but it shall not be
necessary that the same person sign the certificate of authentication on all of
the Notes issued hereunder.
SECTION 2.06. CANCELLATION AND DESTRUCTION OF NOTES BY THE TRUSTEE.
Whenever any Outstanding Notes shall be delivered to the Trustee for the
cancellation thereof pursuant to this Indenture, upon payment of the principal
amount and interest represented thereby, or for replacement pursuant to Section
2.03 hereof, such Notes shall be promptly cancelled and, within a reasonable
time, cremated or otherwise destroyed by the Trustee and counterparts of a
certificate of destruction evidencing such cremation or other destruction shall
be furnished by the Trustee to the Issuer.
SECTION 2.07. TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Issuer may execute and the Trustee shall authenticate and deliver
temporary Notes. Temporary Notes shall be issuable as fully registered Notes
without coupons, of any denomination, and substantially in the form of the
definitive Notes but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Issuer. Every
temporary Note shall be executed by the Issuer and be authenticated by the
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Trustee upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Notes. As promptly as practicable the Issuer
shall execute and shall furnish definitive Notes and thereupon temporary Notes
may be surrendered in exchange therefor without charge at the principal office
of the Trustee, and the Trustee shall authenticate and deliver in exchange for
such temporary Notes a like aggregate principal amount of definitive Notes.
Until so exchanged the temporary Notes shall be entitled to the same benefits
under this Indenture as definitive Notes.
SECTION 2.08. ISSUANCE OF NOTES. The Issuer shall have the authority,
upon complying with the provisions of this Article, to issue and deliver the
Notes which shall be secured by the Trust Estate. In addition, the Issuer may
enter into any Derivative Products it deems necessary or desirable with respect
to any or all of the Notes.
SECTION 2.09. DEFINITIVE NOTES. If (a) the Administrator advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
discharge its responsibilities with respect to the Notes, and the Administrator
is unable to locate a successor; (b) the Administrator at its option, with the
consent of the applicable Clearing Agency Participants, advises the Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency; or (c) after the occurrence of an Event of Default, or a default by the
Master Servicer, a Subservicer or the Administrator under the Master Servicing
Agreement, its related Servicing Agreement or the Administration Agreement,
respectively, Noteholders representing Beneficial Ownership Interests
aggregating at least a majority of the Outstanding Amount of the Notes advise
the Clearing Agency (which shall then notify the Trustee) in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Noteholders and the applicable Clearing Agency
Participants consent to the termination of the book-entry system through the
Clearing Agency, then the Trustee shall cause the Clearing Agency to notify all
Noteholders, through the Clearing Agency, of the occurrence of any such event
and of the availability of definitive Notes to Noteholders requesting the same.
Upon surrender to the Trustee of the typewritten Notes representing the
book-entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Trustee shall authenticate the
definitive Notes in accordance with the instructions of the Clearing Agency.
Neither the Issuer nor the Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of definitive Notes, the
Trustee shall recognize the holders of the definitive Notes as Registered
Owners.
Upon acquisition or transfer of a definitive Note by, for or with the
assets of, a Benefit Plan, such Noteholder shall be deemed to have represented
that such acquisition or purchase will not constitute or otherwise result in:
(a) in the case of a Benefit Plan subject to Title I of ERISA or Section 4975 of
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 (b) in the case of a Benefit Plan subject to a
substantially 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. By acceptance of a
definitive Note, whether upon original issuance or subsequent transfer, each
holder of such a Note acknowledges the restrictions on the transfer of such Note
set forth in the Securities Legend and agrees that it will transfer such a Note
only as provided herein.
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SECTION 2.10. PAYMENT OF PRINCIPAL AND INTEREST.
(a) The LIBOR Rate Notes shall accrue interest as provided in
the forms of the Class A-1L Notes, the Class A-2L Notes and the Class
A-3L Notes set forth in Exhibits B-1, B-2 and B-3, respectively, hereto.
The Auction Rate Notes shall accrue interest as provided in Appendix A
hereto and as provided in the forms of the Class A-4AR-1 Notes, the
Class A-4AR-2 Notes, the Class B-1 Notes and the Class B-2 Notes set
forth in Exhibits B-4, B-5, B-6 and B-7 hereto. Such interest shall be
payable with respect to each Class of Notes on its applicable
Distribution Date as specified in Section 5.07 hereof, subject to
Section 4.01 hereof. Any installment of interest or principal, if any,
payable on any Note which is punctually paid or duly provided for by the
Issuer on the applicable Distribution Date shall be paid to the Person
in whose name such Note is registered on the Record Date by check mailed
first-class, postage prepaid to such Person's address as it appears on
the records of the Trustee on such Record Date, except that, unless
definitive Notes have been issued pursuant to Section 2.09 hereof, with
respect to Notes registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payment shall be made by wire transfer in immediately available
funds to the account designated by such nominee and except for the final
installment of principal payable with respect to such Note on the
applicable Distribution Date or on the Note Final Maturity Date for such
Note which shall be payable as provided below. The amount of interest
distributable to Noteholders of the LIBOR Rate Notes for each $1,000 in
principal amount will be calculated by applying the applicable interest
rate for the Interest Accrual Period to the principal amount of $1,000,
multiplying that product by the actual number of days in the Interest
Accrual Period divided by 360, and rounding the resulting percentage
figure to the fifth decimal point. The amount of interest distributable
to Noteholders of the Auction Rate Notes will be calculated as set forth
in Appendix A hereto. The terms of and definitions related to the
Auction Rate Notes are found in Article I hereof and Appendix A hereto.
(b) The principal of each Note shall be payable in installments
on each applicable Distribution Date as provided in Section 5.07 hereof.
Notwithstanding the foregoing, the entire unpaid principal amount of
each Class of Notes shall be due and payable, if not previously paid, on
the Note Final Maturity Date for such Class of Notes and on the date on
which an Event of Default shall have occurred and be continuing if the
Trustee or the Registered Owners of the Notes representing not less than
a majority of the Outstanding Amount of the Notes have declared the
Notes to be immediately due and payable in the manner provided in
Section 6.02 hereof. The Trustee shall notify the Person in whose name a
Note is registered on or prior to the close of business on the Record
Date preceding the applicable Distribution Date on which the Issuer
expects that the final installment of principal of and interest on such
Note will be paid. Such notice shall be mailed or transmitted by
facsimile prior to such final Distribution Date and shall specify that
such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may
be presented and surrendered for payment of such installment.
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SECTION 2.11. REDEMPTION OF THE NOTES.
(a) OPTIONAL REDEMPTION OF AUCTION RATE NOTES. 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 A
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 Carry-Over Amounts (and any accrued interest thereon) due and
payable on such Class of the Auction Rate Notes to such Auction Rate
Distribution Date.
(b) OPTIONAL REDEMPTION OF AUCTION RATE NOTES FROM THE SALE OF
FINANCED ELIGIBLE LOANS. Subject to the provisions of subsection (g) of
this Section, upon a sale of a Pro rata Portion of the Financed Eligible
Loans as provided in Section 2.04 of Appendix A hereto, each Class of
the Auction Rate Notes is subject to redemption, in whole only, on any
Auction Rate 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
Carry-Over Amounts (and any accrued interest thereon) due and payable on
such Class of the Auction Rate Notes to such Auction Rate Distribution
Date.
(c) MANDATORY REDEMPTION OF AUCTION RATE NOTES. Each Class of
the Auction Rate Notes is subject to mandatory redemption, in whole or
in part, on any Auction Rate Distribution Date for such Class of the
Auction Rate Notes and for which notice can be given pursuant to
subsection (e) of this Section, each at a redemption price equal to the
principal balance being redeemed plus accrued interest, if any (but not
including any Carry-Over Amounts, if any, except to the extent such
Carry-Over Amounts is payable on such Auction Rate Distribution Date
pursuant to Section 5.04 hereof), to such Auction Rate Distribution Date
from amounts transferred to the Retirement Account of the Debt Service
Fund representing Principal Distribution Amount or representing amounts
transferred from the Collection Fund pursuant to Section 5.04(c)(xiv)
hereof.
(d) OPTIONAL REDEMPTION FROM SALE OF FINANCED ELIGIBLE LOANS.
The Notes shall be subject to redemption from the proceeds of a sale of
Financed Eligible Loans in accordance with Section 10.03 or 10.04 hereof
on any Quarterly Distribution Date.
(e) NOTICE OF REDEMPTION AND PURCHASE. Notice of redemption with
respect to a Class of the Auction Rate Notes shall be given by the
Trustee by first class mail, postage prepaid, mailed no later than 10
days prior to the Redemption Date to the Registered Owners of the
Auction Rate Notes to be redeemed at the address of such Registered
Owner appearing in the note register; but neither failure to give such
notice nor any defect in any notice so given shall affect the validity
of the proceedings for redemption of any Auction Rate Note not affected
by such failure or defect. So long as any such Class of the Auction Rate
Notes are maintained in book-entry form, the Trustee shall treat the
Clearing Agency as the sole Registered Owner of such Class of the
Auction Rate Notes. All notices of redemption shall state (i) the
Redemption Date, (ii) the redemption price, (iii) the name (including
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Class designation), the Note Final Maturity Date and CUSIP number of
each of the Auction Rate Notes to be redeemed, (iv) the principal amount
of Auction Rate Notes of such Class to be redeemed, and, if less than
all Outstanding Auction Rate Notes of a Class are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the Auction Rate Notes to be redeemed, (v) that,
on the Redemption Date, the redemption price on each such Auction Rate
Note will become due and payable and that interest on each such Auction
Rate Note shall cease to accrue on and after such date and (vi) the
place or places where such Auction Rate Notes are to be surrendered for
payment of the redemption price thereof. Within 60 days after any
Redemption Date, a second notice of redemption shall be given by the
Trustee, in the manner described above, to the Registered Owner of an
Auction Rate Note that was not presented for redemption within 30 days
after the Redemption Date. Following provision of notice, the redemption
price will become due and payable on the Redemption Date, and interest
shall cease to accrue on the Auction Rate Notes to be redeemed. Upon
surrender of any such Auction Rate Note for redemption in accordance
with such notice, such Auction Rate Note shall be paid at the redemption
price. If any Auction Rate Note called for redemption shall not be so
paid upon surrender thereof for redemption, the redemption price and, to
the extent lawful, interest thereon shall, until paid, bear interest
from the Redemption Date at the interest rate borne by the Auction Rate
Note on the Redemption Date.
Any Auction Rate Note which is to be redeemed only in part shall
be surrendered to the Trustee (with, if the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory
to the Trustee duly executed by, the Registered Owner thereof or his,
her or its attorney duly authorized in writing) and an Authorized
Representative shall execute and the Trustee shall authenticate and
deliver to the Registered Owner of such Auction Rate Note, without
service charge (such charge to be paid by the Issuer), a new Auction
Rate Note or Auction Rate Notes of any Authorized Denomination or
Authorized Denominations, in aggregate outstanding principal balance
equal to the unredeemed portion of the principal of the Auction Rate
Note so surrendered. Any Auction Rate Note with respect to which a
partial distribution of principal is made shall remain Outstanding in
the then current outstanding principal balance. The Trustee shall retain
a record of the outstanding principal balance of each Auction Rate Note
any portion of the principal of which has been distributed.
Not less than two Business Days prior to each Quarterly
Distribution Date on which principal reduction payments will be made on
a Class of the LIBOR Rate Notes or on which a Class of the LIBOR Rate
Notes is to be redeemed, the Trustee shall cause notice of any reduction
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
LIBOR Rate 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 LIBOR Rate Notes.
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(f) SELECTION OF NOTES FOR REDEMPTION. If less than all of the
Outstanding Notes of a Class of the Auction Rate Notes are to be
redeemed pursuant to this Section, the particular Auction Rate Notes to
be redeemed shall be selected by the Trustee by lot in such manner as
the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions of the principal of Auction
Rate Notes in an Authorized Denomination.
(g) RESTRICTIONS ON THE REDEMPTION OF CLASS B NOTES. Class B
Notes may not be redeemed pursuant to subsection (b) hereof 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 following conditions have been
met:
(i) the Parity Ratio is at least equal to 101% or such
other percentage for which a Rating Confirmation has been
received by the Issuer and the Trustee, after giving effect to
the proposed redemption of the Class B Notes; and
(ii) the Senior Parity Ratio is at least equal to 104%
or such other percentage for which a Rating Confirmation has
been received by the Issuer and the Trustee, after giving effect
to the proposed redemption of the Class B Notes.
SECTION 2.12. BOOK-ENTRY NOTES
(a) Subject to paragraph (d) of this Section, the Registered
Owner of all Notes shall be a Clearing Agency, and the Notes shall be
registered in the name of the nominee for such Clearing Agency.
(b) The Notes shall be initially issued in the form of one or
more separate, authenticated fully-registered Notes for each Class
thereof in the aggregate Outstanding Amount of such Class. Upon initial
issuance, the ownership of each such Note shall be registered in the
registration books kept by the Trustee in the name of the nominee of the
applicable Clearing Agency. The Trustee and the Issuer may treat the
applicable Clearing Agency, or its nominee, as the sole and exclusive
owner of such Class of the Notes registered in its name for the purposes
of (i) payment of the principal or redemption price of and interest on
such Class of the Notes; (ii) selecting such Class of the Notes or
portions thereof to be redeemed; (iii) giving any notice permitted or
required to be given to Noteholders under this Indenture; (iv)
registering the transfer of such Class of the Notes; and (v) obtaining
any consent or other action to be taken by Noteholders and for all other
purposes whatsoever, and neither the Trustee nor the Issuer shall be
affected by any notice to the contrary (except as provided in paragraph
(d) of this Section). Neither the Trustee nor the Issuer shall have any
responsibility or obligation to any Clearing Agency Participant, any
Beneficial Owner of such Class of the Notes or any other Person claiming
a Beneficial Ownership Interest in such Class of the Notes under or
through a Clearing Agency or any Clearing Agency Participant thereof, or
any other Person which is not shown on the registration books as being a
Noteholder, with respect to the accuracy of any records maintained by a
35
Clearing Agency or any Clearing Agency Participant thereof, the payment
to a Clearing Agency of any amount in respect of the principal or
redemption price of or interest on such Class of the Notes; any notice
which is permitted or required to be given to Noteholders under this
Indenture; the selection by a Clearing Agency or any Clearing Agency
Participant thereof of any Person to receive payment in the event of a
partial redemption of such Class of the Notes; or any consent given or
other action taken by a Clearing Agency as a Noteholder. The Trustee
shall pay all principal and redemption price of and interest on such
Class of the Notes only to or upon the order of the applicable Clearing
Agency, and all such payments shall be valid and effective to fully
satisfy and discharge the Issuer's obligations with respect to the
principal, purchase price or redemption price of and interest on such
Class of the Notes to the extent of the sum or sums so paid. Except as
provided in paragraph (d) of this Section, no Person other than a
Clearing Agency shall receive an authenticated Note of such Class
evidencing the obligation of the Issuer to make payments of principal or
redemption price and interest pursuant to this Indenture. Upon delivery
by a Clearing Agency to the Trustee of written notice to the effect that
such Clearing Agency has determined to substitute a new nominee in place
of the preceding nominee, the Notes will be transferable to such new
nominee in accordance with paragraph (g) of this Section.
(c) The Notes may be offered and/or sold only to Qualified
Institutional Buyers in reliance on Rule 144A or, with respect to the
LIBOR Rate Notes, 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, Notes of each Class 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 Notes of each Class 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 Note Final Maturity Date. The Rule
144A Certificates will be deposited on the Date of Issuance with the
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 representing a Class of
the Notes may from time to time be increased or decreased by adjustments
made on the records of the Trustee or DTC or its nominee, as the case
may be, as hereinafter provided. The Regulation S Certificates will be
deposited on the Date of Issuance with the DTC Custodian and registered
in the name of Cede & Co. as initial nominee for DTC for the accounts of
Euroclear, and Clearstream. The aggregate principal amount of the
Regulation S Certificate representing a Class of the LIBOR Rate Notes
may from time to time be increased or decreased by adjustments made on
the records of the 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 each Class of the LIBOR
Rate Notes, and one Rule 144A Certificate for each Class of the Auction
Rate Notes. At all times, the entire Outstanding Amount of each Class of
the LIBOR Rate Notes will be allocated among the corresponding Rule 144A
Certificate and Regulation S Certificate. At all times, the entire
Outstanding Amount of each class of the Auction Rate Notes will be
allocated to the corresponding Rule 144A Certificate. Any Notes sold 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 LIBOR Rate Notes sold to Non-U.S. Persons
pursuant to Regulation S will be issued as Regulation S Certificates.
36
(d) A Clearing Agency may determine to discontinue providing its
services with respect to a Class of the Notes at any time by giving
notice to the Issuer and the Trustee and discharging its
responsibilities with respect thereto under applicable law, or the
Issuer may determine that a Clearing Agency is incapable of discharging
its responsibilities and may so advise such Clearing Agency. In either
such event, the Issuer shall use reasonable efforts to locate another
securities depository. Under such circumstances (if there is no
successor Clearing Agency), the Issuer and the Trustee shall be
obligated to deliver Individual Notes representing such Class of the
Notes in accordance with paragraph (g) of this Section. In the event
Individual Notes representing a Class of the Notes are issued, the
provisions of this Indenture shall apply to such Individual Notes in all
respects, including, among other things, the transfer and exchange of
such Class of the Notes and the method of payment of principal or
redemption price of and interest on such Class of the Notes. Whenever a
Clearing Agency requests the Issuer and the Trustee to do so, the Issuer
and the Trustee will cooperate with such Clearing Agency in taking
appropriate action after reasonable notice (i) to make available one or
more separate Individual Notes representing such Class of the Notes to
any Clearing Agency Participant having such Class of the Notes credited
to its account with the Clearing Agency, or (ii) to arrange for another
securities depository to maintain custody of the Individual Notes
representing such Class of the Notes.
(e) Notwithstanding any other provision of this Indenture to the
contrary, so long as any Note is registered in the name of the nominee
of a Clearing Agency, all payments with respect to the principal or
redemption price of and interest on such Note and all notices with
respect to such Note shall be made and given, respectively, to such
Clearing Agency as provided in its letter of representations or other
such instruction letter.
(f) In connection with any notice or other communication to be
provided to Noteholders pursuant to this Indenture by the Issuer or the
Trustee or with respect to any consent or other action to be taken by
Noteholders, the Issuer or the Trustee, as the case may be, shall
establish a record date for such consent or other action and give the
applicable Clearing Agency notice of such record date not less than 15
calendar days in advance of such record date (or such longer time as may
be required by such Clearing Agency) to the extent possible. Such notice
to such Clearing Agency shall be given only when such Clearing Agency is
the sole Noteholder.
(g) In the event that any transfer or exchange of Notes is
permitted under paragraph (b) or (d) of this Section, such transfer or
exchange shall be accomplished upon receipt by the Trustee from the
Noteholder thereof of the Notes to be transferred or exchanged and
appropriate instruments of transfer to the permitted transferee, all in
accordance with the applicable provisions of the Indenture. In the event
Individual Notes representing a Class of the Notes are issued to
Noteholders other than the nominee of the applicable Clearing Agency, or
another securities depository as Noteholder of all the Notes of such
Class, the provisions of this Indenture shall also apply to, among other
things, the printing of such Individual Notes and the methods of payment
of principal or redemption price of and interest on such Individual
Notes representing such Class of the Notes.
37
SECTION 2.13. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication is required under this Indenture to be given to Noteholders,
unless and until Definitive Notes shall have been issued to Noteholders pursuant
to Section 2.09 hereof, the Trustee shall give all such notices and
communications specified herein to the applicable Clearing Agency.
SECTION 2.14. TRANSFER RESTRICTIONS.
(a) Each person who is or who becomes a Beneficial Owner of a
Note shall be deemed by the acceptance or acquisition of such Beneficial
Ownership Interest to have agreed to be bound by the provisions of this
Section. No Beneficial Ownership Interest in a Note may be transferred,
unless the proposed transferee shall have delivered to the Issuer and
the Trustee any of (i) evidence satisfactory to them that such Note has
been registered under the Securities Act and has been registered or
qualified under all applicable state securities laws to the reasonable
satisfaction of the Issuer; (ii) an express agreement substantially in
the form of the Investment Letter attached as Exhibit E hereto for
Qualified Institutional Buyers by the proposed transferee to be bound by
and to abide by the provisions of this Section and the restrictions
noted in such Investment Letter; provided that compliance with the
provisions of this clause (ii) shall be deemed to have been satisfied if
the proposed transferee is listed in the latest available S&P Rule 144A
list of Qualified Institutional Buyers or other industry recognized
subscriber services listing Qualified Institutional Buyers or (iii)
evidence that such Note has been sold outside the United States to
persons (other than U.S. Persons) in offshore transactions pursuant to
the requirements of Regulation S.
(b) The Issuer will, upon the request of any Beneficial Owner of
any Note, which Beneficial Owner is a Qualified Institutional Buyer,
provide such Beneficial Owner, and any Qualified Institutional Buyer
designated by such Beneficial Owner, such financial and other
information as such Beneficial Owner may reasonably determine to be
necessary in order to permit compliance with the information
requirements of Rule 144A under the Securities Act in connection with
the resale of Notes, except at such time as the Issuer is subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended.
(c) 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 2.12(c) and this subsection (c).
(i) GLOBAL CERTIFICATES. Subject to paragraphs (ii),
(iii) and (iv) of this subsection (c), transfers of a Global
Certificate shall be limited to transfers of such Global
Certificate 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 Ownership Interest in a Rule 144A
Certificate representing a Class of the Notes 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
38
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 Ownership Interest in the
Regulation S Certificate. Upon receipt by the Trustee, as note
registrar, of:
(A) instructions given in accordance with
Euroclear, Clearstream or DTC's procedures, as the case
may be, from a Clearing Agency Participant to instruct
DTC to cause to be credited a Beneficial Ownership
Interest in the Regulation S Certificate in an amount
equal to the Beneficial Ownership 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 Trustee, as note 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 Ownership
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 Ownership 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 Ownership Interest in a Regulation S
Certificate representing a Class of the LIBOR Rate Notes 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, Clearstream or DTC, as the
case may be, exchange or transfer or cause the exchange or
transfer of such interest for an equivalent Beneficial Ownership
Interest in the Rule 144A Certificate. Upon receipt by the
Trustee, as note registrar, of:
(A) instructions given in accordance with DTC's
procedure from a Clearing Agency Participant to instruct
Euroclear or Clearstream to cause to be credited a
Beneficial Ownership Interest in the Rule 144A
Certificate equal to the Beneficial Ownership Interest
in the Regulation S Certificate to be exchanged or
transferred; and
39
(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 Trustee, as note registrar,
as the case may be, will instruct DTC to (1) reduce the
Regulation S Certificate and increase the principal amount of
the Rule 144A Certificate by the aggregate principal amount of
the Beneficial Ownership Interest in the Regulation S
Certificate to be transferred or exchanged, and (2) credit or
cause to be credited to the account of the Person specified in
such instructions a Beneficial Ownership Interest in the Rule
144A Certificate equal to the reduction in the principal amount
of the Regulation S Certificate.
(iv) CERTIFICATED SECURITIES. In the event that a Global
Certificate is exchanged for a Class of the Notes in definitive
registered form without interest coupons, pursuant to Section
2.12(g) hereof, the Notes of such Class 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 Trustee to insure that such transfers comply with Rule 144A,
or, with respect to the a Class of the LIBOR Rate Notes
denominated in U.S. Dollars, are to Non-U.S. Persons and
non-U.S. residents (as determined for purposes of the Investment
Company Act), 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 Ownership Interests within the relevant
Clearing Agency; or (B)(1) in the case of transfers of interests
in a Rule 144A Certificate, in accordance with paragraph (ii) of
this subsection (c) or (2) in the case of transfers of interest
in a Regulation S Certificate, in accordance with paragraph
(iii) of this subsection (c); 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 paragraph (vi) of this
subsection (c).
(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 paragraph (iii) of this
subsection (c). Beneficial Ownership Interests in a
Regulation S Certificate may only be held through a
Foreign Clearing System.
(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
40
purpose hereunder, and the 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 Trustee at its address listed in
Section 9.01 hereof.
(d) Each Noteholder, by its purchase of a Note, whether upon
original issuance or subsequent transfer, is deemed to have represented
and agreed that:
(i) (in connection with the purchase of the Notes, (1)
none of the Issuer, the 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
Trustee or the initial purchasers or any of their respective
affiliates other than any statements in the Offering Memorandum
relating to the Notes (the "Offering Memorandum"), and such
Beneficial Owner has read and understands the Offering
Memorandum; (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 decision (including decisions
regarding the suitability of any transaction pursuant to this
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 Trustee, or the initial purchasers
or any of their respective affiliates; and (4)(A) the Noteholder
is a Qualified Institutional Buyer as defined in Rule 144A under
the Securities Act, is aware (and if it is acquiring the notes
for the account of one or more Qualified Institutional Buyers,
each Beneficial Owner of the Notes is aware) that the Issuer and
the initial purchasers are relying on the exemption from the
registration requirements of the Securities Act provided by Rule
144A, that it is acquiring the Notes for its own account or for
the account of one or more Qualified Institutional Buyers for
whom it is authorized to act, in either case for investment
purposes and not for distribution in violation of the Securities
Act, that it is able to bear the economic risk of an investment
in the Notes and that the Noteholder has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of purchasing the Notes, or (B)
the Noteholder is a person that is not a U.S. Person (as defined
in Regulation S) outside the United States of America, acquiring
the Notes in an offshore transaction pursuant to the safe harbor
from the registration requirements of the Securities Act
provided by either Rule 903 or Rule 904 of Regulation S;
(ii) the Noteholder understands that the Notes are being
offered only in a transaction that does not require registration
under the Securities Act and, if such Noteholder decides to
resell or otherwise transfer such Notes, then it agrees that it
will resell or transfer such Notes only (1) so long as such
notes are eligible for resale pursuant to Rule 144A, to a person
whom the seller reasonably believes is a Qualified Institutional
41
Buyer acquiring the 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, or (2) to
a purchaser who is not a U.S. Person (as defined in Regulation
S) outside the United States of America, acquiring the Notes
pursuant to the safe harbor from registration under the
Securities Act in accordance with Rule 903 or Rule 904 of
Regulation S and, in each case, in accordance with any
applicable United States state securities laws or other
applicable securities laws of the relevant jurisdiction;
(iii) unless the Securities Legend has been removed from
the Notes, such Noteholder shall notify each transferee of the
Notes of the deemed representations set out above and 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 arrangement ("Plan") of a Note will not
constitute or otherwise result in: (1) in the case of a Plan
subject to Section 406 of ERISA or Section 4975 of 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 (2) 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;
(v) it is aware that, except as otherwise provided in
this Indenture, any of the Notes being sold to it in reliance on
Regulation S will be represented by one or more Regulation S
Certificates and that Beneficial Ownership Interests therein may
be held only through DTC for the respective accounts of
participants in those Clearing Systems;
(vi) the Noteholder understands that each certificate
representing an interest in the Notes will bear the Securities
Legend, unless determined otherwise in accordance with
applicable law:
(vii) by virtue of its acceptance of such Note or
Beneficial Ownership Interest therein to indemnify the
Administrator, the Master Servicer, the Trustee, the Eligible
Lender Trustee and the Issuer against any and all liability that
may result if any transfer of such Note is not made in a manner
consistent with the Securities Legend.
ARTICLE III
PARITY AND PRIORITY OF LIEN; OTHER OBLIGATIONS;
AND DERIVATIVE PRODUCTS
SECTION 3.01. PARITY AND PRIORITY OF LIEN. The provisions, covenants and
agreements herein set forth to be performed by or on behalf of the Issuer shall
be for the equal benefit, protection and security of the Registered Owners of
any and all of the Obligations, all of which, 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.
42
SECTION 3.02. OTHER OBLIGATIONS. The Available Funds 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 free and clear of any pledge, lien, charge or encumbrance thereon or with
respect thereto prior to, of equal rank with or subordinate to the respective
pledges created by this Indenture, except as otherwise expressly provided
herein, and all action on the part of the Issuer to that end has been duly and
validly taken. If any Financed Eligible Loan is found to have been subject to a
lien at the time such Financed Eligible Loan was acquired, the Issuer shall
cause such lien to be released, shall purchase such Financed Eligible Loan from
the Trust Estate for a purchase price equal to its principal amount plus any
unamortized premium, if any, and interest accrued thereon or shall replace such
Financed Eligible Loan with another Eligible Loan with substantially identical
characteristics which replacement Eligible Loan shall be free and clear of liens
at the time of such replacement. Except as otherwise provided herein, the Issuer
shall not create or voluntarily permit to be created any debt, lien or charge on
the Financed Eligible Loans which would be on a parity with, subordinate to, or
prior to the lien of this Indenture; shall not do or omit to do or suffer to be
done or omitted to be done any matter or things whatsoever whereby the lien of
this Indenture or the priority of such lien for the Obligations hereby secured
might or could be lost or impaired; and will pay or cause to be paid or will
make adequate provisions for the satisfaction and discharge of all lawful claims
and demands which if unpaid might by law be given precedence to or any equality
with this Indenture as a lien or charge upon the Financed Eligible Loans;
provided, however, that nothing in this Section 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 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 Class A Obligations and the Class B Notes)
shall be entitled to no payment from the Trust Estate, nor may any remedy be
exercised with respect to such subordinate lien against the Trust Estate until
all Obligations have been paid or deemed paid hereunder.
SECTION 3.03. DERIVATIVE PRODUCTS; COUNTERPARTY PAYMENTS; ISSUER
DERIVATIVE PAYMENTS. The Issuer hereby authorizes and directs the 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, payments to a Counterparty and (b) the Trustee may receive,
from time to time, Counterparty Payments for the account of the Issuer. No
Derivative Product shall be entered into subsequent to the Date of Issuance
unless the Trustee shall have received a Rating Confirmation from each Rating
Agency that such Derivative Product will not adversely affect the Rating on any
of the Notes.
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ARTICLE IV
PROVISIONS APPLICABLE TO THE NOTES;
DUTIES OF THE ISSUER
SECTION 4.01. PAYMENT OF PRINCIPAL AND INTEREST. 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 according to the true intent and meaning thereof. The
Obligations shall be and are hereby declared to be payable from and equally
secured, except as specifically provided in this Indenture with respect to
certain payment and other priorities, 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 or control of any
Financed Eligible Loans, which shall be held only by the Trustee or its agent or
bailee.
SECTION 4.02. 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 Trustee shall reasonably require for the better
conveying, transferring and pledging and confirming unto the Trustee, all and
singular, the properties constituting the Trust Estate hereby transferred and
pledged, or intended so to be transferred and pledged.
SECTION 4.03. 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.
(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, including but not limited to the Basic Documents to
which it is a party, the Guarantee Agreements and the Certificate of
Insurance, and will punctually perform all duties required by the Trust
Agreement and the laws of the State.
(c) The Issuer shall be operated on the basis of its Fiscal
Year.
(d) The Issuer shall cause to be kept full and proper books of
records and accounts, in which full, true and proper entries will be
made of all dealings, business and affairs of the Issuer which relate to
the Notes and any Derivative Product.
(e) The Issuer, upon written request of the Trustee, will permit
at all reasonable times the 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 Trustee such other information as it may reasonably
request. The Trustee shall be under no duty to make any such examination
unless requested in writing to do so by the Registered Owners of 66-2/3%
in collective aggregate principal amount of the Notes at the time
Outstanding, and unless such Registered Owners shall have offered the
Trustee security and indemnity satisfactory to it against any costs,
expenses and liabilities which might be incurred thereby.
44
(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 Trustee and each Rating Agency within 150 days of the
close of each Fiscal Year. The 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 Trustee or its agent or bailee
to be held pursuant to this Indenture and pursuant to the Master
Servicing Agreement, a Subservicing 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 Trustee nor any Registered Owner shall in any manner be or
be deemed to be an indispensable party to the exercise of any such
privilege, claim or suit and the Trustee shall be under no obligation
whatsoever to exercise any such privilege, claim or suit; provided,
however, that the 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 Trustee's agent or bailee) so
long as such loans are subject to the lien of this Indenture.
(i) The Issuer shall notify the Trustee and each Rating Agency
in writing prior to entering into any Derivative Product.
SECTION 4.04. ENFORCEMENT OF MASTER SERVICING AGREEMENT AND SUBSERVICING
AGREEMENTS. The Issuer shall comply with, shall require the Master Servicer to
comply with and shall cause the Master Servicer to require the Subservicers 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 the Master Servicing Agreement and
all Subservicing 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 the Master Servicer and each
Subservicer to specify whether payments received by it represent
principal or interest;
(b) not permit the release of the obligations of the Master
Servicer and any Subservicer under the Master Servicing Agreement and
any Subservicing Agreement except in conjunction with amendments or
modifications permitted by paragraph (h) below;
45
(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, the Trustee and the Registered Owners under or with respect
to the Master Servicing Agreement and each Subservicing Agreement;
(d) at its own expense, the Issuer shall duly and punctually
perform and observe each of its obligations to the Master Servicer or a
Subservicer under the Master Servicing Agreement or its related
Subservicing Agreement in accordance with the terms thereof;
(e) the Issuer agrees to give the Trustee and each Rating Agency
prompt written notice of each default on the part of the Master Servicer
or a Subservicer of its obligations under the Master Servicing Agreement
or its related Subservicing Agreement coming to the Issuer's attention;
(f) the Issuer shall not waive any default by the Master
Servicer or a Subservicer under the Master Servicing Agreement or its
related Subservicing Agreement without the written consent of the
Trustee and the giving of written notice to each Rating Agency;
(g) the Issuer shall cause the Master Servicer and each
Subservicer to deliver to the Trustee and the Issuer, on or before March
30 of each year, beginning with March 30, 2008, a certificate stating
that (i) a review of the activities of the Master Servicer and each
Subservicer during the preceding calendar year and of its performance
under the Master Servicing Agreement and its related Subservicing
Agreement has been made under the supervision of the officer signing
such certificate and (ii) to the best of such officers' knowledge, based
on such review, the Master Servicer and such Subservicer has fulfilled
all its obligations under the Master Servicing Agreement and its related
Subservicing 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 stature thereof. The
Issuer shall send copies of such annual certificate of the Master
Servicer and each Subservicer to each Rating Agency; and
(h) not consent or agree to or permit any amendment or
modification of the Master Servicing Agreement or any Subservicing
Agreement which will in any manner materially adversely affect the
rights or security of the Registered Owners. The Issuer and the Trustee
shall be entitled to receive and rely upon an opinion of counsel that
any such amendment or modification will not materially adversely affect
the rights or security of the Registered Owners.
SECTION 4.05. 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 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.
46
SECTION 4.06. ADDITIONAL COVENANTS WITH RESPECT TO THE HIGHER EDUCATION
ACT. The Issuer covenants that it will cause the Trustee to be, or replace the
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
Guaranteed Eligible Loans; provided, however, that nothing above shall prevent
the Issuer from delivering the Eligible Loans to the Master Servicer, a
Subservicer or a Guaranty Agency. The Registered Owners of the Notes shall not
in any circumstances be deemed to be the owner or holder of Guaranteed Eligible
Loans.
The Issuer, or the Administrator on behalf of the Issuer, shall be
responsible for each of the following actions with respect to the Higher
Education Act:
(a) the Issuer, or the Administrator on behalf of the Issuer,
shall be responsible for dealing with the Secretary with respect to the
rights, benefits and obligations, under the Certificates of Insurance,
including but not limited to the payment of all of the fees owed with
respect the Financed Eligible Loans, and the Issuer, or the
Administrator on behalf of the Issuer, shall be responsible for dealing
with the Guaranty Agencies with respect to the rights, benefits and
obligations under the Guarantee Agreements with respect to the Financed
Eligible Loans;
(b) the Issuer, or the Administrator on behalf of the Issuer,
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;
(c) the Issuer, or the Administrator on behalf of the Issuer,
shall cause the Financed Eligible Loans to be serviced by entering into
the Master Servicing Agreement or other agreement with the Master
Servicer for the collection of payments made for, and the administration
of the accounts of, the Financed Eligible Loans;
(d) the Issuer, or the Administrator on behalf of the Issuer,
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, or the Administrator on behalf of the Issuer,
shall cause all Available Funds, including the benefits of the Guarantee
Agreements, the Interest Benefit Payments and the Special Allowance
Payments, to flow to the Trustee. The Trustee shall have no liability
for actions taken at the direction of the Issuer or the Administrator,
except for negligence or willful misconduct in the performance of its
express duties hereunder. The 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
47
(f) the Issuer, or the Administrator on behalf of the Issuer,
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 with
the Seller 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 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 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 Trustee to file a UCC-1
financing statement identifying the Seller as debtor and the
Trustee as secured party and describing the MPN Loan sold
pursuant to this Agreement. The preparation or filing of such
UCC-1 financing statement is solely for additional protection of
the Trustee's interest in the MPN Loans and shall not be deemed
to contradict the express intent of the Seller and the 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."
The Trustee shall not be deemed to be the designated agent for the
purposes of this Section unless it has agreed in writing to be such agent.
SECTION 4.07. FINANCED ELIGIBLE LOANS; COLLECTIONS THEREOF; ASSIGNMENT
THEREOF. The Issuer, through the Master Servicer and one or more Subservicers,
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; provided, however, the Issuer may offer interest rate reductions
with respect to the Financed Eligible Loans which result in rates of interest
not less than those shown in the cash flow analyses provided to each Rating
Agency on the Date of Issuance, and provided further that such rates of interest
may be further reduced if a Rating Confirmation is obtained, based on new cash
flow analyses containing such assumptions as the Issuer shall reasonably
determine. The Issuer shall cause the filing and assignment of such claims
(prior to the timely filing deadline for such claims under the Regulations) by
the Master Servicer or the appropriate Subservicer. The Issuer will comply with
the Higher Education Act and Regulations which apply to the Program and to such
Financed Eligible Loans.
48
SECTION 4.08. APPOINTMENT OF AGENTS, DIRECTION TO TRUSTEE, 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 or officer
of the Administrator, either singly or collectively, shall be personally liable
for any act or omission not willfully fraudulent or mala fide. The Issuer hereby
directs the Trustee to enter into this Indenture, the Administration Agreement,
the Custodian Agreements, the Auction Agent Agreement and the Investment
Agreements. The Issuer hereby directs the Eligible Lender Trustee to enter into
this Indenture, the Guarantee Agreements, the Custodian Agreements and the
Eligible Lender Trust Agreement.
SECTION 4.09. 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 4.10. 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 Delaware
statutory trust, except as otherwise permitted by this Section. Except as
otherwise permitted herein, 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 entity; or (c) permit one or more other entities to
consolidate with or merge into it. The preceding restrictions in clauses (a),
(b) and (c) above shall not apply to a transaction if the transferee or the
surviving or resulting entity, if other than the Issuer, by proper written
instrument for the benefit of the 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 4.11. AMENDMENT OF STUDENT LOAN PURCHASE AGREEMENTS. The Issuer
shall notify the Trustee in writing of any proposed amendments to any existing
Student Loan Purchase Agreement. No such amendment shall become effective unless
and until the Trustee consents thereto in writing. The consent of the Trustee
shall not be unreasonably withheld and shall not be withheld if the Trustee
receives an opinion of counsel acceptable to it that such an amendment is
required by the Higher Education Act and is not materially prejudicial to the
Registered Owners.
SECTION 4.12. REPRESENTATIONS; NEGATIVE COVENANTS.
(a) The Issuer hereby makes the following representations and
warranties to the Trustee on which the Trustee relies in authenticating
the Notes and on which the Registered Owners have relied in purchasing
the Notes. Such representations and warranties shall survive the
transfer and assignment of the Trust Estate to the Trustee.
(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.
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(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 create and issue the Notes, to execute,
deliver and perform this Indenture and to grant the Trust Estate
to the Trustee and the creation and issuance of the Notes,
execution, delivery and performance of this Indenture and grant
of the Trust Estate to the Trustee have been duly authorized by
the Issuer by all necessary statutory trust action.
(iv) BINDING OBLIGATION. This Indenture, assuming due
authorization, execution and delivery by the Trustee, the Notes
in the hands of the Registered Owners thereof and the Issuer
Derivative Payments constitute legal, valid and binding
obligations of the Issuer enforceable against the Issuer in
accordance with their 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 do 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 its affiliates is a party pending,
or, to the best of its 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 issuance of any Notes
or the consummation of any of the transactions contemplated by
this Indenture or (C) seeking any determination or ruling that
might materially and adversely affect the performance by the
Issuer of its obligations under, or the validity or
enforceability of this Indenture.
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(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 Date of Issuance.
(viii) PLACE OF BUSINESS. The Issuer's place of business
and chief executive office is located in Wilmington, Delaware
and the Issuer has had no other chief executive office.
(ix) TAX AND ACCOUNTING TREATMENT. The Issuer intends to
treat the transactions contemplated by the Student Loan Purchase
Agreements as an absolute transfer rather than as a pledge of
the Financed Eligible Loans from the Seller for federal income
tax and financial accounting purposes and the Issuer (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 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.
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
Student Loan Trust 2007-2" and has not changed since its
inception. The Issuer has no trade names, fictitious names,
assumed names or "dba's" under which it conducts its business
and has made no filing in respect of any such name.
(xii) BUSINESS PURPOSE. The Issuer has acquired the
Financed Eligible Loans conveyed to it under a Student Loan
Purchase Agreement 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
requirements for statutory trusts under the laws of the State
with respect to its operations and has engaged in no other
activities other than those specified in this Indenture and the
Student Loan Purchase Agreements and in accordance with the
transactions contemplated herein and therein.
(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.
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(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 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 SELLER. The Issuer is
not and will not be involved in the day-to-day management of the
Seller, the Administrator, the Depositor or any affiliate.
(xvi) NO TRANSFERS WITH SELLER OR AFFILIATES. Other than
the acquisition of assets and the transfer of any Notes pursuant
to this Indenture, the Issuer does not engage in and will not
engage in any transactions with the Seller and affiliates,
except as provided herein with respect to the Administration
Agreement and the Master Servicing Agreement or the payment of
distributions to the Depositor.
(xvii) ABILITY TO PERFORM. There has been no material
impairment in the ability of the Issuer to perform its
obligations under this Indenture.
(xviii) FINANCIAL CONDITION. No material adverse change
has occurred in the Issuer's financial status since the date of
its formation.
(xix) EVENT OF DEFAULT. No Event of Default has occurred
and no event has occurred that, with the giving of notice, the
passage of time, or both, would become an Event of Default.
(xx) ACQUISITION OF FINANCED ELIGIBLE LOANS LEGAL. The
Issuer has complied with all applicable federal, state and local
laws and regulations in connection with its acquisition of the
Financed Eligible Loans from the Seller.
(xxi) NO MATERIAL MISSTATEMENTS OR OMISSIONS. No
information, certificate of an officer, statement furnished in
writing or report delivered to the Trustee, the Master Servicer,
a Subservicer or any Registered Owner by the Issuer contains any
untrue statement of a material fact or omits a material fact
necessary to make such information, certificate, statement or
report not misleading.
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(xxii) NOT AN INVESTMENT COMPANY. The Issuer is not an
"investment company" within the meaning of the Investment
Company Act, or is exempt from all provisions of the Investment
Company Act.
(b) The Issuer will not:
(i) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by
this Indenture;
(ii) claim any credit on, or make any deduction from,
the principal amount of any of the Notes by reason of the
payment of any taxes levied or assessed upon any portion of the
Trust Estate;
(iii) except as otherwise provided herein, dissolve or
liquidate in whole or in part, except with the prior written
consent of the Trustee, and to the extent Notes remain
Outstanding, approval of the Registered Owners and a Rating
Confirmation;
(iv) permit the validity or effectiveness of this
Indenture, any Supplement 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) incur or assume any indebtedness or guarantee any
indebtedness of any Person whether secured by any Financed
Eligible Loans under this Indenture or otherwise, except for
such obligations as may be incurred by the Issuer in connection
with the issuance of the Notes pursuant to this Indenture and
unsecured trade payables in the ordinary course of its business;
(viii) operate such that it would be consolidated with
the Depositor or any other affiliate and its separate existence
disregarded in any federal or state proceeding;
(ix) act as agent of the Seller or, except as provided
in its Student Loan Purchase Agreement, allow the Seller to act
as its agent;
(x) allow the Seller or the Depositor or any other
affiliate to pay its expenses, guarantee its obligations or
advance funds to it for payment of expenses; or
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(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
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 Trustee
hereunder on such date, on which the Trustee relies in accepting the
Trust Estate. Such representations and warranties shall survive the
grant of the Trust Estate to the Trustee pursuant to this Indenture:
(i) FINANCED ELIGIBLE LOANS. Each Financed Eligible Loan
acquired by the Issuer shall constitute an Eligible Loan and
shall satisfy any representations and warranties made with
respect thereto in an applicable Student Loan Purchase
Agreement.
(ii) GRANT. It is the intention of the Issuer that the
transfer herein contemplated constitutes a grant of the Financed
Eligible Loans to the Trustee.
(iii) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give
the 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 Date of Issuance and
copies of the file-stamped financing statements shall be
delivered to the 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 Financed Eligible Loans
(other than the security interest created in favor of the
Trustee) to be created.
(iv) TRANSFER NOT SUBJECT TO BULK TRANSFER ACT. Each
grant of the Financed Eligible Loans by the Issuer pursuant to
this Indenture is not subject to the bulk transfer act or any
similar statutory provisions in effect in any applicable
jurisdiction.
(v) 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.
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SECTION 4.13. ADDITIONAL COVENANTS. So long as any of the Notes are
Outstanding:
(a) The Issuer shall not engage in any business or activity
other than in connection with the transactions contemplated by the Basic
Documents.
(b) The Issuer shall not consolidate or merge with or into any
other entity or convey or transfer its properties and assets
substantially as an entirety to any entity except as otherwise provided
herein.
(c) The funds and other assets of the Issuer shall not be
commingled with those of any other individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
(d) The Issuer shall not be, become or hold itself out as being
liable for the debts of any other party.
(e) The Issuer shall not form, or cause to be formed, any
subsidiaries.
(f) The Issuer shall act solely in its own name and through its
duly authorized officers or agents 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.
(g) 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 applicable law) inside or outside the
State at such place or places as may be designated from time to time by
the provisions of the Trust Agreement.
(h) All actions of the Issuer shall be taken by an Authorized
Representative.
(i) The Issuer shall not amend, alter, change or repeal any
provision contained in this Section without (i) the prior written
consent of the Trustee and (ii) a Rating Confirmation from each Rating
Agency rating any Notes Outstanding (a copy of which shall be provided
to the Trustee) that such amendment, alteration, change or repeal will
have no adverse effect on the rating assigned to the Notes.
(j) The Issuer shall not amend its Certificate of Trust or its
Trust Agreement without first obtaining the prior written consent of
each Rating Agency.
(k) 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.
55
(l) The Issuer will strictly observe legal formalities in its
dealings with the Seller, the Depositor or any affiliate thereof, and
funds or other assets of the Issuer will not be commingled with those of
the Seller, the Depositor or any other affiliate thereof. The Issuer
shall not maintain joint bank accounts or other depository accounts to
which the Seller, the Depositor or any other affiliate has independent
access. None of the Issuer's funds will at any time be pooled with any
funds of the Seller, the Depositor or any other affiliate.
(m) The Issuer will maintain an arm's length relationship with
the Seller (and any Affiliate). Any Person that renders or otherwise
furnishes services to the Issuer will be compensated by the Issuer at
market rates for such services it renders or otherwise furnishes to the
Issuer except as otherwise provided in this Indenture. Except as
contemplated in this Indenture, the Student Loan Purchase Agreements,
the Master Servicing Agreement or a Subservicing Agreement, the Issuer
will not hold itself out to be responsible for the debts of the Seller,
the Depositor or the decisions or actions respecting the daily business
and affairs of the Seller or the Depositor.
SECTION 4.14. PROVIDING OF NOTICE. The Issuer, upon learning of any
failure on its part to observe or perform in any material respect any covenant,
representation or warranty of the Issuer set forth in this Indenture or the
Student Loan Purchase Agreements, or of any failure on the part of the Seller to
observe or perform in any material respect any covenant, representation or
warranty of the Seller set forth in its Student Loan Purchase Agreement, shall
promptly notify the Trustee, the Master Servicer, the appropriate Subservicer
and each Rating Agency of such failure.
SECTION 4.15. CERTAIN REPORTS. Not later than the Determination Date
preceding each Monthly Distribution Date, the Administrator will prepare and
provide a certificate in the form of Exhibit C hereto (the "Administrator's
Monthly Distribution Date Certificate") to the Trustee. The Trustee shall
provide a copy of any Administrator's Monthly Distribution Date Certificate to
any Noteholder who requests such in writing. The 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.
SECTION 4.16. STATEMENT AS TO COMPLIANCE. The Issuer will deliver to the
Trustee, within 120 days after the end of each fiscal year, a brief certificate
from an Authorized Representative including (a) a current list of the Authorized
Representatives, and (b) a statement indicating whether or not to the knowledge
of the signers thereof the Issuer is in 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.
SECTION 4.17. REPRESENTATIONS OF THE ISSUER REGARDING THE TRUSTEE'S
SECURITY INTEREST. The Issuer hereby represents and warrants for the benefit of
the Trustee and the Registered Owners as follows:
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(a) This Indenture creates a valid and continuing security
interest (as defined in the applicable Uniform Commercial Code in effect
in the States of Colorado, Delaware, Nebraska and Utah) in the Financed
Eligible Loans in favor of the 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 Issuer.
(b) Pursuant to the Higher Education Act, a security interest in
student loans is perfected in the same manner as "accounts" within the
meaning of the applicable UCC, which applicable UCCs are the UCC as in
effect in the States of Delaware and Utah 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, other that those
granted pursuant to this Indenture.
(d) For sale of loan participations, swaps and other "payment
intangibles" (within the meaning of the applicable UCC), the Issuer has
received all consents and approvals required by the terms of the
Financed Eligible Loans to the sale of the Financed Eligible Loans
hereunder to the Trustee.
(e) The Issuer has caused or will have caused, within ten 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 Trustee hereunder.
(f) The Issuer has received a written acknowledgment from the
Master Servicer and each Subservicer (as custodian for the Trustee) that
the Master Servicer or such Subservicer is holding executed copies of
the promissory notes and master promissory notes that constitute or
evidence the Financed Eligible Loans for which it is acting as Master
Servicer or Subservicer, and that the Master Servicer or such
Subservicer is holding such solely on behalf and for the benefit of the
Trustee.
(g) Other than the security interest granted to the 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 Trustee hereunder or that has been terminated. The Issuer is not
aware of any judgment or tax lien filings against the Issuer.
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SECTION 4.18. FURTHER COVENANTS OF THE ISSUER REGARDING THE TRUSTEE'S
SECURITY INTEREST. The Issuer hereby covenants for the benefit of the Trustee
and the Registered Owners as follows:
(a) The representations and warranties set forth in Section 4.17
hereof shall survive the termination of this Indenture.
(b) The Trustee shall not waive any of the representations and
warranties set forth in Section 4.17 hereof.
(c) The Issuer shall take all steps necessary, and shall cause
the Master Servicer and each Subservicer, if any, to take all steps
necessary and appropriate, to maintain the perfection and priority of
the Trustee's security interest in the Financed Eligible Loans.
SECTION 4.19. BORROWER INCENTIVE PROGRAMS. The Issuer presently offers
borrower incentive programs on the Financed Eligible Loans. If any such
incentive programs, or any other borrower incentive programs offered by the
Issuer in the future which are not required by the Higher Education Act, are in
effect for any Financed Eligible Loans on any Quarterly Distribution Date on
which the Parity Ratio falls below the Initial Parity Ratio, the Issuer shall
either (i) contribute funds to the Collection Fund in an amount equal to the
principal or interest that otherwise would have been paid on such Financed
Eligible Loans in the absence of the borrower incentive programs since the
preceding Quarterly Distribution Date or (ii) notify the Master Servicer to
instruct the Subservicers to notify the borrowers that the borrower incentive
programs for those Financed Eligible Loans have been terminated. If the Master
Servicer or a Subservicer is notified to provide notice of the termination of
the borrower incentive programs for the Financed Eligible Loans being serviced
by such Master Servicer or the Subservicer, such Master Servicer or Subservicer
may choose to contribute funds to the Collection Fund in an amount equal to the
principal or interest that otherwise would have been paid on such Financed
Eligible Loans in the absence of the borrower incentive programs on the Financed
Eligible Loans being serviced by such Master Servicer or Subservicer in lieu of
providing notice of the termination of the borrower incentive programs for those
Financed Eligible Loans. The Issuer shall notify the Rating Agencies if the
Issuer, the Master Servicer or a Subservicer contributes any additional amounts
pursuant to this Section or if any of the borrower incentive programs are
terminated.
SECTION 4.20. STATEMENTS TO NOTEHOLDERS. Two days preceding a Quarterly
Distribution Date, the Issuer shall cause the Administrator to provide to the
Trustee (with a copy to the Rating Agencies) solely for the purpose of having
the Trustee to forward on such Quarterly Distribution Date to Registered Owners
setting forth the information substantially in the form of Exhibit D hereto,
with such additional information as the Administrator shall determine.
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ARTICLE V
FUNDS
SECTION 5.01. CREATION AND CONTINUATION OF FUNDS AND ACCOUNTS. There are
hereby created and established the following Funds to be held and maintained by
the Trustee for the benefit of the Registered Owners:
(a) Acquisition Fund, including a Prefunding Account and a Costs
of Issuance Account therein;
(b) Administration Fund;
(c) Capitalized Interest Fund;
(d) Collection Fund;
(e) a Debt Service Fund, including an Interest Account, a
Principal Account and a Retirement Account;
(f) Department Rebate Fund; and
(g) Reserve Fund
The Trustee is hereby authorized for the purpose of facilitating the
administration of the Trust Estate and for the administration of any Notes
issued hereunder to create further Accounts or Subaccounts in any of the various
Funds and Accounts established hereunder which are deemed necessary or
desirable.
SECTION 5.02. ACQUISITION FUND. There shall be deposited into the
Acquisition Fund moneys from proceeds of the Notes in an amount equal to
$1,427,728,013. There shall be deposited into the Costs of Issuance Account of
the Acquisition Fund from the proceeds of the Notes deposited to the Acquisition
Fund, an amount equal to $1,000,000. There shall be deposited into the
Prefunding Account of the Acquisition Fund any amounts transferred from the
Capitalized Interest Fund pursuant to Section 5.03 hereof. Financed Eligible
Loans shall be held by the Trustee or its agent or bailee (including the Master
Servicer or a Subservicer) and shall be pledged to the Trust Estate and held as
a part of the Acquisition Fund. Any amounts remaining in the Acquisition Fund
after the purchase of the initial portfolio of Eligible Loans on the Date of
Issuance, and not on deposit in the Costs of Issuance Account, shall be
deposited to the Prefunding Account of the Acquisition Fund on the first Monthly
Distribution Date thereafter.
Moneys on deposit in the Costs of Issuance Account of the Acquisition
Fund shall be used upon Issuer Order, to pay costs of issuance of the Notes,
including the costs related to the purchase of one or more Derivative Products,
if any. Moneys on deposit in the Acquisition Fund, including the Prefunding
Account of the Acquisition Fund, including, without limitation, amounts
transferred from the Capitalized Interest Fund pursuant to Section 5.03 hereof,
shall be used upon receipt by the Trustee of an Eligible Loan Acquisition
Certificate, to acquire Eligible Loans and to fund "add-on consolidation loans"
that are Eligible Loans, (A) at a price not to exceed purchase price set forth
in the cash flow analyses provided to each Rating Agency for the Eligible Loans
purchased on the Date of Issuance and (B) at a price not in excess of 100% of
the outstanding principal balance of such Eligible Loans, plus accrued interest,
for any Eligible Loans purchased thereafter. 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.
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In addition, on each Monthly Distribution Date, to the extent there are
insufficient Available Funds in the Collection Fund to make one or more of the
transfers required by Section 5.04(b) (other than transfers to fund "add-on
consolidation loans" or repurchase student loans from the Master Servicer, and
Subservicer or any Guaranty Agency as described in clause (a)(i) and (iii) of
the definition of Available Funds) and 5.04(c)(i) through (iv) hereof, then the
Administrator shall instruct the Trustee in writing to withdraw from the
Acquisition Fund (first from the Prefunding Account and second from the Costs of
Issuance Account therein) on such Monthly Distribution Date an amount of money
(but not Eligible Loans) equal to such deficiency and to deposit such amount in
the Collection Fund to the extent moneys are not available to make such
transfers from the Capitalized Interest Fund pursuant to Section 5.03 hereof.
Notwithstanding the foregoing, if any amounts transferred to the Prefunding
Account from the Capitalized Interest Fund on a Quarterly Distribution Date
remain in the Prefunding Account on the succeeding Quarterly Distribution Date,
then the Trustee shall, without direction from or notice to the Issuer, transfer
all such remaining moneys or funds to the Collection Fund.
While the Issuer will be the beneficial owner of the Financed Eligible
Loans, it is understood and agreed that the Eligible Lender Trustee will be the
legal owner thereof and the Trustee will have a security interest in the
Financed Eligible Loans for and on behalf of the Registered Owners. In the case
of a single Financed Eligible Loan evidenced by a separate note, each such note
will be held in the name of the Trustee for the account of the Issuer, for the
benefit of the Registered Owners. In the case of a Financed Eligible Loan
evidenced by a Master Promissory Note, the Issuer shall cause the holder of the
original Master Promissory Note to indicate by book-entry on its books and
records that the Issuer is the beneficial owner of the Financed Eligible Loan
and that the Eligible Lender Trustee is the legal owner thereof and the Trustee
has a security interest in the Financed Eligible Loan for the benefit of the
Registered Owners.
Except (i) as provided in Sections 5.08, 10.03 and 10.04 hereof and
Section 2.04 of Appendix A hereto, (ii) for consolidation or serialization
purposes, (iii) for transfers to a Guaranty Agency, (iv) for transfers to the
Master Servicer or a Subservicer pursuant to its repurchase obligation under the
applicable Master Servicing Agreement or Subservicing Agreement, (v) for
transfers to a Seller pursuant to its repurchase obligation under its Student
Loan Purchase Agreement, (vi) when the Issuer does not have sufficient moneys in
the Collection Fund to fund any required "add-on consolidation loan" (in which
case the Issuer may sell the Financed Eligible Loan to which such required
"add-on consolidation loan" relates), or (vii) as set forth in the following
sentence, Financed Eligible Loans shall not be sold, transferred or otherwise
disposed of by the Issuer through the Trustee free from the lien of this
Indenture while any of the Class A Notes are Outstanding. If necessary for
administrative purposes, the Issuer may sell Financed Eligible Loans through the
Trustee free from the lien of this Indenture, so long as the sale price for any
Financed Eligible Loan is not less than the Purchase Amount of such Financed
Eligible Loan and the collective aggregate principal balance of all such sales
does not exceed $10,000,000, and the Issuer hereby certifies the same to the
Trustee, upon which the Trustee may conclusively rely. The Issuer hereby
certifies, upon which the Trustee may conclusively rely, that any Financed
Eligible Loan sold pursuant to this Indenture shall not be sold for a price less
than the Purchase Amount of such Financed Eligible Loan. The Issuer shall
provide notice to Moody's if the principal amount of Financed Eligible Loans
sold pursuant to this Indenture exceeds 10% of the Initial Pool Balance.
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SECTION 5.03. CAPITALIZED INTEREST FUND. There shall be deposited into
the Capitalized Interest Fund moneys from proceeds of the Notes in an amount
equal to $65,000,000.
On each Monthly Distribution Date, to the extent there are insufficient
Available Funds in the Collection Fund to make one or more of the transfers
required by Sections 5.04(b) (other than transfers to fund "add-on consolidation
loans" or repurchase student loans from the Master Servicer, any Subservicer or
any Guaranty Agency as described in clause (a)(i) and (iii) of the definition of
Available Funds) and 5.04(c)(i) through (iv) hereof, then the Administrator
shall instruct the Trustee in writing to withdraw from the Capitalized Interest
Fund on such Monthly Distribution Date, an amount equal to such deficiency and
to deposit such amount in the Collection Fund. On the December 2007 Quarterly
Distribution Date, the Administrator shall instruct the Trustee to transfer any
amounts in excess of $36,000,000 on deposit in the Capitalized Interest Fund to
the Prefunding Account of the Acquisition Fund. On the March 2008 Quarterly
Distribution Date, the Administrator shall instruct the Trustee to transfer any
amounts in excess of $23,000,000 on deposit in the Capitalized Interest Fund to
the Prefunding Account of the Acquisition Fund. On the September 2008 Quarterly
Distribution Date, the Administrator shall instruct the Trustee to transfer any
amounts in excess of $10,000,000 on deposit in the Capitalized Interest Fund to
the Prefunding Account of the Acquisition Fund. On the March 2009 Quarterly
Distribution Date, the Administrator shall instruct the Trustee to transfer all
remaining amounts on deposit in the Capitalized Interest Fund to the Prefunding
Account of the Acquisition Fund.
SECTION 5.04. COLLECTION FUND.
(a) DEPOSITS TO COLLECTION FUND. There shall be deposited to the
Collection Fund (i) all Available Funds, and all other moneys and
investments derived from assets on deposit in and transfers from the
Capitalized Interest Fund (as described in Section 5.03 hereof), the
Acquisition Fund (as described in Section 5.02 hereof), the Reserve Fund
(as described in Section 5.05 hereof) and the Department Rebate Fund (as
described in Section 5.08 hereof), (ii) all Counterparty Payments, (iii)
amounts deposited pursuant to Sections 10.03 and 10.04 hereof and (iv)
any other amounts deposited thereto upon receipt of deposit instructions
from the Issuer or the Administrator as applicable. Moneys on deposit in
the Collection Fund shall be used to make the payments described in this
Section and, to the extent moneys are not available in the Prefunding
Account of the Acquisition Fund pursuant to Section 5.02 hereof, upon
receipt by the Trustee of an Eligible Loan Acquisition Certificate, to
fund "add-on consolidation loans" that are Eligible Loans at a price not
in excess of 100% of the outstanding principal balance of such Eligible
Loans. The Trustee may conclusively rely on all written instructions of
the Administrator described in this Indenture with no further duty to
examine or determine the information contained in any Administrator's
Monthly Distribution Date Certificate or Issuer Order.
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(b) PAYMENTS ON DATES OTHER THAN MONTHLY DISTRIBUTION DATES. In
accordance with Section 5.08 hereof, the Administrator shall instruct
the Trustee in writing on a monthly basis not later than the 10th
calendar day of each month to withdraw from the Collection Fund and
deposit to the Department Rebate Fund the amount necessary to bring the
balance of the Department Rebate Fund to the Department Rebate Interest
Amount for such date, and the Trustee shall comply with such
instructions. Upon written direction from the Administrator to the
Trustee, 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 without limitation amounts described in
clause (a)(i), (ii) and (iii) of the definition of Available Funds.
(c) PAYMENTS ON MONTHLY DISTRIBUTION DATES. The Administrator
shall instruct the Trustee in writing no later than the Determination
Date preceding each Monthly Distribution Date (based on the information
contained in a certificate of the Administrator (in the form set forth
as Exhibit C hereto) and the related Servicer's Report, if applicable)
to make the following deposits and distributions from the Available
Funds in the Collection Fund received during the immediately preceding
Collection Period or remaining in the Collection Fund from a prior
Monthly Distribution Date (including any amounts transferred from the
Capitalized Interest Fund pursuant to Section 5.03 hereof, the
Acquisition Fund pursuant to Section 5.02 hereof and the Reserve Fund
pursuant to Section 5.05(b) and (c) hereof) to the Persons or to the
account specified below on such Monthly Distribution Date, in the
following order of priority, and the Trustee shall comply with such
instructions, provided, however, that if the Available Funds received
during the immediately preceding Collection Period or remaining in the
Collection Fund from a prior Monthly Distribution Date are not
sufficient to make the payments or deposits required pursuant to clauses
(i) through (iv) of this subsection (c), then, after any required
transfers from the Acquisition Fund, the Capitalized Interest Fund and
the Reserve Fund, any other Available Funds on deposit in the Collection
Fund, which the Administrator would have deemed Available Funds for the
current Collection Period, may be used to make the payments or deposits
required pursuant to clauses (i) through (iv) of this subsection (c):
(i) to the credit of the Administration Fund to the
extent and in the manner provided in Section 5.06 hereof, an
amount sufficient to pay to the Master Servicer, the Trustee,
the Delaware Trustee, the Broker-Dealers and the Auction Agent,
pro rata, based on amounts owed to each such party, without
preference or priority of any kind, the Servicing Fee, the
Trustee Fee, the Delaware Trustee Fee, the Broker-Dealer Fees
and the Auction Agent Fee, respectively, due and payable prior
to the next succeeding Monthly Distribution Date, in each case,
together with such fees remaining unpaid from prior Monthly
Distribution Dates;
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(ii) to pay the Administrator, the Administration Fee
due and payable on the Monthly Distribution Date and all unpaid
Administration Fees from prior Monthly Distribution Dates;
(iii) to the credit of the Interest Account to the
extent and in the manner provided in Section 5.07(a) hereof to
provide for the payment of interest on the Class A Notes or the
payment of any Issuer Derivative Payments (excluding Termination
Payments other than Priority Termination Payments) payable
therefrom, pro-rata, based on amounts owed to each such party,
without preference or priority of any kind payable therefrom;
(iv) to the credit of the Interest Account to the extent
and in the manner provided in Section 5.07(a) hereof to provide
for the payment of interest on the Class B Notes;
(v) to the Depositor, an amount equal to the unpaid
interest accrued on the Financed Eligible Loans subsequent to
the Cutoff Date but prior to the Date of Issuance, until such
amount has been paid in full;
(vi) if such Monthly Distribution Date is a Quarterly
Distribution Date, to the credit of the Retirement Account for
payment to the Class A Noteholders, the Class A Principal
Distribution Amount;
(vii) if such Monthly Distribution Date is a Quarterly
Distribution Date, on and after the Stepdown Date, and provided
that no Trigger Event is in effect on such Monthly Distribution
Date, to the credit of the Retirement Account for payment to the
Class B Noteholders, the Class B Principal Distribution Amount;
(viii) if such Monthly Distribution Date is a Quarterly
Distribution Date, to the credit of the Reserve Fund, the
amount, if any, necessary to reinstate the balance of the
Reserve Fund up to the Specified Reserve Fund Balance;
(ix) if such Monthly Distribution Date is a Quarterly
Distribution Date, to pay to the Master Servicer, the aggregate
unpaid amount of any Carryover Servicing Fees, if any;
(x) if such Monthly Distribution Date is a Quarterly
Distribution Date, to the credit of the Interest Account to the
extent and in the manner provided in Section 5.07(a) for the
payment of any Carry-Over Amount (and interest thereon) with
respect to the Class A Notes;
(xi) if such Monthly Distribution Date is a Quarterly
Distribution Date, to the credit of the Interest Account to the
extent and in the manner provided in Section 5.07(a) for the
payment of Carry-Over Amounts (and interest thereon) with
respect to the Class B Notes;
(xii) if such Monthly Distribution Date is a Quarterly
Distribution Date, to pay to the Counterparties, pro rata,
without preference or priority of any kind, any accrued and
unpaid Termination Payments due to each such Counterparty under
the applicable Derivative Product;
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(xiii) if such Monthly Distribution Date is a Quarterly
Distribution Date, in the event the Financed Eligible Loans are
not sold pursuant to Sections 10.03 or 10.04 hereof, to the
credit of the Retirement Account as additional Principal
Distribution Amount to pay as an accelerated payment of
principal balance of the Notes then Outstanding, to the
Noteholders in the same order and priority as is set forth in
Sections 5.07(b) hereof until the principal amount of the Notes
is paid in full; and
(xiv) subject to the remaining provisions of this
Section, if such Monthly Distribution Date is a Quarterly
Distribution Date, any remaining Available Funds, at the option
of the Issuer, will be (A) deposited to the Debt Service Fund
and used to redeem Class-B Notes pursuant to Section 2.11(a)
hereof if the Senior Parity Ratio will be at least 103% after
the redemption of such Class B Notes or (B) released to the
Issuer.
Amounts remaining in the Collection Fund on a Monthly
Distribution Date that is not also a Quarterly Distribution Date after
making the payments and deposits required by clauses (i) thorough (vi)
of this subsection (c) shall remain in the Collection Fund and be
included in the Available Revenues for the next Monthly Distribution
Date.
Amounts properly distributed to the Issuer pursuant to clause (v)
or (xiv) of this subsection (c) shall be deemed released from the Trust
Estate and the security interest therein granted to the Trustee, and the
Issuer shall in no event thereafter be required to refund any such
distributed amounts.
The amounts to be transferred to the Administration Fund pursuant
to clause (i) of this subsection (c) shall be estimated by the
Administrator based upon the Broker-Dealer Fees and Auction Agent Fees
set forth in the existing Broker-Dealer Agreements and the Auction Agent
Agreement.
Subject to the provisions of Sections 7.05 and 7.07 hereof, the
Issuer hereby certifies that the amounts paid to the Trustee, the
Auction Agent, the Broker-Dealers and the Delaware Trustee (but not the
Master Servicer) pursuant to clause (i) of this subsection (c) and the
Administration Fee pursuant to clause (ii) of this subsection (c), shall
not in any one Fiscal Year exceed the amount or percentage designated
therefore in the cash flows provided to each Rating Agency on the Date
of Issuance, unless the Issuer, after furnishing each Rating Agency with
revised cash flows, shall have received a Rating Confirmation.
SECTION 5.05. RESERVE FUND.
(a) On the Date of Issuance, the Trustee shall deposit
$3,671,987 into the Reserve Fund. Thereafter, the Trustee shall transfer
to the Reserve Fund from the Collection Fund all amounts designated for
transfer thereto pursuant to Section 5.04(c)(viii) hereof.
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(b) On each Monthly Distribution Date, to the extent there are
insufficient Available Funds in the Collection Fund to make one or more
of the transfers required by Sections 5.04(b) (other than transfers to
fund "add-on consolidation loans" or repurchase student loans from the
Master Servicer, any Subservicer or any Guaranty Agency as described in
clause (a)(i) and (iii) of the definition of Available Funds) and
5.04(c)(i) through (iv) hereof, then the Administrator shall instruct
the Trustee in writing to withdraw from the Reserve Fund on such Monthly
Distribution Date, as the case may be, an amount equal to such
deficiency and to deposit such amount in the Collection Fund to the
extent moneys are not available to make such transfers from the
Capitalized Interest Fund pursuant to Section 5.03 hereof or from the
Acquisition Fund pursuant to Section 5.02 hereof. Additionally, if on
the Note Final Maturity Date for a Class of Notes, and after giving
effect to the distribution of the Available Funds on such Note Final
Maturity Date, the principal amount of such Class of Notes will not be
reduced to zero, the Administrator shall instruct the Trustee in writing
to withdraw from the Reserve Fund on such Note Final Maturity Date an
amount equal to the amount needed to reduce the principal amount of such
Class of Notes to zero and to deposit such amount in the Principal
Account of the Debt Service Fund for application to payment of the
Outstanding Amount of such Class of Notes.
(c) After giving effect to subsection (b) of this Section, if
the amount on deposit in the Reserve Fund on any Quarterly Distribution
Date is greater than the Specified Reserve Fund Balance for such
Quarterly Distribution Date, the Administrator shall instruct the
Trustee in writing to withdraw from the Reserve Fund on such Quarterly
Distribution Date an amount equal to such excess and to deposit such
amount in the Collection Fund.
(d) On the final Distribution Date upon termination of the trust
and following the payment in full of the Outstanding Amount of the Notes
and of all other amounts (other than unpaid Issuer Derivative Payments
and Carryover Servicing Fees) owing or to be distributed hereunder to
Noteholders, the Trustee, the Master Servicer, the Administrator, the
Auction Agent, the Broker-Dealers, the Delaware Trustee or the
Counterparties (excluding Termination Payments other than Priority
Termination Payments), to the extent that Available Funds on such date
are insufficient to make the following payments, amounts remaining in
the Reserve Fund shall be used first to pay any unpaid Issuer Derivative
Payments and second to pay any Carryover Servicing Fees. Any amount
remaining on deposit in the Reserve Fund after such payments have been
made shall be released to the Issuer. The Issuer shall in no event be
required to refund any amounts properly distributed pursuant to this
subsection (d).
(e) Anything in this Section to the contrary notwithstanding, if
the market value of securities and cash in the Reserve Fund is on any
Distribution Date sufficient to pay the remaining principal amount of
and interest accrued on the Notes, and to pay any unpaid Issuer
Derivative Payments and Carryover Servicing Fees, such amount will be so
applied on such Distribution Date and the Administrator shall instruct
the Trustee in writing to make such payments.
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SECTION 5.06. ADMINISTRATION FUND. The Trustee shall credit to the
Administration Fund all amounts transferred thereto from the Collection Fund as
provided in Section 5.04(c)(i) hereof. Amounts in the Administration Fund shall
be used for the payment of Servicing Fees, Trustee Fees, Delaware Trustee Fees,
Broker-Dealer Fees and Auction Agent Fees as provided in this Section.
On each Monthly Distribution Date, the Trustee shall transfer and credit
to the Administration Fund moneys available hereunder for transfer thereto in
such amounts and at such times as an Authorized Officer of the Issuer shall
direct by the Administrator's Monthly Distribution Date Certificate or an Issuer
Order, for the payment of Servicing Fees, Trustee Fees, Delaware Trustee Fees,
Broker-Dealer Fees and Auction Agent Fees due prior to the next succeeding
Monthly Distribution Date.
Amounts in the Administration Fund may be paid out for Servicing Fees,
Trustee Fees, Delaware Trustee Fees, Broker-Dealer Fees and Auction Agent Fees
at any time as set forth in the Administrator's Monthly Distribution Date
Certificate or upon receipt of an Issuer Order and shall be paid in the full
amount designated therein. Upon receipt by the Trustee of the Administrator's
Monthly Distribution Date Certificate or an Issuer Orders directing the payment
of Servicing Fees, Trustee Fees, Delaware Trustee Fees, Broker-Dealer Fees and
Auction Agent Fees to designated payees in designated amounts for stated
services or, in the case of reimbursement of the Issuer for its payment of such
Servicing Fees, Trustee Fees, Delaware Trustee Fees, Broker-Dealer Fees or
Auction Agent Fees (to the extent permitted in this Section), to the Issuer, and
in each case certifying that such payment is authorized by this Indenture, be
used for and applied only to pay Servicing Fees, Trustee Fees, Delaware Trustee
Fees, Broker-Dealer Fees and Auction Agent Fees or to reimburse another fund,
account or other source of the Issuer for the previous payment of Servicing
Fees, Trustee Fees, Delaware Trustee Fees, Broker-Dealer Fees or Auction Agent
Fees. Payments from the Administration Fund for such purposes shall be made by
check or wire transfer by the Trustee in accordance with such the
Administrator's Monthly Distribution Date Certificates or Issuer Orders. Amounts
in the Administration Fund in excess of amounts needed to pay Servicing Fees,
Trustee Fees, Delaware Trustee Fees, Broker-Dealer Fees and Auction Agent Fees
may, upon Issuer Order, be transferred to the Collection Fund.
SECTION 5.07. DEBT SERVICE FUND. The Debt Service Fund shall be used
only for the payment of principal, premium, if any, and interest on the Notes,
Issuer Derivative Payments and Carry-Over Amounts (including any accrued
interest thereon).
(a) INTEREST ACCOUNT. With respect to each class of Notes on
which interest is paid at least monthly, the Trustee shall deposit to
the credit of the Interest Account an amount equal to the Interest
Distribution Amount that will become payable on such Class of the Notes
prior to the next succeeding Monthly Distribution Date. With respect to
each class of Notes on which interest is paid at intervals less
frequently than monthly, the Trustee shall make equal monthly deposits
to the credit of the Interest Account on each Monthly Distribution Date
preceding the Distribution Date (and, if applicable, on such
Distribution Date if such Distribution Date is also a Monthly
Distribution Date) for such Class of the Notes, to aggregate the full
amount of the Interest Distribution Amount due on the next Distribution
Date for such Class of the Notes. For purposes of making the deposits
required by this subsection (a), with respect to a Class of the Notes,
66
for any Interest Accrual Period for which the actual interest rate with
respect to such Class of Notes is not known on the Monthly Distribution
Date, such Class of Notes shall be assumed to bear interest at the rate
determined by the Administrator on behalf of the Issuer. Amounts
transferred to the Interest Account of the Debt Service Fund for the
payment of interest on the Class A Notes shall be allocated among each
Class of the Class A Notes on the pro-rata bases based upon the amounts
required to be transferred for such Class pursuant to this subsection
(a), and amounts transferred to the Interest Account of the Debt Service
Fund for the payment of interest on the Class B Notes shall be allocated
among each Class of the Class B Notes on the pro-rata bases based upon
the amounts required to be transferred for such Class pursuant to this
subsection (a).
With respect to each Derivative Product under which Issuer
Derivative Payments are paid at least monthly, the Trustee shall deposit
to the credit of the Interest Account an amount equal to the Issuer
Derivative Payments that will become payable under such Derivative
Product prior to the next succeeding Monthly Distribution Date. With
respect to each Derivative Product under which Issuer Derivative
Payments are paid less frequently than monthly, the Trustee shall make
equal monthly deposits to the credit of the Interest Account on each
Monthly Distribution Date preceding the payment date (and, if
applicable, on such payment date if such payment date is also a Monthly
Distribution Date) on which such Issuer Derivative Payments are due, to
aggregate the full amount of such Issuer Derivative Payments on such
payment date. For purposes of making the deposits required by this
subsection (a), with respect to any Derivative Product for which any
such payment amount cannot be determined on the Monthly Distribution
Date, the Trustee will make such deposit based upon the payment amount
determined by Administrator on behalf of the Issuer. Amounts transferred
to the Interest Account of the Debt Service Fund for the payment of
Issuer Derivative Payments shall be allocated among each Counterparty on
the pro-rata bases based upon the amounts required to be transferred for
such Derivative Product pursuant to this subsection (a).
In making the deposits required to be deposited and credited to
the Interest Account, all other deposits and credits otherwise made or
required to be made to the Interest Account shall, to the extent
available for such purpose, be taken into consideration and allowed for.
On each Quarterly Distribution Date, if any Carry-Over Amount
(including any accrued interest thereon) will be due and payable with
respect to a Class of the Auction Rate Notes during the next month, the
Trustee shall transfer to the Interest Account (to the extent amounts
are available therefore in the Collection Fund after taking into account
all prior applications of moneys in the Collection Fund on such
Quarterly Distribution Date in accordance with Section 5.04 hereof) an
amount equal to such Carry-Over Amount (including any accrued interest
thereon) so due and payable. Amounts transferred to the Interest Account
of the Debt Service Fund for the payment of Carry-Over Amount (including
any accrued interest thereon) on the Class A Notes shall be allocated
among each Class of the Class A Notes on the pro-rata bases based upon
the Carry-Over Amount (including any accrued interest thereon) required
to be transferred for such Class pursuant to this subsection (a), and
amounts transferred to the Interest Account of the Debt Service Fund for
the payment of Carry-Over Amount (including any accrued interest
thereon) on the Class B Notes shall be allocated among each Class of the
Class B Notes on the pro-rata bases based upon the Carry-Over Amount
(including any accrued interest thereon) required to be transferred for
such Class pursuant to this subsection (a).
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The moneys in the Interest Account required for the payment of
interest on the Notes of any Class, any Issuer Derivative Payments or
any Carry-Over Amount (including any accrued interest thereon) shall be
applied by the Trustee to the payment of such interest or amounts when
due without further authorization or direction, except that the Issuer
shall provide written direction as to any Issuer Derivative Payments.
Any amounts allocated to a Class of the Notes shall be paid to the
applicable Noteholders on the next Distribution Date for such Class.
(b) PRINCIPAL ACCOUNT. The moneys in the Principal Account
required for the payment of the principal of a Class of the Notes at its
Note Final Maturity Date shall be applied by the Trustee to such payment
when due without further authorization or direction. Amounts transferred
to the Principal Account of the Debt Service Fund for the payment of
principal on the Class A Notes shall be allocated among each Class of
the Class A Notes on the pro-rata bases based upon the amounts required
to be transferred for such Class pursuant to this subsection (b), and
amounts transferred to the Principal Account of the Debt Service Fund
for the payment of principal on the Class B Notes shall be allocated
among each Class of the Class B Notes on the pro-rata bases based upon
the amounts required to be transferred for such Class pursuant to this
subsection (b).
All Notes retired by prepayment, purchase or payment at a Note
Final Maturity Date pursuant to this subsection (b) shall be canceled
and shall not be reissued. The accrued interest to be paid on the
prepayment, purchase or payment at a Note Final Maturity Date of such
Notes shall be paid from the Interest Account.
(c) RETIREMENT ACCOUNT. The Trustee shall deposit to the credit
of the Retirement Account (i) any amounts transferred thereto from the
Collection Fund to provide for the redemption of, or the distribution of
principal with respect to, a Class of the Notes and (ii) that portion of
the proceeds of the sale of Financed Eligible Loans, if any, to be used
to pay the principal or redemption price of a Class of the Notes on a
date other than the Note Final Maturity Date. All redemptions of, and
distributions of principal with respect to, Notes (other than at a Note
Final Maturity Date) shall be made with moneys deposited to the credit
of the Retirement Account.
In the event that a Class of the Notes is to be prepaid from the
Retirement Account on a date other than a regularly scheduled
Distribution Date for such Class, accrued interest on such Class of the
Notes shall be paid from the Interest Account.
Any Class A Principal Distribution Amount deposited to the
Retirement Account shall be used to redeem or make distributions of
principal on the Class A Notes in the following order of priority:
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(i) to the Class A-1L Notes until paid in full, and then
(ii) to the Class A-2L Notes until paid in full, and
then
(iii) to the Class A-3L Notes until paid in full, and
then
(iv) pro rata, based upon the Outstanding Amounts of
each Class, to the Class A-4AR-1 Notes and the Class A-4AR-2
Notes until paid in full
Any Class B Principal Distribution Amount deposited to the
Retirement Account shall be used to redeem or make distributions of
principal on the Class B Notes, pro rata, based upon the Outstanding
Amounts of each Class, to the Class B-1 Notes and the Class B-2 Notes
until paid in full.
The moneys in the Retirement Account required for the payment of
the redemption price of a Class of the Notes to be redeemed, or required
distributions of principal with respect to a Class of the Notes, shall
be applied by the Trustee to such payment when due without further
authorization or direction. Any Class A Principal Distribution Amount
allocated to a Class of the LIBOR Rate Notes shall be paid to the
applicable Noteholders on the Quarterly Distribution Date such Class A
Principal Distribution Amount is deposited to the Retirement Account.
Any Class A Principal Distribution Amount allocated to a Class of the
Auction Rate Notes shall be paid to the applicable Noteholders in lots
of $50,000 on the next Auction Rate Distribution Date for such Class for
which notice of redemption can be provided pursuant to Section 2.11(e)
hereof. Amounts in excess of lots of $50,000 allocated to the Class
A-4AR-1 Notes, the Class A-4AR-2 Notes, the Class B-1 Notes or the Class
B-2 Notes shall be retained in the Retirement Account of the Debt
Service Fund and used to redeem such Class on a later Auction Rate
Distribution Date.
SECTION 5.08. DEPARTMENT REBATE FUND. On or before the 10th calendar day
of each month (or, if such date is not a Business Day, the next Business Day),
the Trustee shall deposit into the Department Rebate Fund from the Collection
Fund pursuant to Section 5.04(b) hereof the amount necessary to bring the
balance of the Department Rebate Fund to the Department Rebate Interest Amount
for such date. Upon written instructions from the Administrator to the Trustee,
the Trustee shall (i) pay to the Department an amount equal to the Department
Rebate Interest Amount due on a Department Rebate Payment Date, FIRST, from
amounts on deposit in the Department Rebate Fund and, SECOND, from the
Collection Fund pursuant to Section 5.04(b) hereof or (ii) if the Department has
deducted the Department Rebate Interest Amount from Interest Benefit Payments or
Special Allowance Payments due to the Issuer, transfer the amounts on deposit in
the Department Rebate Fund to the Collection Fund.
SECTION 5.09. INVESTMENT OF FUNDS HELD BY TRUSTEE. The Trustee shall
invest money held for the credit of any Fund, Account or Subaccount held by the
Trustee hereunder as directed in writing (or orally, confirmed in writing) by an
Authorized Representative, 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, Account or Subaccount will be required for the purposes intended. In the
absence of any such direction and to the extent practicable, the Trustee shall
invest amounts held hereunder in those Investment Securities described in clause
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(k) of the definition of the Investment Securities. All such investments shall
be held by (or by any custodian on behalf of) the Trustee for the benefit of the
Issuer; provided that on the day upon which such interest is paid, all interest
and other investment income collected (net of losses and investment expenses) on
funds on deposit therein shall be deposited into the Collection Fund. The
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 Trustee with respect to any
discretionary acts required or permitted of the Trustee under any Investment
Securities and the Trustee shall not take such discretionary acts without such
written direction.
The Investment Securities purchased shall be held by the Trustee and
shall be deemed at all times to be part of such Fund, Account or Subaccount or
combination thereof, and the Trustee shall inform the Issuer of the details of
all such investments. Upon direction in writing (or orally, confirmed in
writing) from an Authorized Representative, the Trustee shall use its best
efforts to sell at the best price obtainable, or present for redemption, any
Investment Securities purchased by it as an investment whenever it shall be
necessary to provide money to meet any payment from the applicable Fund. The
Trustee shall advise the Issuer in writing, on or before the fifteenth day of
each calendar month (or such later date as reasonably consented to by the
Issuer), of all investments held for the credit of each Fund in its custody
under the provisions of this Indenture as of the end of the preceding month and
the value thereof, and shall list any investments which were sold or liquidated
for less than the par value thereof, plus accrued but unpaid interest at the
time thereof.
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 Trustee and its affiliates may act as
principal or agent in the acquisition or disposition of any Investment
Securities.
Notwithstanding the foregoing, the Trustee shall not be responsible or
liable for any losses on investments made by it hereunder or for keeping all
Funds held by it, fully invested at all times, its only responsibility being to
comply with the investment instructions of the Issuer or its designee in a
non-negligent manner.
The Issuer acknowledges that to the extent the regulations of the
Comptroller of the Currency or other applicable regulatory agency grant the
Issuer the right to receive brokerage confirmations of security transactions,
the Issuer waives receipt of such confirmations.
SECTION 5.10. RELEASE.
(a) The 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 the terms hereof permit the sale, disposition or
transfer of such Financed Eligible Loans.
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(b) Subject to the payment of its fees and expenses pursuant to
Sections 7.05 and 7.07 hereof, the 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 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 Trustee as provided in this Article
shall be bound to ascertain the Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys.
(c) The Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Trustee pursuant to Sections 7.05 and
7.07 hereof and all amounts payable to the Master Servicer, each
Subservicer, the Administrator, the Auction Agent, the Broker-Dealers,
the Delaware Trustee and the Counterparties have been paid, release any
remaining portion of the Trust Estate that secured the Notes from the
lien of this Indenture and release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Funds and Accounts.
(d) Subject to the provisions of this Indenture, the Trustee
shall release property from the lien of this Indenture only upon receipt
of an Issuer Order.
(e) Each Registered Owner, by the acceptance of a Note,
acknowledges that from time to time the Trustee shall release the lien
of this Indenture on any Financed Eligible Loan to be sold or
transferred pursuant to Section 5.02 hereof, and each Registered Owner,
by the acceptance of a Note, consents to any such release.
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 any interest on
any Note when the same becomes due and payable, and such default shall
continue for a period of five (5) days; provided, however, that a
default in the due and punctual payment of any interest on any Class B
Note shall not be an Event of Default if any Class A Notes are
Outstanding;
(b) default in the due and punctual payment of the principal of
any Note when the same becomes due and payable on the related Note Final
Maturity Date; provided, however, that a default in the due and punctual
payment of principal on any Class B Note shall not be an Event of
Default if any Class A Notes are Outstanding;
(c) default in the performance or observance of any other of the
covenants, agreements or conditions on the part of the Issuer to be
kept, observed and performed contained in this Indenture or in the
Notes, and continuation of such default for a period of 90 days after
written notice thereof by the Trustee to the Issuer; and
(d) the occurrence of an Event of Bankruptcy.
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Any notice herein provided to be given to the Issuer with respect to any
default shall be deemed sufficiently given if sent by registered 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
Trustee by an Authorized Representative. The Trustee may give any such notice in
its discretion and shall give such notice if requested to do so in writing by
the Registered Owners of at least 51% of the collective aggregate principal
amount of the Highest Priority Obligations at the time Outstanding.
SECTION 6.02. REMEDY ON DEFAULT; POSSESSION OF TRUST ESTATE. Subject to
Sections 6.08, 7.05 and 7.07 hereof, upon the happening and continuance of any
Event of Default, the Trustee 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 Available Funds of the same and of every part
thereof, and after deducting therefrom all 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 Trustee shall apply the rest and
residue of the money received by the Trustee as follows:
FIRST, to the Trustee and the Delaware Trustee, any Trustee Fee
and any Delaware Trustee Fee, respectively due and owing;
SECOND, to the Master Servicer, the Auction Agent and the
Broker-Dealers, pro rata, without preference or priority of any kind,
according to the amounts due and payable to each such party, any
Servicing Fees, Auction Agent Fee and Broker-Dealer Fees, respectively,
due to each such party and remaining unpaid;
THIRD, pro rata, based on amounts due and owing, to (i) the
Counterparties, pro rata, without preference or priority of any kind, in
proportion to their respective entitlements under the applicable
Derivative Products (excluding all Termination Payments other than
Priority Termination Payments) and (ii) to the Class A Noteholders of
each Class for amounts due and unpaid on each such Class of Class A
Notes for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on each such Class of Class A
Notes for such interest;
FOURTH, to the Class A Noteholders for amounts due and unpaid on
the Class A Notes for principal, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class A
Notes for principal;
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FIFTH, to the Class B Noteholders for amounts due and unpaid on
the Class B Notes for interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class B
Notes for such interest;
SIXTH, to the Class B Noteholders for amounts due and unpaid on
the Class B Notes for principal, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class B
Notes for principal;
SEVENTH, to the Class A Noteholders, all Carry-Over Amounts (and
any accrued interest thereon) then due and unpaid, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A Notes for such Carry-Over Amounts;
EIGHTH, to the Class B Noteholders, all Carry-Over Amounts (and
any accrued interest thereon) then due and unpaid, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class B Notes for such Carry-Over Amounts;
NINTH, to the Counterparties, in proportion to the respective
entitlements under the applicable Derivative Product, ratably, without
preference or priority of any kind, for any Termination Payments due and
any other unpaid Issuer Derivative Payments;
TENTH, to the Master Servicer, for any unpaid Carryover Servicing
Fees; and
ELEVENTH, to the Issuer, for distribution in accordance with the
terms of the Administration Agreement and the Trust Agreement.
The Trustee may fix a record date and payment date for any payment to
Registered Owners pursuant to this Section. At least 15 days before such record
date, the Trustee shall mail to each Registered Owner and the Issuer a notice
that states the record date, the payment date and the amount to be paid.
SECTION 6.03. REMEDIES ON DEFAULT; ADVICE OF COUNSEL. Upon the happening
of any Event of Default, the Trustee may proceed to protect and enforce the
rights of the Trustee and the Registered Owners in such manner as counsel for
the 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 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 Trustee may make and deliver to the purchaser or
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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 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 Trustee, shall ratify and
confirm any sale or sales by executing and delivering to the Trustee or to such
purchaser or purchasers all such instruments as may be necessary, or in the
judgment of the Trustee, proper for the purpose which may be designated in such
request. In addition, the Trustee may proceed to protect and enforce the rights
of the Trustee and the Registered Owners of the Obligations in such manner as
counsel for the 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 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 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 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 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
Class B Notes unless the proceeds of such a sale would be sufficient to
discharge the Class B Notes 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 Trustee or of the Registered Owners under this Indenture or
otherwise, then as a matter of right, the 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.
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SECTION 6.06. RESTORATION OF POSITION. In case the 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 Trustee, then and in every such case to the extent not
inconsistent with such adverse decree, the Issuer, the 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 Trustee and of the Registered Owners shall continue as though no
such proceeding had been taken.
SECTION 6.07. APPLICATION OF SALE PROCEEDS. The proceeds of any sale of
the Trust Estate, together with any funds at the time held by the Trustee and
not otherwise appropriated, shall be applied by the Trustee as set forth in
Section 6.02 hereof, and then to the Issuer or whomsoever shall be lawfully
entitled thereto.
SECTION 6.08. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default should occur and be continuing, then and in every such case the
Trustee or the Registered Owners of Obligations representing not less than a
majority of the Outstanding Amount of the Highest Priority Obligations may
declare all the Outstanding Obligations to be immediately due and payable, by a
notice in writing to the Issuer (and to the Trustee if given by the Registered
Owners), and upon any such declaration the unpaid principal amount of such
Outstanding Obligations, together with accrued and unpaid interest thereon
through the date of acceleration, shall become immediately due and payable,
subject, however, to Section 6.04 hereof.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Registered
Owners of Obligations representing a majority of the collective aggregate
principal amount of the Highest Priority Obligations then Outstanding, by
written notice to the Issuer and the Trustee, may rescind and annul such
declaration and its consequences if:
(a) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay:
(i) all payments of principal of and interest on all
Obligations and all other amounts that would then be due
hereunder or upon such Obligations if the Event of Default
giving rise to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Trustee, the Master Servicer, any Subservicer,
the Delaware Trustee, the Auction Agent and the Broker-Dealers
and their agents and counsel; and
(b) all Events of Default, other than the nonpayment of the
principal of the Obligations that has become due solely by such
acceleration, have been cured or waived as provided in Section 6.14
hereof.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
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SECTION 6.09. REMEDIES NOT EXCLUSIVE. The remedies herein conferred upon
or reserved to the 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 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 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 6.10. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Issuer covenants that if:
(a) default is made in the payment of any installment of
interest, if any, on any Notes when such interest becomes due and
payable and such default continues for a period of five (5) days; or
(b) default is made in the payment of the principal of (or
premium, if any, on) any Notes at their Note Final Maturity Date,
then the Issuer will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Registered Owners, the whole amount then due and payable on such
Notes for principal (and premium, if any) and interest, with interest upon any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installments of
interest, if any, at the rate or rates borne by or provided for in such Notes,
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
fees, expenses, disbursements and advances of the Trustee and its agents and
counsel.
If the Issuer fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as Trustee of an express trust, may upon receiving
indemnification satisfactory to the Trustee institute a judicial proceeding for
the collection of the sums so due and unpaid, may prosecute such proceeding to
judgment or final decree, and may enforce the same against the Issuer or any
other obligor upon such Notes of such 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 Notes, wherever situated.
If an Event of Default with respect to Notes occurs and is continuing,
the Trustee may, after being indemnified to its satisfaction and in its
discretion, proceed to protect and enforce its rights and the rights of the
Registered Owners of Notes by such appropriate judicial proceedings as the
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 6.11. DIRECTION OF TRUSTEE. Upon the happening of any Event of
Default, the Registered Owners of at least 51% of the collective aggregate
principal amount of the Highest Priority Obligations then Outstanding, shall
have the right by an instrument or instruments in writing delivered to the
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Trustee to direct and control the 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 Trustee to take any proceedings which in the Trustee's opinion
would be unjustly prejudicial to non-assenting Registered Owners of Obligations,
but the Trustee shall be entitled to assume that the action requested by the
Registered Owners of at least 51% of the collective aggregate principal amount
of the Highest Priority Obligations then Outstanding will not be prejudicial to
any non-assenting Registered Owners unless the Registered Owners of more than
50% of the collective aggregate principal amount of the non-assenting Registered
Owners of such Obligations, in writing, show the Trustee how they will be
prejudiced. Provided, however, that anything in this Indenture to the contrary
notwithstanding, the Registered Owners of a majority of the collective aggregate
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
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),
7.05 and 7.07 hereof.
SECTION 6.12. RIGHT TO ENFORCE IN 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 Trustee, unless and until such Registered Owner shall have
previously given to the Trustee written notice of a default hereunder, and of
the continuance thereof, and also unless the Registered Owners of the requisite
principal amount of the Obligations then Outstanding shall have made written
request upon the Trustee and the Trustee shall have been afforded reasonable
opportunity to institute such action, suit or proceeding in its own name, and
unless the 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 Trustee to take any such action hereunder,
and the 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.
SECTION 6.13. PHYSICAL POSSESSION OF OBLIGATIONS NOT REQUIRED. In any
suit or action by the Trustee arising under this Indenture or on all or any of
the Obligations issued hereunder, or any supplement hereto, the 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 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 collective
aggregate 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 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 all expenses of the
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 Sections 7.05 and 7.07
hereof. In case of any such waiver or rescission, or in case any proceedings
taken by the Trustee on account of any such default shall have been discontinued
or abandoned or determined adversely to the Trustee, then and in every such case
the Issuer, the 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. The Trustee shall
give written notice to each Rating Agency of any waiver of an Event of Default
pursuant to this Section.
ARTICLE VII
THE TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUST. The 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 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 Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the 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 Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform as to form with the requirements of
this 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 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 person would exercise or use under the circumstances in the
conduct of his or her own affairs.
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(c) Before taking any action hereunder requested by Registered
Owners, the Trustee may require that it be furnished an indemnity bond
or other indemnity and security satisfactory to it by the Registered
Owners, as applicable, for the reimbursement of all expenses to which it
may be put and to protect it against all liability.
SECTION 7.02. RECITALS OF OTHERS. The recitals, statements and
representations set forth herein and in the Notes shall be taken as the
statements of the Issuer, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the title of
the Issuer in the Trust Estate or as to the security afforded thereby and
hereby, or as to the validity or sufficiency of this Indenture or of the Notes
issued hereunder, and the Trustee shall incur no responsibility in respect of
such matters.
SECTION 7.03. AS TO FILING OF INDENTURE. The 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) 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) to do any act which may be suitable to be done for the better
maintenance of the lien or security hereof (other than the filing of any
continuation (but not initial) statements), or (e) to give notice of the
existence of such lien, or for extending or supplementing the same or to see
that any rights to the Trust Estate and Funds intended now or hereafter to be
transferred in trust hereunder are subject to the lien hereof. The 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 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 to
the Trust Estate. The Trustee agrees to prepare, request that the Issuer execute
(if such execution is necessary for any such filing) and file in a timely manner
(if received from the Issuer in a timely manner) with any necessary execution by
the Issuer, the continuation statements referred to herein; provided, that the
Trustee shall have no responsibility for the sufficiency, adequacy or priority
of any initial filing and in the absence of written notice to the contrary by
the Issuer or other Authorized Representative, may rely and shall be protected
in relying on all information and exhibits in such initial filings for the
purposes of any continuation statements.
SECTION 7.04. TRUSTEE MAY ACT THROUGH AGENTS. The 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 its
appointment. All reasonable costs incurred by the Trustee and all reasonable
compensation to all such persons as may reasonably be employed in connection
with the trusts hereof shall be paid by the Issuer.
SECTION 7.05. INDEMNIFICATION OF 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 Sections 6.02 and 6.08 hereof, for each of
which no additional security or indemnity may be required, the 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 Trustee shall not be required to take notice, or be
deemed to have knowledge, of any default or Event of Default of the Issuer
hereunder and may conclusively assume that there has been no such default or
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Event of Default (other than an Event of Default described in Section 6.01(a) or
(b) hereof) unless and until a corporate trust officer 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. However, the 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 Trustee, without assurance of reimbursement
or indemnity, and in such case the 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
Trustee. In furtherance and not in limitation of this Section, the Trustee shall
not be liable for, and shall be held harmless by the Issuer from, following any
Issuer Orders, instructions or other directions upon which the 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 Trustee may reimburse itself
from any money in its possession under the provisions of this Indenture, subject
only to the prior lien of the Notes for the payment of the principal thereof,
premium, if any, and interest thereon from the Collection Fund. None of the
provisions contained in this Indenture or any other agreement to which it is a
party shall require the 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 Trustee for, and to hold it harmless
against, any loss, liability or expenses incurred without negligence or bad
faith on its part, 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. The Issuer agrees to indemnify and hold harmless the
Trustee against any and all claims, demands, suits, actions or other proceedings
and all liabilities, costs and expenses whatsoever caused by any untrue
statement or misleading statement or alleged untrue statement or alleged
misleading statement of a material fact contained in any offering document
distributed in connection with the issuance of the Notes or caused by any
omission or alleged omission from such offering document of any material fact
required to be stated therein or necessary in order to make the statements made
therein in the light of the circumstances under which they were made, not
misleading.
SECTION 7.06. TRUSTEE'S RIGHT TO RELIANCE. The Trustee shall be
protected in acting upon any notice, resolution, request, consent, order,
certificate, report, appraisal, opinion, report or document of the Issuer, the
Administrator, the Master Servicer or a Subservicer or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties. The Trustee may consult with experts and with counsel (who may
but need not be counsel for the Issuer, the Trustee, or for a Registered Owner),
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.
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Whenever in the administration hereof the Trustee shall reasonably deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
a certificate signed by an Authorized Representative or an authorized officer of
the Administrator, the Master Servicer or a Subservicer.
The Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it hereby; provided, however, that
the Trustee shall be liable for its negligence or willful misconduct in taking
such action.
The Trustee is authorized to enter into agreements with other Persons,
in its capacity as Trustee, in order to carry out or implement the terms and
provisions of this Indenture. The Trustee shall not be liable with respect to
any action taken, suffered or omitted to be taken in good faith in accordance
with this Indenture or any other transaction document or at the direction of the
Registered Owners evidencing the appropriate percentage of the aggregate
principal amount of the Outstanding Notes relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture
or any other transaction document.
SECTION 7.07. COMPENSATION OF 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 Trustee in and about the execution and administration of the
trust hereby created and reasonable compensation to the Trustee for its services
in the premises shall be paid by the Issuer. The compensation of the Trustee
shall not be limited to or by any provision of law in regard to the compensation
of trustees of an express trust. The Trustee shall not materially increase the
Trustee Fee without giving the Issuer and each Rating Agency at least 90 days'
written notice prior to the beginning of a Fiscal Year. If not paid by the
Issuer, the 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 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
Trustee).
SECTION 7.08. RESIGNATION OF TRUSTEE. The Trustee and any successor to
the 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 Trustee shall have been appointed pursuant to Section 7.10 hereof (and
is qualified to be the Trustee under the requirements of Section 7.10 hereof).
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If no successor Trustee has been appointed by the date specified or within a
period of 90 days from the receipt of the notice by the Issuer, whichever period
is the longer, the Trustee may (a) appoint a temporary successor Trustee having
the qualifications provided in Section 7.10 hereof or (b) request a court of
competent jurisdiction to (i) require the Issuer to appoint a successor, as
provided in Section 7.10 hereof, within three days of the receipt of citation or
notice by the court, or (ii) appoint a Trustee having the qualifications
provided in Section 7.10 hereof. In no event may the resignation of the Trustee
be effective until a qualified successor Trustee shall have been selected and
appointed. In the event a temporary successor Trustee is appointed pursuant to
clause (a) above, the Issuer may remove such temporary successor Trustee and
appoint a successor thereto pursuant to Section 7.10 hereof.
SECTION 7.09. REMOVAL OF TRUSTEE. The Trustee or any successor Trustee
may be removed (a) at any time by the Registered Owners of a majority of the
collective aggregate principal amount of the Highest Priority Obligations then
Outstanding, (b) by the Issuer for cause or upon the sale or other disposition
of the Trustee or its corporate trust functions or (c) by the Issuer without
cause so long as no Event of Default exists or has existed within the last 30
days, upon payment to the Trustee so removed of all money then due to it
hereunder and appointment of a successor thereto by the Issuer and acceptance
thereof by said successor. One copy of any such order of removal shall be filed
with the Delaware Trustee and the other with the Trustee so removed.
In the event a Trustee (or successor Trustee) is removed, by any person
or for any reason permitted hereunder, such removal shall not become effective
until (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 Trustee removed have appointed a successor Trustee or otherwise the Issuer
shall have appointed a successor, and (b) the successor Trustee has accepted
appointment as such.
SECTION 7.10. SUCCESSOR TRUSTEE. In case at any time the Trustee or any
successor Trustee shall resign, be dissolved, or otherwise shall be disqualified
to act or be incapable of acting, or in case control of the Trustee or of any
successor Trustee or of its officers shall be taken over by any public officer
or officers, a successor Trustee may be appointed by the Issuer by an instrument
in writing duly authorized by the Issuer. In the case of any such appointment by
the Issuer of a successor to the Trustee, the Issuer shall forthwith cause
notice thereof to be mailed to the Registered Owners of the Notes at the address
of each Registered Owner appearing on the note registration books maintained by
the Trustee, as registrar.
Every successor Trustee appointed by the Registered Owners, by a court
of competent jurisdiction, or by the Issuer shall be a bank or trust company in
good standing, organized and doing business under the laws of the United States
or of a state therein, which has a reported capital and surplus of not less than
$50,000,000, be authorized under the law to exercise corporate trust powers, be
subject to supervision or examination by a federal or state authority, and be an
Eligible Lender 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.
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SECTION 7.11. MANNER OF VESTING TITLE IN TRUSTEE. Any successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor
Trustee, and also to the Issuer, an instrument accepting such appointment
hereunder, and thereupon such successor Trustee, without any further act, deed
or conveyance shall become fully vested with all the estate, properties, rights,
powers, trusts, duties and obligations of its predecessors in trust hereunder
(except that the predecessor Trustee shall continue to have the benefits to
indemnification hereunder together with the successor Trustee), with like effect
as if originally named as Trustee herein; but the Trustee ceasing to act shall
nevertheless, on the written request of an Authorized Representative, or an
authorized officer of the successor Trustee, execute, acknowledge and deliver
such instruments of conveyance and further assurance and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in such successor Trustee all the right, title and interest of the Trustee which
it succeeds, in and to the Trust Estate and such rights, powers, trusts, duties
and obligations, and the Trustee ceasing to act also, upon like request, pay
over, assign and deliver to the successor Trustee any money or other property or
rights subject to the lien of this 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 Trustee for more fully and
certainly vesting in and confirming to such new Trustee such estate, properties,
rights, powers and duties, any and all such deeds and instruments in writing
shall on request be executed, acknowledged and delivered by the Issuer.
In case any of the Notes to be issued hereunder shall have been
authenticated but not delivered, any successor Trustee may adopt the certificate
of authentication of the Trustee or of any successor to the Trustee; and in case
any of the Notes shall not have been authenticated, any successor to the Trustee
may authenticate such Notes in its own name; and in all such cases such
certificate shall have the full force which it has anywhere in the Notes or in
this Indenture.
SECTION 7.12. ADDITIONAL COVENANTS BY THE TRUSTEE TO CONFORM TO THE
HIGHER EDUCATION ACT. The 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 knowingly 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
Trustee from delivering the Eligible Loans to the Master Servicer, a Subservicer
or a Guaranty Agency.
SECTION 7.13. 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 Trustee to examine at the principal
office of the Trustee a copy of any report or instrument theretofore filed with
the Trustee relating to the condition of the Trust Estate.
SECTION 7.14. LIMITATION WITH RESPECT TO EXAMINATION OF REPORTS. Except
as provided in this Indenture, the 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 7.15. SERVICING AGREEMENTS. The Trustee acknowledges the receipt
of copies of the Master Servicing Agreement and Subservicing Agreements
described in Section 4.04 hereof.
SECTION 7.16. ADDITIONAL COVENANTS OF TRUSTEE. The 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, 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 7.17. NOTICES TO RATING AGENCIES. It shall be the duty of the
Issuer to notify each Rating Agency then rating any of the Notes of (a) any
amendment, change, expiration, extension or renewal of this Indenture, (b)
prepayment or defeasance of all the Notes, (c) any change in the Trustee, (d)
any other information reasonably required to be reported to each Rating Agency
under any Supplemental Indenture or (e) any amendment to or transfer of an
Investment Agreement; provided, however, the provisions of this Section do not
apply when such documents have been previously supplied to such Rating Agency,
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:
Via electronic delivery to Servicer_reports@sandp.com
--------------------------
For any information not available in electronic format:
Standard & Poor's Ratings Services
a Division of the McGraw-Hill Companies, Inc.
55 Water Street, 41st Floor
New York, New York 10041-0003
Attention: ABS Surveillance Group
Via electronic delivery to surveillance-abs-consumer@fitchratings.com
------------------------------------------
For any information not available in electronic format:
Fitch, Inc.
One State Street Plaza
New York, New York 10004
Attention: ABS Surveillance
84
Via electronic delivery to servicerreports@moodys.com
--------------------------
For any information not available in electronic format:
Moody's Investors Service
ABS/RMBS Monitoring Department
7 World Trade Center, 25th Floor
250 Greenwich Street
New York, New York 10007
Attention: ABS Monitoring Group
The Trustee also acknowledges that each Rating Agency's periodic review
for maintenance of a Rating on any Class of Notes may involve discussions and/or
meetings with representatives of the Trustee at mutually agreeable times and
places.
SECTION 7.18. MERGER OF THE TRUSTEE. Any corporation into which the
Trustee may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the 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 7.19. RECEIPT OF FUNDS FROM MASTER SERVICER OR A SUBSERVICER.
The Trustee shall not be accountable or responsible in any manner whatsoever for
any action of the Issuer, the Administrator, the depository bank of any funds of
the Issuer, or the Master Servicer or a Subservicer while such Master Servicer
or Subservicer is acting as bailee or agent of the Trustee with respect to the
Eligible Loans for actions taken in compliance with any instruction or direction
given to the Trustee, or for the application of funds or moneys by the Master
Servicer or a Subservicer until such time as funds are received by the Trustee.
SECTION 7.20. SPECIAL CIRCUMSTANCES LEADING TO RESIGNATION OF TRUSTEE.
Because the Trustee serves as trustee hereunder for Obligations of different
priorities, it is possible that circumstances may arise which will cause the
Trustee to resign from its position as trustee for one or more of the
Obligations. In the event that the 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 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
Trustees, under which the administration of certain of the Obligations would be
separated from the administration of the other Obligations.
SECTION 7.21. SURVIVAL OF TRUSTEE'S RIGHTS TO RECEIVE COMPENSATION,
REIMBURSEMENT AND INDEMNIFICATION. The Trustee's rights to receive compensation,
reimbursement and indemnification of money due and owing hereunder at the time
of the Trustee's resignation or removal shall survive the Trustee's resignation
or removal.
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SECTION 7.22. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; CONFLICTING
INTERESTS. There shall at all times be a Trustee hereunder which 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 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 hereinafter specified in this Article. Neither the Issuer
nor any Person directly or indirectly controlling or controlled by, or under
common control with, the Issuer shall serve as Trustee.
SECTION 7.23. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Issuer or any other obligor upon the Notes or the property of the Issuer or
of such other obligor or their creditors, the Trustee (irrespective of whether
the principal of the Notes of any Class shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Issuer for the payment of overdue principal,
premium, if any, or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Notes, of principal (and
premium, if any) and interest, if any, owing and unpaid in respect of
the Notes and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable fees, compensation, expenses, disbursements and
advances of the Trustee and its agents and counsel) and of the
Registered Owners allowed in such judicial proceeding; and
(b) to collect and receive any money or other property payable
or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby
authorized by each Registered Owner of Notes to make such payments to
the Trustee, and if the Trustee shall consent to the making of such
payments directly to the Registered Owners, to pay to the Trustee any
amount due to it for the reasonable fees, compensation, expenses,
disbursements and advances of the Trustee and any predecessor Trustee,
their agents and counsel, and any other amounts due the Trustee or any
predecessor Trustee.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Registered Owner of
a Note any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Registered Owner thereof, or to
authorize the Trustee to vote in respect of the claim of any Registered Owner of
a Note in any such proceeding.
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In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Registered Owners of the Notes, and it shall not be necessary to make any
Registered Owners of the Notes parties to any such proceedings.
SECTION 7.24. NO PETITION. The Trustee will not at any time institute
against the Issuer any bankruptcy proceeding under any United States federal or
State bankruptcy or similar law in connection with any obligations of the Issuer
under this Indenture.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
SECTION 8.01. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF
REGISTERED OWNERS. The Issuer and the 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 formal defect or omission in this
Indenture;
(b) to grant to or confer upon the 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 Trustee;
(c) to subject to this Indenture additional revenues, properties
or collateral;
(d) to modify, amend or supplement this Indenture or any
indenture supplemental hereto in such manner as to permit the
qualification hereof and thereof under the Trust Indenture Act of 1939
or any similar federal statute hereafter in effect or to permit the
qualification of the Notes for sale under the securities laws of the
United States of America or of any of the states of the United States of
America, and, if they so determine, to add to this Indenture or any
indenture supplemental 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-Trustee or a
co-registrar or transfer agent or the succession of a new Trustee
hereunder, or any additional or substitute Guaranty Agency, Master
Servicer or Subservicer;
(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 an opinion of counsel to
the effect that the addition or amendment of such provisions will in no
way impair the existing security of the Registered Owners of any
Outstanding Obligations;
(g) to make any change as shall be necessary in order to obtain
and maintain for any of the Notes an investment grade Rating from a
nationally recognized rating service, which changes, in the opinion of
the Trustee are not to the prejudice of the Registered Owner of any of
the Obligations;
87
(h) to make any changes necessary to comply with or obtain more
favorable treatment under any current or future law, rule or regulation,
including but not limited to 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 this Indenture with respect to any
particular Derivative Product;
(j) to create any additional Funds or Accounts or Subaccounts
under this Indenture deemed by the Trustee to be necessary or desirable;
(k) to make any other change with a Rating Confirmation; or
(l) to make any other change which, in the judgment of the
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 Trustee without the prior written approval of
the Trustee, which approval shall be evidenced by execution of a Supplemental
Indenture.
SECTION 8.02. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF REGISTERED
OWNERS. Exclusive of Supplemental Indentures covered by Section 8.01 hereof and
subject to the terms and provisions contained in this Section, and not
otherwise, the Registered Owners of not less than a majority of the collective
aggregate principal amount of the Obligations then Outstanding shall have the
right, from time to time, to consent to and approve the execution by the Issuer
and the Trustee of such other indenture or indentures supplemental hereto as
shall be deemed necessary and desirable by the 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 all
then Outstanding Obligations, (i) an extension of the maturity date of the
principal of or the interest on any Obligation, or (ii) a reduction in the
principal amount of any Obligation or the rate of interest thereon, or (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 such
Supplemental Indenture, or (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 Trustee
without the prior written approval of the Trustee.
If at any time the Issuer shall request the Trustee to enter into any
such Supplemental Indenture for any of the purposes of this Section, the 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.
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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 principal corporate trust office of the 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 collective aggregate
principal amount of the Obligations 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 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. RIGHTS OF TRUSTEE. If, in the opinion of the Trustee, any
Supplemental Indenture provided for in this Article adversely affects the
rights, duties or immunities of the Trustee under this Indenture or otherwise,
the Trustee may, in its discretion, decline to execute such Supplemental
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an opinion of its Counsel as conclusive evidence that
any such Supplemental Indenture conforms to the requirements of this Indenture.
SECTION 8.04. CONSENT OF AUCTION AGENTS. So long as any Auction Agency
Agreement is in effect, (a) no Supplemental Indenture which materially adversely
affects the rights, duties or immunities of the Auction Agent created by this
Indenture or the Auction Agency Agreement shall become effective unless and
until delivery to the Trustee of a written consent of the Auction Agent to such
Supplemental Indenture; and (b) the Trustee shall promptly furnish to the
Auction Agent a copy of each Supplemental Indenture.
SECTION 8.05. CONSENT OF BROKER-DEALERS. So long as any Broker-Dealer
Agreement is in effect, (a) no Supplemental Indenture which materially adversely
affects the rights, duties or immunities of the Broker-Dealer created by this
Indenture or the Broker-Dealer Agreement shall become effective unless and until
delivery to the Trustee of a written consent of the Broker-Dealer to such
Supplemental Indenture; and (b) the Trustee shall promptly furnish to the
Broker-Dealer a copy of each Supplemental Indenture.
SECTION 8.06. 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, the Master Servicer or a Subservicer, unless the
Higher Education Act or Regulations are hereafter modified so as to permit the
same. The Trustee may request an opinion of counsel to the effect that an
amendment or supplement to this Indenture was adopted in conformance with this
Indenture.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NOTICES. Any notice, request or other instrument required
by this Indenture to be signed or executed by the Registered Owners of
Obligations may be executed by the execution of any number of concurrent
instruments of similar tenor, and may be signed or executed by such Registered
Owners of Obligations in person or by agent appointed in writing. As a condition
for acting thereunder the 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 Trustee. The fact and date of the
execution of such instrument may be proved by the certificate of any officer in
any jurisdiction who by the laws thereof is authorized to take acknowledgments
of deeds within such jurisdiction, that the person signing such instrument
acknowledged before him the execution thereof, or may be proved by any affidavit
of a witness to such execution sworn to before such officer.
The amount of Notes held by any person executing such instrument as a
Registered Owner of Notes and the fact, amount and numbers of the Notes held by
such person and the date of his holding the same may be proved by a certificate
executed by any responsible trust company, bank, banker or other depository in a
form approved by the Trustee, showing that at the date therein mentioned such
person had on deposit with such depository the Notes described in such
certificate; provided, however, that at all times the Trustee may require the
actual deposit of such Note or Notes with the Trustee.
All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, telex, telecopy, electronic
communication, facsimile or similar writing) at the following addresses, and
each address shall constitute each party's respective "Principal Office" for
purposes of this Indenture:
If intended for the Issuer:
Nelnet Student Loan Trust 2007-2
c/o M&T Trust Company of Delaware, Delaware Trustee
1220 North Market Street, Suite 202
Mail Code: MD1-WD22
Wilmington, DE 19801
Attention: Rita Marie Ritrovato
Telephone: (302) 255-4966
Facsimile: (302) 661-2266
Email: rritrovato@mtb.com
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With a copy to the Administrator:
National Education Loan Network, Inc.
121 South 13th Street, Suite 201
Lincoln, NE 68505
Attention: Carol Aversman
Telephone: (402) 458-2305
Facsimile: (402) 458-2399
If intended for the Trustee or the Eligible Lender Trustee:
Zions First National Bank
717 Seventeenth Street, Suite 301
Denver, CO 80202
Attention: Corporate Trust Department
Telephone: (720) 947-7475
Facsimile: (720) 947-7480
Any party may change the address to which subsequent notices to such
party are to be sent, or of its Principal Office, by notice to the others,
delivered by hand or received by telex or facsimile or registered first-class
mail, postage prepaid. Each such notice, request or other communication shall be
effective when delivered by hand or received by 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 a lien on and security interest in, and (b) an assignment of, the
Trust Estate.
SECTION 9.04. SEVERABILITY OF LIEN. If the lien of this Indenture shall
be or shall ever become ineffectual, invalid or unenforceable against any part
of the Trust Estate, which is not subject to the lien, because of want of power
or title in the Issuer, the inclusion of any such part shall not in any way
affect or invalidate the pledge and lien hereof against such part of the Trust
Estate as to which the Issuer in fact had the right to pledge.
SECTION 9.05. CONSENT OF REGISTERED OWNERS BINDS SUCCESSORS. Any request
or consent of the Registered Owner of any Obligations given for any of the
purposes of this Indenture shall bind all future Registered Owners of the same
Obligation or any Obligations issued in exchange therefor or in substitution
thereof in respect of anything done or suffered by the Issuer or the Trustee in
pursuance of such request or consent.
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SECTION 9.06. NONLIABILITY OF PERSONS; NO GENERAL OBLIGATION. It is
hereby expressly made a condition of this Indenture that any agreements,
covenants or representations herein contained or contained in the Notes do not
and shall never constitute or give rise to a personal or pecuniary liability or
charge against the organizers, officers, employees, agents or trustees or the
Administrator 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 NOTES OR INTEREST CHECKS. Should any of
the Notes or interest checks not be presented for payment when due, the Trustee
shall retain from any money transferred to it for the purpose of paying the
Notes or interest checks so due, for the benefit of the Registered Owners
thereof, a sum of money sufficient to pay such Notes or interest checks when the
same are presented by the Registered Owners thereof for payment. Such money
shall not be required to be invested. All liability of the Issuer to the
Registered Owners of such Notes or interest checks and all rights of such
Registered Owners against the Issuer under the Notes or interest checks or under
this Indenture shall thereupon cease and determine, and the sole right of such
Registered Owners shall thereafter be against such deposit. If any Note or
interest check shall not be presented for payment within the period of two years
following its payment or prepayment date, the Trustee shall return to the Issuer
the money theretofore held by it for payment of such Note or interest check, and
such Note or interest check shall (subject to the defense of any applicable
statute of limitation) thereafter be an unsecured obligation of the Issuer. The
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 Delaware Uniform Commercial Code
and the Utah Uniform Commercial Code.
SECTION 9.09. LAWS GOVERNING. It is the intent of the parties hereto
that this Indenture shall in all respects be governed by the laws of the State
of New York.
SECTION 9.10. SEVERABILITY. If any covenant, agreement, waiver, or part
thereof in this Indenture contained be forbidden by any pertinent law or under
any pertinent law be effective to render this Indenture invalid or unenforceable
or to impair the lien hereof, then each such covenant, agreement, waiver, or
part thereof shall itself be and is hereby declared to be wholly ineffective,
and this Indenture shall be construed as if the same were not included herein.
SECTION 9.11. EXHIBITS. The terms of the Schedules and Exhibits, if any,
attached to this Indenture are incorporated herein in all particulars.
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SECTION 9.12. NON-BUSINESS DAYS. Except as may otherwise be provided
herein, if the date for making payment of any amount hereunder or on any Note,
or if the date for taking any action hereunder, is not a Business Day, then such
payment can be made without accruing further interest or action can be taken on
the next succeeding Business Day, with the same force and effect as if such
payment were made when due or action taken on such required date.
SECTION 9.13. PARTIES INTERESTED HEREIN. Nothing in this Indenture
expressed or implied is intended or shall be construed to confer upon, or to
give to, any person or entity, other than the Trustee, the Delaware Trustee, the
Auction Agent, any Broker-Dealer, 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 Trustee, the paying agent, if any, and
the Registered Owners of the Obligations.
SECTION 9.14. OBLIGATIONS ARE LIMITED OBLIGATIONS. The Notes and the
obligations of the Issuer contained in this Indenture are special, limited
obligations of the Issuer, secured by and payable solely from the Trust Estate
herein provided. The Issuer shall not be obligated to pay the Notes, the
interest thereon, or any other obligation created by or arising from this
Indenture from any other source.
SECTION 9.15. LIMITATIONS ON COUNTERPARTY RIGHTS. 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. A Counterparty which is in default under any Derivative
Product shall however, continue to maintain all obligations undertaken by it
under the terms of its Derivative Product. No Counterparty shall have any
consent or voting rights under this Indenture, or any rights to instruct the
Trustee to take, or refrain from taking, any action hereunder except upon
satisfaction of a Rating Confirmation.
SECTION 9.16. AGGREGATE PRINCIPAL AMOUNT OF OBLIGATIONS. Whenever in
this Indenture reference is made to the aggregate principal amount of any
Obligations, such phrase shall mean, at any time, the principal amount of any
Notes and the Derivative Value of any Derivative Product.
SECTION 9.17. FINANCED ELIGIBLE LOANS. The Issuer expects to acquire
Eligible Loans and to transfer Eligible Loans to the 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 9.18. CONCERNING THE DELAWARE TRUSTEE. It is expressly
understood and agreed by the parties to this Indenture and the Registered Owners
that (a) this Indenture is executed and delivered by the Delaware Trustee not in
its individual or personal capacity but solely in its capacity as Delaware
Trustee under the Trust Agreement on behalf of the Issuer, in the exercise of
the powers and authority conferred and vested in it as Delaware Trustee under
the Trust Agreement, subject to the protections, indemnities and limitations
from liability afforded to the Delaware Trustee thereunder; (b) the
representations, warranties, covenants, undertakings, agreements and obligations
93
by the Delaware Trustee are made and intended not as personal representations,
warranties, covenants, undertakings, agreements and obligations by M&T Trust
Company of Delaware, but are made and intended for the purpose of only binding
the Trust Estate, as defined in the Trust Agreement, and the Issuer; (c) nothing
contained herein shall be construed as creating any liability on M&T Trust
Company of Delaware, individually or personally, to perform any expressed or
implied covenant, duty or obligation of any kind whatsoever contained herein;
and (d) under no circumstances shall M&T Trust Company of Delaware, be
personally liable for the payment of any fees, costs, indebtedness or expenses
of any kind whatsoever or be personally liable for the breach or failure of any
obligation, representation, agreement, warranty or covenant whatsoever made or
undertaken by the Delaware Trustee or Issuer hereunder.
ARTICLE X
PAYMENT AND CANCELLATION OF NOTES
AND SATISFACTION OF INDENTURE
SECTION 10.01. TRUST IRREVOCABLE. The trust created by the terms and
provisions of this Indenture is irrevocable until the indebtedness secured
hereby (the Notes and interest thereon) and all Issuer Derivative Payments are
fully paid or provision made for its payment as provided in this Article.
SECTION 10.02. SATISFACTION OF INDENTURE.
(a) If the Issuer shall pay, or cause to be paid, or there shall
otherwise be paid (i) to the Registered Owners of the Notes, the
principal of and interest on the Notes, at the times and in the manner
stipulated in this Indenture; and (ii) to each Counterparty, all Issuer
Derivative Payments then due, then the pledge of the Trust Estate, and
all covenants, agreements and other obligations of the Issuer to the
Registered Owners of Notes shall thereupon cease, terminate and become
void and be discharged and satisfied. In such event, the Trustee shall
execute and deliver to the Issuer all such instruments as may be
desirable to evidence such discharge and satisfaction, and the 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. If the
Issuer shall pay or cause to be paid, or there shall otherwise be paid,
to the Registered Owners of any Outstanding Notes the principal of and
interest on such Notes and to each Counterparty all Issuer Derivative
Payments then due, at the times and in the manner stipulated in this
Indenture and in the respective Derivative Product, such Notes and each
Counterparty shall cease to be entitled to any lien, benefit or security
under this Indenture, and all covenants, agreements and obligations of
the Issuer to the Registered Owners thereof and each Counterparty shall
thereupon cease, terminate and become void and be discharged and
satisfied.
(b) Notes or interest installments shall be deemed to have been
paid within the meaning of Section 10.02(a) hereof if money for the
payment thereof has been set aside and is being held in trust by the
Trustee at the Note Final Maturity Date or earlier prepayment date
thereof. Any Outstanding Note shall, prior to the Note Final Maturity
94
Date or earlier prepayment thereof, be deemed to have been paid within
the meaning and with the effect expressed in Section 10.02(a) hereof if
(i) such Note is to be prepaid on any date prior to its Note Final
Maturity Date and (ii) the Issuer shall have given notice of prepayment
as provided herein on said date, there shall have been deposited with
the Trustee either money (fully insured by the Federal Deposit Insurance
Corporation or fully collateralized by Governmental Obligations) in an
amount which shall be sufficient, or Governmental Obligations (including
any Governmental Obligations issued or held in book-entry form on the
books of the Department of Treasury of the United States of America) the
principal of and the interest on which when due will provide money
which, together with the money, if any, deposited with the Trustee at
the same time, shall be sufficient, to pay when due the principal of and
interest to become due on such Note on and prior to the prepayment date
or Note Final Maturity Date thereof, as the case may be. Notwithstanding
anything herein to the contrary, however, no such deposit shall have the
effect specified in this subsection (b) if made during the existence of
an Event of Default, unless made with respect to all of the Notes then
Outstanding. Neither Governmental Obligations nor money deposited with
the Trustee pursuant to this subsection (b) nor principal or interest
payments on any such Governmental Obligations shall be withdrawn or used
for any purpose other than, and shall be held irrevocably in trust in an
escrow account for, the payment of the principal of and interest on such
Notes. Any cash received from such principal of and interest on such
Governmental Obligations deposited with the Trustee, if not needed for
such purpose, shall, to the extent practicable, be reinvested in
Governmental Obligations maturing at times and in amounts sufficient to
pay when due the principal of and interest on such Notes on and prior to
such prepayment date or Note Final Maturity Date thereof, as the case
may be, and interest earned from such reinvestments shall be paid over
to the Issuer, as received by the Trustee, free and clear of any trust,
lien or pledge. Any payment for Governmental Obligations purchased for
the purpose of reinvesting cash as aforesaid shall be made only against
delivery of such Governmental Obligations. For the purposes of this
Section, "Governmental Obligations" shall mean and include only
non-callable direct obligations of the Department of the Treasury of the
United States of America or portions thereof (including interest or
principal portions thereof), and such Governmental Obligations shall be
of such amounts, maturities and interest payment dates and bear such
interest as will, without further investment or reinvestment of either
the principal amount thereof or the interest earnings therefrom, be
sufficient to make the payments required herein, and which obligations
have been deposited in an escrow account which is irrevocably pledged as
security for the Notes. Such term shall not include mutual funds and
unit investment trusts.
(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 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.
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(e) The provisions of this Section are applicable to the Notes
and the Issuer Derivative Payments.
SECTION 10.03. OPTIONAL PURCHASE OF ALL FINANCED ELIGIBLE LOANS. The
Administrator shall certify to and notify the Depositor, or any assignee of its
rights hereunder, and the Trustee in writing, within 15 days after the last
Business Day of each Collection Period in which the then outstanding Pool
Balance is 12% or less of the Initial Pool Balance, of the percentage that the
then outstanding Pool Balance bears to the Initial Pool Balance. The Depositor
or its assignee shall have the option to purchase all of the Financed Eligible
Loans on the earlier of (a) the September 2021 Quarterly Distribution Date and
(b) the date that is the tenth (10th) Business Day preceding the Quarterly
Distribution Date next succeeding the last day of the Collection Period on which
the then outstanding Pool Balance is 10% or less of the Initial Pool Balance
(each, an "Optional Purchase Date"). To exercise the option described in this
Section, the Depositor or its assignee shall deposit in the Collection Fund on
the Optional Purchase Date, an amount equal to the aggregate Purchase Amount for
the Financed Eligible Loans and the related rights with respect thereto, plus
the appraised value of any such other property held in the Trust Estate other
than the Funds and Accounts, such value to be determined by an appraiser
mutually agreed upon by the Depositor or its assignee and the Trustee; provided,
however, that the Depositor or its assignee may not effect such purchase if such
aggregate Purchase Amount and the appraised value of such other property do not
equal or exceed the Minimum Purchase Amount, less any amounts on deposit in the
Funds and Accounts.
SECTION 10.04. AUCTION OF FINANCED ELIGIBLE LOANS. If the Depositor, or
any assignee of its rights under Section 10.03 hereof, does not exercise its
option to purchase Financed Eligible Loans pursuant to Section 10.03 hereof, the
Trustee (or its designated agent) shall, promptly after the Business Day next
succeeding the Optional Purchase Date, offer for sale Financed Eligible Loans in
an amount sufficient to redeem all Notes Outstanding on such Quarterly
Distribution Date, and any such sale shall be consummated on or before such
Quarterly Distribution Date (the "Trust Auction Date"). Nelnet, Inc. or its
Affiliates and unrelated third parties may bid to purchase the Financed Eligible
Loans. The Trustee shall provide written notice to the Depositor of any such
offer for sale at least three Business Days in advance of the Trust Auction
Date. If at least two independent bids are received, the 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 Trustee shall accept the highest of the remaining bids if it is equal
to or in excess of both (i) the Minimum Purchase Amount, less any amounts on
deposit in the Funds and Accounts and (ii) the fair market value of such
Financed Eligible Loans as of the end of the Collection Period immediately
preceding the Trust Auction Date. If at least two bids are not received or the
highest bid after the resolicitation process is completed is not equal to or in
excess of the higher of the amounts described in the preceding sentences, the
Trustee shall not consummate such sale. The Trustee may consult, and, at the
direction of the Depositor, shall consult, with a financial advisor, including
an initial purchaser of the Notes or the Administrator, to determine if the fair
market value of the Financed Eligible Loans has been offered. The proceeds of
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any such sale shall be deposited to the Collection Fund and applied to the
redemption of all Notes Outstanding in accordance with Section 2.11(d) hereof.
Unless requested by the Administrator, if the sale is not completed, the Trustee
may, but will not be obligated to, solicit bids for sale of the Financed
Eligible Loans with respect to future Quarterly Distribution Dates upon terms
similar to those described above. The Trustee shall be obligated to make such
solicitations, however, if requested to do so by the Administrator. Notice of
the prepayment of any Obligations resulting from a purchase of the Financed
Eligible Loans on the Optional Purchase Date or the auction of the Financed
Eligible Loans on the Trust Auction Date, shall be given by the Trustee to the
Registered Owners by first-class mail within five Business Days of such Optional
Purchase Date or Trust Auction Date.
SECTION 10.05. CANCELLATION OF PAID NOTES. Any Notes which have been
paid or purchased by the Issuer, mutilated Notes replaced by new Notes, and any
temporary Note for which definitive Notes have been delivered shall (unless
otherwise directed by the Issuer by Issuer Order) forthwith be cancelled by the
Trustee and, except for temporary Notes, returned to the Issuer.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed
in its organizational name and behalf by its Delaware Trustee, and the Trustee,
to evidence its acceptance of the trusts hereby created, has caused this
Indenture to be executed in its organizational name and behalf, all in multiple
counterparts, each of which shall be deemed an original, and the Issuer and the
Trustee have caused this Indenture to be dated as of the date herein above first
shown.
NELNET STUDENT LOAN TRUST 2007-2,
a Delaware statutory trust
By: M&T TRUST COMPANY OF DELAWARE, not in
its individual capacity or personal
capacity but solely in its capacity as
Delaware Trustee
By /s/ RITA MARIE RITROVATA
------------------------------------------
Name RITA MARIE RITROVATA
----------------------------------------
Title ASSISTANT VICE PRESIDENT
---------------------------------------
ZIONS FIRST NATIONAL BANK, as Trustee
By /s/ DAVID W BATA
------------------------------------------
David W. Bata, Vice President
Acknowledged and accepted as to clause "C"
of the Granting Clauses as of the day and
year first written above:
ZIONS FIRST NATIONAL BANK, as Eligible Lender
Trustee
By /s/ DAVID W BATA
------------------------------------------
David W. Bata, Vice President
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APPENDIX A
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 A as such terms are given in Article I of the Indenture. In addition,
the following terms shall have the following respective meanings:
"ALL HOLD RATE" means, 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 LIBOR RATE" means, 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
Telerate Page 3750 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 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 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
Appendix A-1
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 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.
"AUCTION" means the implementation of the Auction Procedures on an
Auction Date.
"AUCTION AGENT" means 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" means 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" means, initially, November 8, 2007 with respect to the
Class A-4AR-1 Notes, November 6, 2007 with respect to the Class A-4AR-2 Notes,
September 27, 2007 with respect to the Class B-1 Notes and September 25, 2007
with respect to the Class B-2 Notes; and thereafter, the Business Day
immediately preceding the first day of each Auction Period for such Class, other
than:
(a) each Auction Period commencing after the ownership of the
applicable Auction Rate Notes is no longer maintained in Book-Entry Form
by the Clearing Agency;
(b) each Auction Period commencing after and during the
continuance of a Payment Default; or
(c) 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 A.
"AUCTION NOTE INTEREST RATE" means each variable rate of interest per
annum borne by a Class of the Auction Rate Notes for each related Auction Period
and determined in accordance with the provisions of Sections 2.01 and 2.02 of
this Appendix A.
Appendix A-2
"AUCTION PERIOD" means the Interest Accrual Period applicable to the
Auction Rate Notes during which time the interest rate is determined pursuant to
Section 2.02(a) of this Appendix A, which Auction Period (after the Initial
Period for such Class) initially shall consist generally of 28 days for the
Class A-4AR-1 Notes, 28 days for the Class A-4AR-1 Notes, 28 days for the Class
B-1 Notes and 28 days for the Class B-2 Notes, as the same may be adjusted
pursuant to Sections 2.01 and 2.02(g) of this Appendix A.
"AUCTION PERIOD ADJUSTMENT" means an adjustment to the Auction Period as
provided in Section 2.02(g) of this Appendix A.
"AUCTION PROCEDURES" means the procedures set forth in Section 2.02(a)
of this Appendix A by which the Auction Rate is determined.
"AUCTION RATE" means 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 A.
"AUCTION RATE NOTES" shall mean, collectively, the Class A-4AR-1 Notes,
the Class A-4AR-2 Notes, the Class B-1 Notes and the Class B-2 Notes.
"AUCTION RATE DISTRIBUTION DATE" means, for each Class of the Auction
Rate Notes, the Business Day immediately following the expiration of the Initial
Period for such Class of the Auction Rate Note and each related Auction Period
thereafter; provided, however, if the duration of such Auction Period exceeds 90
days, then such Class of the Auction Rate Notes shall have interest payment
dates on (a) each Quarterly Distribution Date occurring during such Auction
Period, and (b) the first Business Day immediately following the end of such
Auction Period.
"AVAILABLE AUCTION RATE NOTES" has the meaning set forth in Section
2.02(a)(iii)(A)(1) of this Appendix A.
"BID" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix A.
"BID AUCTION RATE" has the meaning set forth in Section 2.02(a)(iii)(A)
of this Appendix A.
"BIDDER" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix A.
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" means 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 Clearing Agency or its nominee as registered owner, with the securities
"immobilized" to the custody of the Clearing Agency, and (c) the book entry is
the record that identifies the owners of beneficial interests in that principal
and interest.
"BROKER-DEALER" means, initially, Banc of America Securities LLC,
Citigroup Capital Markets Inc., J.P. Morgan Securities Inc., SunTrust Robinson
Humphrey, Inc. and Nelnet Capital, LLC, with respect to the Class A-4AR-1 Notes,
the Class A-4AR-2 Notes, the Class B-1 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
(a) is a Clearing Agency Participant (or an affiliate of a Clearing Agency
Participant), (b) has been appointed as such by the Issuer pursuant to Section
2.02(f) of this Appendix A, and (c) has entered into a Broker-Dealer Agreement
that is in effect on the date of reference.
Appendix A-3
"BROKER-DEALER AGREEMENT" means, collectively or individually as the
context may require, 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 August 1, 2007, among the Issuer,
the Initial Auction Agent and the respective initial 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" means 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 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.
"CARRY-OVER AMOUNT" means the excess, if any, of (a) the amount of
interest on an Auction Rate Note that would have accrued with respect to the
related Interest Accrual Period at the least of the applicable Auction Rate and
the components included in the Maximum Rate (other than the Net Loan Rate) over
(b) the amount of interest on such Auction Rate Note actually accrued with
respect to such Auction Rate Note with respect to such Interest Accrual Period
based on the Net Loan Rate, together with the unreduced portion of any such
excess from prior Interest Accrual Periods; provided that any reference to
"principal" or "interest" in the Indenture and in this Appendix A and the
Auction Rate Notes shall not include within the meanings of such words any
Carry-Over Amount or any interest accrued on any Carry-Over Amount.
"ELIGIBLE CARRY-OVER MAKE-UP AMOUNT" means, with respect to each
Interest Accrual Period relating to an Auction Rate Note as to which, as of the
first day of such Interest Accrual Period, there is any unpaid Carry-Over
Amount, an amount equal to the lesser of (a) interest computed on the principal
balance of the Auction Rate Note in respect to such Interest Accrual Period at a
per annum rate equal to the excess, if any, of the Net Loan Rate over the
Auction Rate; and (b) the aggregate Carry-Over Amount remaining unpaid as of the
first day of such Interest Accrual Period together with interest accrued and
unpaid thereon through the end of such Interest Accrual Period.
"EXISTING OWNER" means (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.
Appendix A-4
"EXISTING OWNER REGISTRY" means 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 A.
"INITIAL AUCTION AGENT" means Deutsche Bank Trust Company Americas, a
New York banking corporation, its successors and assigns.
"INITIAL AUCTION AGENT AGREEMENT" means, collectively, the Auction Agent
Agreement dated as of August 1, 2007, by and among the Issuer, the Trustee and
the Initial Auction Agent, including any amendment thereof or supplement
thereto.
"INITIAL PERIOD" means, as to Auction Rate Notes, the period commencing
on the Date of Issuance and continuing through the day immediately preceding the
Initial Rate Adjustment Date for such Auction Rate Notes.
"INITIAL RATE" means for each Class of the Auction Rate Notes, the per
annum rate set forth below:
CLASS INITIAL AUCTION RATE
Class A-4AR-1 5.75%
Class A-4AR-2 5.75%
Class B-1 6.25%
Class B-2 6.25%
"INITIAL RATE ADJUSTMENT DATE" means, for each Class of the Auction Rate
Notes, the date set forth below (or if such date is not a Business Day, the
following Business Day):
INITIAL INTEREST RATE
CLASS ADJUSTMENT DATE
Class A-4AR-1 November 9, 2007
Class A-4AR-2 November 7, 2007
Class B-1 September 28, 2007
Class B-2 September 26, 2007
"INTEREST ACCRUAL PERIOD" means, with respect to a Class of the Auction
Rate Notes, the Initial Period for such Class and each period commencing on an
Auction Rate Distribution Date for such Class and ending on the day before (a)
the next Auction Rate Distribution Date for such Class or (b) its Note Final
Maturity Date, as applicable.
Appendix A-5
"INTEREST RATE ADJUSTMENT DATE" means the date on which an Auction Note
Interest Rate is effective, and means, with respect to a Class of the Auction
Rate Notes, the date of commencement of each Auction Period for such Class.
"INTEREST RATE DETERMINATION DATE" means, with respect to a Class of the
Auction Rate Notes, the Auction Date for such Class, or if no Auction Date is
applicable, the Business Day immediately preceding the date of commencement of
an Auction Period for such Class.
"INTEREST RATE LIMITATION" means, 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 means the lesser of:
(a) the Applicable LIBOR Rate plus 1.25%;
(b) the Interest Rate Limitation; and
(c) the Net Loan Rate.
"NELNET ELIGIBLE PURCHASER" means 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" means, with respect to any Interest 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 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.
"NON-PAYMENT RATE" means One-Month LIBOR plus 1.50%.
"ORDER" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix A.
"PAYMENT DEFAULT" means, with respect to the Auction Rate Notes, (a) a
default in the due and punctual payment of any installment of interest on a
Class of the Auction Rate Notes, or (b) a default in the due and punctual
payment of any interest on and principal of a Class of the Auction Rate Notes at
their maturity.
"POTENTIAL OWNER" means 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).
"REGULAR RECORD DATE" means the Business Day next preceding the
applicable Auction Date.
Appendix A-6
"SELL ORDER" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix A.
"SUBMISSION DEADLINE" means 1:00 p.m., New York City 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.
"SUBMITTED BID" has the meaning set forth in Section 2.02(a)(iii)(A) of
this Appendix A.
"SUBMITTED HOLD ORDER" has the meaning set forth in Section
2.02(a)(iii)(A) of this Appendix A.
"SUBMITTED ORDER" has the meaning set forth in Section 2.02(a)(iii)(A)
of this Appendix A.
"SUBMITTED SELL ORDER" has the meaning set forth in Section
2.02(a)(iii)(A) of this Appendix A.
"SUBSTITUTE AUCTION AGENT" means the Person with whom the Issuer and the
Trustee enter into a Substitute Auction Agent Agreement.
"SUBSTITUTE AUCTION AGENT AGREEMENT" means 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 A agrees with the Trustee and the Issuer to perform the
duties of the Auction Agent under this Appendix A.
"SUFFICIENT BIDS" has the meaning set forth in Section 2.02(a)(iii)(A)
of this Appendix A.
ARTICLE II
TERMS AND ISSUANCE
SECTION 2.01. AUCTION RATE AND CARRY-OVER AMOUNTS. During its Initial
Period, a Class of the Auction Rate Notes shall bear interest at its Initial
Rate. Thereafter, and except with respect to an Auction Period Adjustment, (a)
the Class A-4AR-1 Notes shall bear interest at an Auction Note Interest Rate
based on a 28-day Auction Period, (b) the Class A-4AR-2 Notes shall bear
interest at an Auction Note Interest Rate based on a 28-day Auction Period, (c)
the Class B-1 Notes shall bear interest at an Auction Note Interest Rate based
on a 28-day Auction Period and (d) the Class B-2 Notes shall bear interest at an
Auction Note Interest Rate based on a 28-day Auction Period, each as determined
pursuant to this Section 2.01 and Section 2.02 of this Appendix A.
For each Class of the Auction Rate Notes during its 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.
Appendix A-7
The Auction Note Interest Rate to be borne by a Class of the Auction
Rate Notes after its Initial Period for each Auction Period until an Auction
Period Adjustment, if any, shall be determined as described below. Each such
Auction Period after the Initial Period for the Class A-4AR-1 Notes shall
commence on and include the day following the expiration of the immediately
preceding Auction Period and terminate on and include the Thursday (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 Class A-4AR-1 Notes, such Auction Period shall commence
on the Initial Rate Adjustment Date for the Class A-4AR-1 Notes. Each such
Auction Period after the Initial Period for the Class A-4AR-2 Notes shall
commence on and include the day following the expiration of the immediately
preceding Auction Period and terminate on and include the Tuesday (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 Class A-4AR-2 Notes, such Auction Period shall commence
on the Initial Rate Adjustment Date for the Class A-4AR-2 Notes. Each such
Auction Period after the Initial Period for the Class B-1 Notes shall commence
on and include the day following the expiration of the immediately preceding
Auction Period and terminate on and include the Thursday (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 Class B-1 Notes, such Auction Period shall commence on the
Initial Rate Adjustment Date for the Class B-1 Notes. Each such Auction Period
after the Initial Period for the Class B-2 Notes shall commence on and include
the day following the expiration of the immediately preceding Auction Period and
terminate on and include the Tuesday (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 Class
B-2 Notes, such Auction Period shall commence on the Initial Rate Adjustment
Date for the Class B-2 Notes. The Auction Note Interest Rate for a Class of 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 A. By way of example, if an Interest Period ordinarily would end on a
Friday, but the following Monday is not a Business Day, the Interest Period will
end on that Monday and the new Interest Period will begin on Tuesday.
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 Note Interest Rate in effect for the next Auction Period for such Class
will be the Auction Note Interest Rate in effect for the preceding Auction
Period for such Class and such Auction Period will generally be 28 days in
duration for the Class A-4AR-1 Notes, and ending on (and including) the
applicable Thursday (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, 28 days in duration for the Class A-4AR-2 Notes, and ending on
(and including) the applicable Tuesday (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, 28 days in duration for the Class B-1
Notes, and ending on (and including) the applicable Thursday (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 and 28 days in duration for
the Class B-2 Notes, and ending on (and including) the applicable Tuesday
(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. If
the preceding Auction Period was other than generally 7 or 28 days in duration,
the Auction Note 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.
Appendix A-8
Notwithstanding the foregoing:
(a) if the ownership of a Class of the Auction Rate Note is no
longer maintained in Book-Entry Form, the Auction Note Interest Rate on
such Class of the Auction Rate Notes for any Interest Accrual Period
commencing after the delivery of certificates representing such Class of
the Auction Rate Notes pursuant to this Indenture shall equal the
Maximum Rate on the Business Day immediately preceding the first day of
such subsequent Interest Accrual Period; or
(b) if a Payment Default shall have occurred, the Auction Note
Interest Rate on each Class of the Auction Rate Notes for an Interest
Accrual Period commencing on or immediately after such Payment Default,
and for each Interest Accrual Period thereafter, to and including the
Interest 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 Interest
Accrual Period.
In accordance with Section 2.02(a)(iii)(B) and (C) of this Appendix A,
the Auction Agent shall promptly give written notice to the Trustee and the
Issuer of each Auction Note Interest Rate (unless the Auction Note Interest Rate
is the applicable Non-Payment Rate) for each Class of the Auction Rate Notes and
the Maximum Rate when such rate is not the Auction Note Interest Rate applicable
to such Class of the Auction Rate Notes. The Trustee shall notify the Registered
Owners and the Issuer of each Class of the Auction Rate Notes of the applicable
Auction Note Interest Rate applicable to such Class of the 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 this
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 Note Interest Rate applicable to such
Class of the Auction Rate Notes for that Interest Accrual Period will be the
Maximum Rate. If the Auction Note Interest Rate applicable to such Class of the
Auction Rate Notes for any Interest Accrual Period is the Maximum Rate, the
Trustee shall determine the Carry-Over Amount, if any, with respect to such
Class of the Auction Rate Notes for such Interest Accrual Period. Such
Carry-Over Amount shall bear interest calculated at a rate equal to One-Month
LIBOR (as determined by the Auction Agent, provided the Trustee has received
notice of One-Month LIBOR from the Auction Agent, and if the Trustee shall not
have received such notice from the Auction Agent, then as determined by the
Trustee) from the Auction Rate Distribution Date for the Interest Accrual Period
with respect to which such Carry-Over Amount was calculated, until paid. Any
Appendix A-9
payment in respect of Carry-Over Amount shall be applied, first, to any accrued
interest payable thereon and, second, in reduction of such Carry-Over Amount.
For purposes of this Indenture and this Appendix A, any reference to "principal"
or "interest" herein shall not include within the meaning of such words
Carry-Over Amount or any interest accrued on any such Carry-Over Amount. Such
Carry-Over Amount shall be separately calculated for each Auction Rate Note by
the Trustee during such Interest Accrual Period in sufficient time for the
Trustee to give notice to each Registered Owner of such Carry-Over Amount as
required in the next succeeding sentence. Not less than four days before the
Auction Rate Distribution Date for an Interest Accrual Period with respect to
which such Carry-Over Amount has been calculated by the Trustee, the Trustee
shall give written notice to each Registered Owner, the Auction Agent and the
Issuer of the Carry-Over Amount applicable to each Registered Owner's Auction
Rate Note, which written notice may accompany the payment of interest by check
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, to each such Registered Owner at such Registered Owner's
address as it appears on the registration records maintained by the Registrar.
In addition to such 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 Carry-Over Amounts (and all
accrued interest thereon) that remain unpaid shall be cancelled and no
Carry-Over Amount (and interest accrued thereon) shall be paid with respect to
any redeemed Auction Rate Note, (a) the Carry-Over Amount (and interest accrued
thereon calculated at a rate equal to One-Month LIBOR) shall be paid by the
Trustee on an Auction Rate Note on the earliest of (i) the date of defeasance of
the Auction Rate Note, or (ii) the first occurring Auction Rate Distribution
Date (or on the date of any optional redemption) if and to the extent that (x)
the Eligible Carry-Over Make-Up Amount with respect to such subsequent Interest
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 Carry-Over Amount (and interest accrued thereon); and (b) interest shall
accrue on the Carry-Over Amount at a rate equal to One-Month LIBOR until such
Carry-Over Amount is paid in full or is cancelled. The Auction Agent shall
maintain records of the Carry-Over Amounts, if any, for the Auction Rate Notes
for each related Auction Period.
The Carry-Over Amount (and interest accrued thereon) for a Class of the
Auction Rate Notes shall be paid by the Trustee on the earliest of (a) the date
of defeasance of any of such Class or (b) the first occurring Auction Rate
Distribution Date for such Class if and to the extent that (i) the Eligible
Carry -Over Make-Up Amount with respect to such Interest Accrual Period is
greater than zero, and (ii) on such Auction Rate Distribution Date there are
sufficient moneys in the Collection Fund to pay the Eligible Carry -Over Make-Up
Amount for such Class on such Auction Rate Distribution Date pursuant to Section
5.04(c) of the Indenture. Any Carry-Over Amount (and any interest accrued
thereon) on any Class of the Auction Rate Note which is due and payable on an
Auction Rate Distribution Date, which Class of the 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 A; provided, however, that any 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
Appendix A-10
Auction Rate Distribution Date. To the extent that any portion of the 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 by the Trustee on the earliest of (a) the
date of defeasance 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 Trustee pays only a portion of the
Carry-Over Amount (and any interest accrued thereon) on an Auction Rate Note,
the 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 Carry-Over Amount remaining unpaid on such Auction
Rate Note.
The Auction Rate Distribution Date or other date on which such
Carry-Over Amount (or any interest accrued thereon) for a Class of the Auction
Rate Notes shall be paid shall be determined by the Trustee in accordance with
the provisions of the immediately preceding paragraph, and the Trustee shall
make payment of the Carry-Over Amount (and any interest accrued thereon) in the
same manner as, and from the same Fund from which, it pays interest on the such
Class of the Auction Rate Notes on an Auction Rate Distribution Date. Any
payment of Carry-Over Amounts (and interest accrued thereon) on an Auction Rate
Note shall reduce the amount of Eligible Carry -Over Make-Up Amount for such
Auction Rate Note.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Auction Note 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 Note Interest Rate for the next
succeeding Interest Accrual Period, which Interest 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 A and
written notice of such determination shall be given by such securities dealer to
the 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 Clearing Agency Participant, which in turn will maintain records of
such beneficial ownership and (z) to authorize such Clearing Agency
Participant to disclose to the Auction Agent such information with
respect to such beneficial ownership as the Auction Agent may request.
Appendix A-11
So long as the ownership of Auction Rate Notes is maintained in
Book-Entry Form by the Clearing Agency, 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 Clearing Agency Participant advises the
Auction Agent of such transfer. Auctions shall be conducted separately
for each Class of the Auction Rate Notes on each Auction Date for such
Class, if there is an Auction Agent on such Auction Date, in the
following manner:
(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 Note Interest
Rate for the next succeeding Auction Period;
b. the principal amount of
Outstanding Auction Rate Notes, if any,
which such Existing Owner offers to sell if
the Auction Note 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 Note 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 Note 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."
Appendix A-12
(B) (1) Subject to the provisions of Section
2.02(a)(ii) of this Appendix A, 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 Note 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 A, if the Auction Note Interest
Rate determined as provided in this Section
2.02(a) shall be equal to the rate specified
therein; or
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 A, 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 A, 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 A, if
Sufficient Bids have not been made.
(3) Subject to the provisions of Section
2.02(a)(ii) of this Appendix A, 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 Note 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 A, if the
Auction Note Interest Rate determined as
provided in this Section 2.02(a) shall be
equal to the rate specified in such Bid.
Appendix A-13
(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;
(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) A Broker-Dealer may submit Orders in Auctions
for its own account.
Appendix A-14
(E) Neither the Issuer, the Trustee nor 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.
(F) 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.
(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 (1) of this paragraph (F);
b. subject to subclause a. of this
clause (2), 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 and including an amount equal to such
excess;
c. subject to subclauses a. and b.
of this clause (2), 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
(2) shall be treated as the subject of a Bid
by a Potential Owner at the rate therein
specified; and
Appendix A-15
(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 (F) and valid Bids referred to in clause
(2) of this paragraph (F).
(G) 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.
(H) An Existing Owner that offers to purchase
additional Auction Rate Notes is, for purposes of such
offer, treated as a Potential Owner.
(I) 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.
(J) 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. Any Bid
submitted by an Existing Owner or a Potential Owner
specifying a rate lower than the All Hold Rate shall be
treated as a Bid specifying the All Hold Rate, and any
such Bid shall be considered as valid and shall be
selected in the ascending order of the respective rates in
the Submitted Bids.
(K) 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:
Appendix A-16
(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;
(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;
Appendix A-17
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 A, the Auction Agent shall advise the 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 Note Interest Rate for the next succeeding
Interest Accrual Period as follows:
(1) if Sufficient Bids exist, that the
Auction Note Interest Rate for the next succeeding
Interest 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 Note Interest Rate for the next
succeeding Interest Accrual Period shall be equal
to the applicable Maximum Rate; or
(3) if all Outstanding Auction Rate Notes
are subject to Submitted Hold Orders, that the
Auction Note Interest Rate for the next succeeding
Interest Accrual Period shall be equal to the
applicable All Hold Rate.
(C) Promptly after the Auction Agent has determined
the Auction Note Interest Rate, the Auction Agent shall
advise the Trustee of the Auction Note 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 Note
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 Bid Auction Rate, the
Maximum Rate will be the Auction Note Interest 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 Note 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).
Appendix A-18
(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 Note Interest Rate shall be the Bid
Auction Rate), all Submitted Sell Orders shall be accepted
and, subject to the provisions of clauses (D) and (E) 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
Note 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
Note 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;
(3) Potential Owners' Submitted Bids
specifying any rate that is lower than the Auction
Note Interest Rate shall be accepted;
(4) Each Existing Owners' Submitted Bid
specifying a rate that is equal to the Auction Note
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 Note Interest Rate,
subject to the provisions of Section 2.02(a)(iv)(D)
of this Appendix A; and
Appendix A-19
(5) Each Potential Owner's Submitted Bid
specifying a rate that is equal to the Auction Note
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 Note Interest Rate, subject to
the provisions of Section 2.02(a)(iv)(D) and (E) of
this Appendix A.
(B) If Sufficient Bids have not been made (other
than because all of the Outstanding Auction Rate Notes are
subject to Submitted Hold Orders), or if the Maximum Rate
is less than the Bid Auction Rate (in which case the
Auction Note Interest Rate shall be the Maximum Rate),
subject to the provisions of Section 2.02(a)(iv)(D) and
(E) of this Appendix A, 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 Note 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 Note Interest Rate shall be
accepted and (y) any rate that is higher than the
Auction Note Interest Rate shall be rejected; and
(3) Each Existing Owner's Submitted Bid
specifying any rate that is higher than the Auction
Note 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
Appendix A-20
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.
(E) If, as a result of the procedures described in
paragraph (A) 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.
Appendix A-21
(vi) Notwithstanding anything in this Appendix A 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 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 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 Trustee shall promptly notify the
Auction Agent of any such occurrence.
(b) APPLICATION OF INTEREST PAYMENTS FOR THE AUCTION RATE NOTES.
(i) The Trustee shall determine not later than 2:00 p.m.,
New York City 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 Trustee shall,
not later than 2:15 p.m., New York City time, on such Business
Day, send a notice thereof in substantially the form of
Attachment A attached hereto to the Auction Agent by telecopy or
similar means and, if such Payment Default is cured, the Trustee
shall immediately send a notice in substantially the form of
Attachment B attached hereto to the Auction Agent by telecopy or
similar means.
(ii) Not later than 2:00 p.m., New York City time, on each
anniversary of the Date of Issuance, the 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., New York City time, on each Auction Date, the 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 Auction Agent Agreement.
The Trustee shall, from time to time at the request of the
Auction Agent and at the direction of an Authorized
Representative, reimburse the Auction Agent for its reasonable
expenses as provided in the Auction Agent Agreement, such
expenses to be paid out of amounts available therefor 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 for a Class of the Auction Rate Notes and shall
notify the 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 a
Class of the Auction Rate Notes is no longer maintained in Book-Entry
Form, or if a Payment Default has occurred, then the Trustee shall
determine the Maximum Rate, Applicable LIBOR Rate, All Hold Rate and
Non-Payment Rate for each such Interest Accrual Period. If the ownership
of a Class of the Auction Rate Notes is no longer maintained in
Book-Entry Form by the Clearing Agency, the Trustee shall calculate the
Maximum Rate on the Business Day immediately preceding the first day of
each Interest Accrual Period after the delivery of certificates
representing such Class of the Auction Rate Notes pursuant to the
Indenture. If a Payment Default shall have occurred, the Trustee shall
calculate the Non-Payment Rate on the Interest Rate Determination Date
Appendix A-22
for (i) each Interest Accrual Period for a Class of the Auction Rate
Notes commencing after the occurrence and during the continuance of such
Payment Default and (ii) any Interest Accrual Period for a Class of the
Auction Rate Notes commencing less than two Business Days after the cure
of any Payment Default. The determination by the 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 Trustee of the Maximum Rate, Applicable LIBOR Rate and All Hold
Rate. The Trustee shall be allowed to hire such consultants or experts
as it deems necessary to make any such calculations required of the
Trustee as set forth in this Indenture or the Auction Agent Agreement.
(d) NOTIFICATION OF RATES, AMOUNTS AND PAYMENT DATES.
(i) By 12:00 noon, New York City time, on the Business Day
following each Regular Record Date for a Class of the Auction
Rate Notes, the Trustee shall determine the aggregate amounts of
interest distributable on the next succeeding Auction Rate
Distribution Date to the beneficial owners of such Class of the
Auction Rate Notes.
(ii) At least four days prior to any Auction Rate
Distribution Date for a Class of the Auction Rate Notes, the
Trustee shall:
(A) confirm with the Auction Agent, so long as no
Payment Default has occurred and is continuing and the
ownership of such Class is maintained in Book-Entry Form
by the Clearing Agency, (1) the date of such next Auction
Rate Distribution Date for such Class and (2) the amount
payable to the Auction Agent on the Auction Date for such
Class pursuant to Section 2.02(b)(ii) of this Appendix A;
(B) pursuant to Section 2.01 of this Appendix A,
advise the Registered Owners of such Class of the Auction
Rate Notes of any Carry-Over Amount accruing on such Class
of the Auction Rate Notes; and
(C) advise the Clearing Agency, so long as the
ownership of such Class is maintained in Book-Entry Form
by the Clearing Agency, upon request, of the aggregate
amount of interest distributable on such next Auction Rate
Distribution Date to the beneficial owners of such Class
of the Auction Rate Notes.
If any day scheduled to be an Auction Rate
Distribution Date for a Class of the Auction Rate Notes
shall be changed after the Trustee shall have given the
notice or confirmation referred to in clause (i) of the
preceding sentence, the Trustee shall, not later than
11:15 a.m., New York City time, on the Business Day next
preceding the earlier of the new Auction Rate Distribution
Date or the old Auction Rate Distribution Date for such
Class, by such means as the 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 such Class of the Auction Rate Notes is
maintained in Book-Entry Form by the Clearing Agency.
Appendix A-23
(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 Trustee and the Issuer
will, and the 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 Issuer 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 A by giving at least 90
days' notice to the Trustee, each Broker-Dealer and the Issuer.
The Auction Agent may be removed at any time by the Trustee upon
the written direction of an Authorized Representative 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 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 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 Issuer, shall use its best efforts to
appoint a Substitute Auction Agent.
Appendix A-24
(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 Issuer hereby appoints Banc of America Securities
LLC, Citigroup Capital Markets Inc., J.P. Morgan Securities Inc.,
SunTrust Robinson Humphrey, Inc. and Nelnet Capital, LLC as
Broker-Dealers for the Class A-4AR-1 Notes, the Class A-4AR-2
Notes, the Class B-1 Notes and the Class B-2 Notes. The Auction
Agent will enter into a Broker-Dealer Agreement with each of the
initial Broker-Dealers for the Auction Rate Notes. An Authorized
Representative 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 Trustee and the Auction Agent.
(ii) Any Broker-Dealer may be removed at any time, at the
request of an Authorized Representative, 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 Class of the Auction Rate Notes are
Outstanding, the Issuer may, from time to time, change the length
of one or more Auction Periods for such Class (an "Auction Period
Adjustment"), 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
such Class of the Auction Rate Notes. The Issuer shall not
initiate an Auction Period Adjustment for a Class of the Auction
Rate Notes unless it shall have received the written consent of
the applicable Broker-Dealer, which consent shall not be
unreasonably withheld, not later than 10 days nor more than 20
days prior to the Auction Date for such Auction Period. The
Issuer shall initiate the Auction Period Adjustment for a Class
of the Auction Rate Notes by giving written notice by Issuer
Order to the Trustee, the Auction Agent, the applicable
Broker-Dealer, each Rating Agency and the Clearing Agency in
substantially the form of, or containing substantially the
information contained in, Attachment C attached hereto at least
10 days prior to the Auction Date for such Auction Period.
Appendix A-25
(ii) An Auction Period Adjustment shall take effect only
if (A) the Trustee and the Auction Agent receive, by 11:00 a.m.,
New York City 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, Attachment D 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 Note Interest Rate for the next Auction Period shall be
determined pursuant to the above provisions of this Section 2.02
and the Auction Period shall be the Auction Period determined
without reference to the proposed change. If the condition
referred to in clause (A) above is met but the condition referred
in clause (B) above is not met, the applicable Auction Note
Interest Rate for the next Auction Period for such Class of the
Auction Rate Notes 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.
(h) CHANGES IN THE AUCTION DATE. The applicable Broker-Dealers,
with the written consent of an Authorized Representative may specify an
earlier Auction Date for a Class of the Auction Rate Notes (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 Article I of this Appendix A 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
such Class of the Auction Rate Notes. The applicable Broker-Dealers
shall deliver a written request for consent to such change in the length
of the Auction Date for a Class of the Auction Rate Notes 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 Trustee, the Auction Agent, the
Issuer, each Rating Agency and the Clearing Agency. Such notice shall be
substantially in the form of, or contain substantially the information
contained in, Attachment E 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 the Auction Note Interest Rate for a
Class of the Auction Rate Notes 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 Class of the Auction Rate
Notes to which such Auction Note Interest Rate applies, and the Issuer and the
Trustee may rely thereon for all purposes.
Appendix A-26
In no event shall the cumulative amount of interest paid or payable on a
Class of the Auction Rate Notes (including interest calculated as provided
herein, plus any other amounts that constitute interest on such Class of 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 Issuance through any subsequent day
during the term of such Class of the Auction Rate Notes or otherwise prior to
payment in full of such Class 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 a Class of the
Auction Rate Notes or related documents or otherwise contracted for, charged,
reserved, taken or received in connection with such Class of the Auction Rate
Notes, or if the redemption or acceleration of the maturity of such Class of the
Auction Rate Notes results in payment to or receipt by the Registered Owner or
any former Registered Owner of such Class of the Auction Rate Notes of any
interest in excess of that permitted by applicable law, then, notwithstanding
any provision of such Class of the Auction Rate Notes or related documents to
the contrary, all excess amounts theretofore paid or received with respect to
such Class of the Auction Rate Notes shall be credited on the principal balance
of such Class 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 such Class 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 such Class of the Auction Rate Notes and under the related documents.
SECTION 2.04. PURCHASE OPTION. If no LIBOR Rate Notes are 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 end of the Collection Period immediately
preceding the date of sale for the purpose of redeeming all 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 2.11(b) of the Indenture (the "Auction
Rate Notes Purchase Option"). 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 Debt Service 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 Monthly 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 2.11(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 Auction Rate Notes and to pay a Pro
rata Portion of any Servicing Fees and Carryover Servicing Fees, Administration
Fees, Trustee Fees, Delaware Trustee Fees, Broker-Dealer Fees and Auction Agent
Fees due and owing 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
Appendix A-27
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 Auction Rate Notes Purchase
Option shall exercise such option by delivering a written notice stating its
desire to exercise this option to the Clearing Agency, the 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 Auction Rate Notes Purchase Option and by
delivering to the 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
Auction Rate Notes Purchase Option fails to provide the required purchase price,
no Auction Rate Notes of such Class shall be called for redemption pursuant to
Section 2.11(b) of the Indenture. The Trustee may consult, and, at the direction
of the Issuer, shall consult, with a financial advisor, including an Initial
Purchaser 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, the 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 2.11(b) of the
Indenture and to pay any Issuer Derivative Payments corresponding to such Class
of the Auction Rate Notes into the Debt Service Fund and shall deposit the
remainder to the Collection Fund. The Trustee shall use such amounts on deposit
in the Debt Service Fund to redeem such 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.
Nelnet, Inc. may transfer ownership of the Auction Rate Notes Purchase
Option described in this Section at any time to any Nelnet Eligible Purchaser.
SECTION 2.05. AMENDMENTS TO THIS APPENDIX A. The provisions of this
Appendix A, including without limitation the definitions of All Hold Rate,
Auction Note Interest Rate, Auction Rate Distribution Date, Maximum Rate and
Non-Payment Rate, may be amended pursuant to the Indenture by obtaining the
consent of the Registered Owners of all affected Outstanding Auction Rate Notes
as follows. If on the first Auction Date for each Class of the Auction Rate
Notes occurring at least 20 days after the date on which the Trustee mailed
notice of such proposed amendment to the Registered Owners of the affected
Outstanding Auction Rate Notes as required by the Indenture, (i) the Auction
Note Interest Rate which is determined on such date is the Bid Auction Rate or
the All Hold Rate for such Class and (ii) there is delivered to the Issuer and
the Trustee an Opinion of Counsel to the effect that such amendment shall not
adversely affect the validity of such Class of the Auction Rate Notes, the
proposed amendment shall be deemed to have been consented to by the Registered
Owners of all affected Outstanding Auction Rate Notes of such Class.
Appendix A-28
ATTACHMENT A
NOTICE OF PAYMENT DEFAULT
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
[CLASS A-4AR-1]
[CLASS A-4AR-2]
[CLASS B-1]
[CLASS B-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 Interest Period shall be the
Non-Payment Rate.
ZIONS FIRST NATIONAL BANK, as Trustee
Dated: _______________________ By
----------------------------------
ATTACHMENT B
NOTICE OF CURE OF PAYMENT DEFAULT
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
[CLASS A-4AR-1]
[CLASS A-4AR-2]
[CLASS B-1]
[CLASS B-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
__________________________.
ZIONS FIRST NATIONAL BANK, as Trustee
Dated: _______________________ By
------------------------------------
ATTACHMENT C
NOTICE OF PROPOSED CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
[CLASS A-4AR-1]
[CLASS A-4AR-2]
[CLASS B-1]
[CLASS B-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 Trustee and the Auction Agent receive, by 11:00 a.m., New York City
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 paragraph 2(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 paragraph 2(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 A-4AR-1 NOTES] [CLASS A-4AR-2 NOTES] [CLASS B-1 NOTES] [CLASS B-2 NOTES]
described herein, that there were Sufficient Bids for such [CLASS A-4AR-1 NOTES]
[CLASS A-4AR-2 NOTES] [CLASS B-1 NOTES] [CLASS B-2 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 A-4AR-1 NOTES] [CLASS
A-4AR-2 NOTES] [CLASS B-1 NOTES] [CLASS B-2 NOTES].
6. The Issuer hereby certifies the instructions set forth in this Notice
are in accordance with the terms and provisions of the Indenture, the Auction
Agent Agreement and the Broker-Dealer Agreement.
NELNET STUDENT LOAN TRUST 2007-2
Dated: By
----------------------------- ------------------------------------
2
ATTACHMENT D
NOTICE ESTABLISHING CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
[CLASS A-4AR-1]
[CLASS A-4AR-2]
[CLASS B-1]
[CLASS B-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 A-4AR-1 NOTES] [CLASS A-4AR-2
NOTES] [CLASS B-1 NOTES] [CLASS B-2 NOTES].
6. The Issuer hereby certifies the instructions set forth in this Notice
are in accordance with the terms and provisions of the Indenture, the Auction
Agent Agreement and the Broker-Dealer Agreement.
NELNET STUDENT LOAN TRUST 2007-2
Dated: By
--------------------------- ---------------------------------------
ATTACHMENT E
NOTICE OF CHANGE IN AUCTION DATE
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
[CLASS A-4AR-1]
[CLASS A-4AR-2]
[CLASS B-1]
[CLASS B-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 A-4AR-1 NOTES] [CLASS A-4AR-2 NOTES] [CLASS
B-1 NOTES] [CLASS B-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 A-4AR-1 NOTES] [CLASS A-4AR-2 NOTES]
[CLASS B-1 NOTES] [CLASS B-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 A-4AR-1 NOTES] [CLASS
A-4AR-2 NOTES] [CLASS B-1 NOTES] [CLASS B-2 NOTES].
5. The Broker-Dealer hereby certifies the instructions set forth in this
Notice are in accordance with the terms and provisions of the Indenture, the
Auction Agent Agreement and the Broker-Dealer Agreement.
[BROKER-DEALER], as Broker-Dealer
Dated: By
------------------------ -----------------------------------------
EXHIBIT A
ELIGIBLE LOAN ACQUISITION CERTIFICATE
This Eligible Loan Acquisition Certificate is submitted pursuant to the
provisions of Section 5.02 of the Indenture of Trust, dated as of August 1,
2007, as amended (the "Indenture"), between Nelnet Student Loan Trust 2007-2
(the "Issuer") and Zions First National Bank, as trustee and 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. In your capacity as Trustee, you are hereby authorized and requested
to disburse to _________________ (the "Seller") the sum of $__________ for the
acquisition of Eligible Loans and the sum of $____________ to fund "Add-On
Consolidation Loans". With respect to the Eligible Loans so to be acquired, the
Issuer hereby certifies as follows:
1. The Eligible Loans to be acquired 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, plus accrued
interest.
3. Each Acquired Eligible Loan is an Eligible Loan authorized so to be
acquired by the Indenture.
4. The following items have been received and are being retained, on
your behalf, by the Issuer, the Master Servicer or a Subservicer:
(a) a copy of the Student Loan Purchase Agreement(s) between the
Issuer and the Eligible Lender with respect to the Acquired Eligible
Loans (original copy maintained on file with the Issuer on behalf of the
Trustee);
(b) with respect to each Insured Loan included among the Acquired
Eligible Loans, the Certificate of Insurance relating thereto;
(c) with respect to each Guaranteed Loan included among the
Acquired Eligible Loans, a certified copy of the Guarantee Agreement
relating thereto;
(d) 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 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); and
(e) instruments duly assigning the Acquired Eligible Loans to the
Trustee.
5. The Issuer is not, on the date hereof, in default under the Indenture
or in the performance of any of its covenants and agreements made in the Student
Loan Purchase Agreement(s) relating to the Acquired Eligible Loans, and, to the
best knowledge of the Issuer, the Eligible Lender is not in default under the
Student Loan Purchase Agreement applicable 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 paragraph 4(d) hereof.
6. All of the conditions specified in the Student Loan Purchase
Agreement(s) 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. With respect to all Acquired Eligible Loans which are Insured,
Insurance is in effect with respect thereto, and with respect to all Acquired
Eligible Loans which are Guaranteed, the Guarantee Agreement is in effect with
respect thereto.
8. 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.
9. The proposed use of moneys in the Acquisition Fund is in compliance
with the provisions of the Indenture.
10. The undersigned is authorized to sign and submit this Certificate on
behalf of the Issuer.
11. Eligible Loans are being acquired at a price which permits the
results of the cash flow analyses provided to the Rating Agencies on the Date of
Issuance and as revised/amended to be sustained.
WITNESS my hand this _____ day of ___________.
NELNET STUDENT LOAN TRUST 2007-2
By
-----------------------------------------
Name
---------------------------------------
Title
--------------------------------------
A-2
EXHIBIT B-1
FORM OF [REGULATION S] [RULE 144A] CLASS A-1L NOTE
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY
PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (A) PURSUANT TO RULE 144A PROMULGATED UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (B) 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 NOTE IN ACCORDANCE WITH
RULE 903 OR RULE 904 OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT; (C)
PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) PURSUANT TO A VALID
REGISTRATION STATEMENT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK LIMITED PURPOSE TRUST COMPANY ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY.
B-1-1
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
SENIOR CLASS A-1L (LIBOR)
REGISTERED NO. R-__ REGISTERED $__________
DATE OF ISSUANCE MATURITY DATE CUSIP NO. ISIN NO.
August 27, 2007 September 25, 2013
PRINCIPAL SUM: **DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
Nelnet Student Loan Trust 2007-2, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, on each Quarterly Distribution Date the principal sum equal
to the portion of the Class A Principal Distribution Amount allocable to this
Note for such Quarterly Distribution Date, as described in the Indenture of
Trust, dated as of August 1, 2007, between the Issuer (by M&T Trust Company of
Delaware, in its capacity as Delaware Trustee) and Zions First National Bank, a
national banking association, as eligible lender trustee and indenture trustee
(the "Trustee") (capitalized terms used but not defined herein being defined in
Article I of the Indenture, which also contains rules as to usage that shall be
applicable herein); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Maturity Date specified above (the
"Class A-1L Maturity Date").
The Issuer shall pay interest on this Note at the rate per annum equal
to the Class A-1L Rate (as defined herein), 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 or the Date of Issuance in the case of the first Quarterly
Distribution Date (after giving effect to all payments of principal made on the
preceding Quarterly Distribution Date), subject to certain limitations contained
in the Indenture. Interest on this Note shall accrue from and including the
preceding Quarterly Distribution Date (or, in the case of the first Interest
Accrual Period, the Date of Issuance) to but excluding the following Quarterly
Distribution Date (each an "Interest Accrual Period"). Interest shall be
calculated on the basis of the actual number of days elapsed in each Interest
Accrual Period divided by 360 and rounding the resultant figure to the fifth
decimal point. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
B-1-2
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
[Remainder of page intentionally left blank]
B-1-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
NELNET STUDENT LOAN TRUST 2007-2
By: M&T TRUST COMPANY OF DELAWARE, not in
its individual capacity but solely as
Delaware Trustee under the Trust
Agreement,
By
-----------------------------------------
Authorized Signatory
Date: __________ __, ____
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
ZIONS FIRST NATIONAL BANK, not in its
individual capacity but solely as Trustee,
By
---------------------------------------
Authorized Signatory
Date: __________ __, ____
B-1-4
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Student Loan Asset-Backed Notes, Senior Class A-1L (the "Class
A-1L Notes"), which, together with the Issuer's Student Loan Asset-Backed Notes,
Senior Class A-2L, A-3L, A-4AR-1 and A-4AR-2 (together with the Class A-1L
Notes, the "Class A Notes") and the Issuer's Student Loan Asset-Backed Notes,
Subordinate Class B-1 and Class B-2 (the "Class B Notes" and, together with the
Class A Notes, the "Notes"), are issued under and secured by the Indenture, to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights and obligations thereunder of the
Issuer, the Trustee and the Registered Owners. The Notes are subject to all
terms of 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 are paid on a parity with
interest on the Class A Notes.
The Class A-1L Notes are and will be secured by the Trust Estate pledged
as security therefor as provided in the Indenture. The Class A Notes are senior
to the Class B Notes as and to the extent provided in the Indenture. The Class A
Notes are, except for certain Termination Payments that are not Priority
Termination Payments, issued on a parity with any Derivative Products entered
into by the Issuer with a Counterparty, pursuant to which the Issuer will, from
time to time, owe Issuer Derivative Payments, and will, from time to time, be
owed Counterparty Payments.
Principal of the Class A-1L Notes shall be payable on each Quarterly
Distribution Date in an amount equal to the portion of the Class A Principal
Distribution Amount allocable to this Note for such Quarterly Distribution Date.
"Quarterly Distribution Date" means the twenty-fifth (25th) day of each March,
June, September and December or, if such day is not a Business Day, the
immediately succeeding Business Day, commencing December 26, 2007.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Class A-1L Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (a) an Event of Default shall have
occurred and be continuing and (b) either the Trustee or the Registered Owners
of Obligations representing not less than a majority of the Outstanding Amount
of the Highest Priority Obligations shall have declared the Notes to be
immediately due and payable in the manner provided in the Indenture.
The Notes are subject to redemption from the proceeds of a sale of
Financed Eligible Loans in accordance with Section 10.03 or 10.04 of the
Indenture on any Quarterly Distribution Date on or after (a) the September 2021
Quarterly Distribution Date and (b) the Quarterly Distribution Date next
succeeding the date on which the then outstanding Pool Balance is 10% or less of
the Initial Pool Balance (all as defined in the Indenture), in whole only, at a
redemption price equal to the principal amount thereof being redeemed, plus
accrued interest, if any, due and payable on the Notes to such Quarterly
Distribution Date.
B-1-5
Interest on the Class A-1L Notes shall be payable on each Quarterly
Distribution Date on the principal amount outstanding of the Class A-1L Notes
until the principal amount thereof is paid in full, at a rate per annum equal to
the Class A-1L Rate. The "Class A-1L Rate" for each Interest Accrual Period,
other than the first Interest Accrual Period, shall be equal to the applicable
Three-Month LIBOR, plus 0.18%. The "Class A-1L Rate" for the first Interest
Accrual Period shall be determined by reference to the following formula:
x + [29/30 * (y-x)] plus 0.18%, as determined by the Administrator.
where:
x = Three-Month LIBOR, and
y = Four-Month LIBOR.
Payments of interest on this Note on each Quarterly Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be paid to the Person in whose name such Note is
registered on the Record Date by check mailed first-class, postage prepaid to
such Person's address as it appears on the records of the Trustee on such Record
Date, except that, unless definitive Notes have been issued pursuant to the
Indenture, with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment shall be made by wire transfer in immediately available funds to the
account designated by such nominee. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Quarterly Distribution Date, then the Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Quarterly Distribution Date on which
the Issuer expects that the final installment of principal of and interest on
such Note will be paid. Such notice shall be mailed or transmitted by facsimile
prior to such final Quarterly Distribution Date and shall specify that such
final installment will be payable only upon presentation and surrender of such
Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered upon the records of
the Trustee upon surrender for transfer of any Note at the Principal Office of
the Trustee, duly endorsed for transfer or accompanied by an assignment duly
executed by the Registered Owner or his attorney duly authorized in writing, and
thereupon the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new fully registered Note
or Notes of the same interest rate and for a like Class and aggregate principal
amount of the same maturity.
As to any Note, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on any fully registered Note shall be
made only to or upon the written order of the Registered Owner thereof or his
legal representative but such registration may be changed as provided in the
Indenture. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Note to the extent of the sum or sums paid.
B-1-6
Each Registered Owner and each transferee of a Note shall be deemed to
represent and warrant that either (a) it is not acquiring the Note directly or
indirectly for, or on behalf of, an ERISA plan or any entity whose underlying
assets are deemed to be plan assets of such ERISA plan; or (b)(i) the
acquisition and holding of the Notes will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or similar
law and (ii) if the Notes are subsequently deemed to be "plan assets" pursuant
to the regulations set forth at 29 C.F.R. ss. 2510.3-101, it will promptly
dispose of the Notes.
The Trustee shall require the payment by any Registered Owner requesting
exchange or transfer of any tax or other governmental charge required to be paid
with respect to such exchange or transfer. The applicant for any such transfer
or exchange may be required to pay all taxes and governmental charges in
connection with such transfer or exchange, other than exchanges pursuant to the
Indenture.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Registered
Owners under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
B-1-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
________________________________________________________________________________
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-----------------------
By *
-----------------------------------------
Name
----------------------------------------
Title
---------------------------------------
Signature Guaranteed:
By *
-----------------------------------------
*NOTICE: Signature(s) should
be guaranteed by a guarantor
institution participating in the
Securities Transfer Agents
Medallion Program or in such
other guarantee program
acceptable to the Trustee. The
Assignor's signature to this
assignment must correspond with
the name as it appears upon the
face of the within note in every
particular without alteration or
any change whatever.
B-1-8
EXHIBIT B-2
FORM OF [REGULATION S] [RULE 144A] CLASS A-2L NOTE
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY
PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (A) PURSUANT TO RULE 144A PROMULGATED UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (B) 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 NOTE IN ACCORDANCE WITH
RULE 903 OR RULE 904 OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT; (C)
PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) PURSUANT TO A VALID
REGISTRATION STATEMENT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK LIMITED PURPOSE TRUST COMPANY ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY.
B-2-1
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
SENIOR CLASS A-2L (LIBOR)
REGISTERED NO. R-__ REGISTERED $__________
DATE OF ISSUANCE MATURITY DATE CUSIP NO. ISIN NO.
August 27, 2007 September 25, 2018
PRINCIPAL SUM: **DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
Nelnet Student Loan Trust 2007-2, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, on each Quarterly Distribution Date the principal sum equal
to the portion of the Class A Principal Distribution Amount allocable to this
Note for such Quarterly Distribution Date, as described in the Indenture of
Trust, dated as of August 1, 2007, between the Issuer (by M&T Trust Company of
Delaware, in its capacity as Delaware Trustee) and Zions First National Bank, a
national banking association, as eligible lender trustee and indenture trustee
(the "Trustee") (capitalized terms used but not defined herein being defined in
Article I of the Indenture, which also contains rules as to usage that shall be
applicable herein); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Maturity Date specified above (the
"Class A-2L Maturity Date").
The Issuer shall pay interest on this Note at the rate per annum equal
to the Class A-2L Rate (as defined herein), 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 or the Date of Issuance in the case of the first Quarterly
Distribution Date (after giving effect to all payments of principal made on the
preceding Quarterly Distribution Date), subject to certain limitations contained
in the Indenture. Interest on this Note shall accrue from and including the
preceding Quarterly Distribution Date (or, in the case of the first Interest
Accrual Period, the Date of Issuance) to but excluding the following Quarterly
Distribution Date (each an "Interest Accrual Period"). Interest shall be
calculated on the basis of the actual number of days elapsed in each Interest
Accrual Period divided by 360 and rounding the resultant figure to the fifth
decimal point. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
B-2-2
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
[Remainder of page intentionally left blank]
B-2-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
NELNET STUDENT LOAN TRUST 2007-2
By: M&T TRUST COMPANY OF DELAWARE, not in
its individual capacity but solely as
Delaware Trustee under the Trust
Agreement,
By
----------------------------------------
Authorized Signatory
Date: __________ __, ____
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
ZIONS FIRST NATIONAL BANK, not in its
individual capacity but solely as Trustee,
By
---------------------------------------
Authorized Signatory
Date: __________ __, ____
B-2-4
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Student Loan Asset-Backed Notes, Senior Class A-2L (the "Class
A-2L Notes"), which, together with the Issuer's Student Loan Asset-Backed Notes,
Senior Class A-1L, A-3L, A-4AR-1 and A-4AR-2 (together with the Class A-2L
Notes, the "Class A Notes") and the Issuer's Student Loan Asset-Backed Notes,
Subordinate Class B-1 and Class B-2 (the "Class B Notes" and, together with the
Class A Notes, the "Notes"), are issued under and secured by the Indenture, to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights and obligations thereunder of the
Issuer, the Trustee and the Registered Owners. The Notes are subject to all
terms of 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 are paid on a parity with
interest on the Class A Notes.
The Class A-2L Notes are and will be secured by the Trust Estate pledged
as security therefor as provided in the Indenture. The Class A Notes are senior
to the Class B Notes as and to the extent provided in the Indenture. The Class A
Notes are, except for certain Termination Payments that are not Priority
Termination Payments, issued on a parity with any Derivative Products entered
into by the Issuer with a Counterparty, pursuant to which the Issuer will, from
time to time, owe Issuer Derivative Payments, and will, from time to time, be
owed Counterparty Payments.
Principal of the Class A-2L Notes shall be payable on each Quarterly
Distribution Date in an amount equal to the portion of the Class A Principal
Distribution Amount allocable to this Note for such Quarterly Distribution Date.
"Quarterly Distribution Date" means the twenty-fifth (25th) day of each March,
June, September and December or, if such day is not a Business Day, the
immediately succeeding Business Day, commencing December 26, 2007.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Class A-2L Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (a) an Event of Default shall have
occurred and be continuing and (b) either the Trustee or the Registered Owners
of Obligations representing not less than a majority of the Outstanding Amount
of the Highest Priority Obligations shall have declared the Notes to be
immediately due and payable in the manner provided in the Indenture.
The Notes are subject to redemption from the proceeds of a sale of
Financed Eligible Loans in accordance with Section 10.03 or 10.04 of the
Indenture on any Quarterly Distribution Date on or after (a) the September 2021
Quarterly Distribution Date and (b) the Quarterly Distribution Date next
succeeding the date on which the then outstanding Pool Balance is 10% or less of
the Initial Pool Balance (all as defined in the Indenture), in whole only, at a
redemption price equal to the principal amount thereof being redeemed, plus
accrued interest, if any, due and payable on the Notes to such Quarterly
Distribution Date.
B-2-5
Interest on the Class A-2L Notes shall be payable on each Quarterly
Distribution Date on the principal amount outstanding of the Class A-2L Notes
until the principal amount thereof is paid in full, at a rate per annum equal to
the Class A-2L Rate. The "Class A-2L Rate" for each Interest Accrual Period,
other than the first Interest Accrual Period, shall be equal to the applicable
Three-Month LIBOR, plus 0.25%. The "Class A-2L Rate" for the first Interest
Accrual Period shall be determined by reference to the following formula:
x + [29/30 * (y-x)] plus 0.25%, as determined by the Administrator.
where:
x = Three-Month LIBOR, and
y = Four-Month LIBOR.
Payments of interest on this Note on each Quarterly Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be paid to the Person in whose name such Note is
registered on the Record Date by check mailed first-class, postage prepaid to
such Person's address as it appears on the records of the Trustee on such Record
Date, except that, unless definitive Notes have been issued pursuant to the
Indenture, with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment shall be made by wire transfer in immediately available funds to the
account designated by such nominee. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Quarterly Distribution Date, then the Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Quarterly Distribution Date on which
the Issuer expects that the final installment of principal of and interest on
such Note will be paid. Such notice shall be mailed or transmitted by facsimile
prior to such final Quarterly Distribution Date and shall specify that such
final installment will be payable only upon presentation and surrender of such
Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered upon the records of
the Trustee upon surrender for transfer of any Note at the Principal Office of
the Trustee, duly endorsed for transfer or accompanied by an assignment duly
executed by the Registered Owner or his attorney duly authorized in writing, and
thereupon the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new fully registered Note
or Notes of the same interest rate and for a like Class and aggregate principal
amount of the same maturity.
As to any Note, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on any fully registered Note shall be
made only to or upon the written order of the Registered Owner thereof or his
legal representative but such registration may be changed as provided in the
Indenture. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Note to the extent of the sum or sums paid.
B-2-6
Each Registered Owner and each transferee of a Note shall be deemed to
represent and warrant that either (a) it is not acquiring the Note directly or
indirectly for, or on behalf of, an ERISA plan or any entity whose underlying
assets are deemed to be plan assets of such ERISA plan; or (b)(i) the
acquisition and holding of the Notes will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or similar
law and (ii) if the Notes are subsequently deemed to be "plan assets" pursuant
to the regulations set forth at 29 C.F.R. ss. 2510.3-101, it will promptly
dispose of the Notes.
The Trustee shall require the payment by any Registered Owner requesting
exchange or transfer of any tax or other governmental charge required to be paid
with respect to such exchange or transfer. The applicant for any such transfer
or exchange may be required to pay all taxes and governmental charges in
connection with such transfer or exchange, other than exchanges pursuant to the
Indenture.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Registered
Owners under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
B-2-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
________________________________________________________________________________
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-----------------------
By *
-----------------------------------------
Name
----------------------------------------
Title
---------------------------------------
Signature Guaranteed:
By *
-----------------------------------------
*NOTICE: Signature(s) should
be guaranteed by a guarantor
institution participating in the
Securities Transfer Agents
Medallion Program or in such
other guarantee program
acceptable to the Trustee. The
Assignor's signature to this
assignment must correspond with
the name as it appears upon the
face of the within note in every
particular without alteration or
any change whatever.
B-2-8
EXHIBIT B-3
FORM OF [REGULATION S] [RULE 144A] CLASS A-3L NOTE
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY
PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (A) PURSUANT TO RULE 144A PROMULGATED UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (B) 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 NOTE IN ACCORDANCE WITH
RULE 903 OR RULE 904 OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT; (C)
PURSUANT TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) PURSUANT TO A VALID
REGISTRATION STATEMENT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK LIMITED PURPOSE TRUST COMPANY ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY.
B-6-1
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
SENIOR CLASS A-3L (LIBOR)
REGISTERED NO. R-__ REGISTERED $__________
DATE OF ISSUANCE MATURITY DATE CUSIP NO. ISIN NO.
August 27, 2007 March 25, 2026
PRINCIPAL SUM: **DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
Nelnet Student Loan Trust 2007-2, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, on each Quarterly Distribution Date the principal sum equal
to the portion of the Class A Principal Distribution Amount allocable to this
Note for such Quarterly Distribution Date, as described in the Indenture of
Trust, dated as of August 1, 2007, between the Issuer (by M&T Trust Company of
Delaware, in its capacity as Delaware Trustee) and Zions First National Bank, a
national banking association, as eligible lender trustee and indenture trustee
(the "Trustee") (capitalized terms used but not defined herein being defined in
Article I of the Indenture, which also contains rules as to usage that shall be
applicable herein); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Maturity Date specified above (the
"Class A-3L Maturity Date").
The Issuer shall pay interest on this Note at the rate per annum equal
to the Class A-3L Rate (as defined herein), 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 or the Date of Issuance in the case of the first Quarterly
Distribution Date (after giving effect to all payments of principal made on the
preceding Quarterly Distribution Date), subject to certain limitations contained
in the Indenture. Interest on this Note shall accrue from and including the
preceding Quarterly Distribution Date (or, in the case of the first Interest
Accrual Period, the Date of Issuance) to but excluding the following Quarterly
Distribution Date (each an "Interest Accrual Period"). Interest shall be
calculated on the basis of the actual number of days elapsed in each Interest
Accrual Period divided by 360 and rounding the resultant figure to the fifth
decimal point. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
B-6-2
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
[Remainder of page intentionally left blank]
B-6-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
NELNET STUDENT LOAN TRUST 2007-2
By: M&T TRUST COMPANY OF DELAWARE, not in
its individual capacity but solely as
Delaware Trustee under the Trust
Agreement,
By
----------------------------------------
Authorized Signatory
Date: __________ __, ____
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
ZIONS FIRST NATIONAL BANK, not in its
individual capacity but solely as Trustee,
By
---------------------------------------
Authorized Signatory
Date: __________ __, ____
B-6-4
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Student Loan Asset-Backed Notes, Senior Class A-3L (the "Class
A-3L Notes"), which, together with the Issuer's Student Loan Asset-Backed Notes,
Senior Class A-1L, A-2L, A-4AR-1 and A-4AR-2 (together with the Class A-3L
Notes, the "Class A Notes") and the Issuer's Student Loan Asset-Backed Notes,
Subordinate Class B-1 and Class B-2 (the "Class B Notes" and, together with the
Class A Notes, the "Notes"), are issued under and secured by the Indenture, to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights and obligations thereunder of the
Issuer, the Trustee and the Registered Owners. The Notes are subject to all
terms of 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 are paid on a parity with
interest on the Class A Notes.
The Class A-3L Notes are and will be secured by the Trust Estate pledged
as security therefor as provided in the Indenture. The Class A Notes are senior
to the Class B Notes as and to the extent provided in the Indenture. The Class A
Notes are, except for certain Termination Payments that are not Priority
Termination Payments, issued on a parity with any Derivative Products entered
into by the Issuer with a Counterparty, pursuant to which the Issuer will, from
time to time, owe Issuer Derivative Payments, and will, from time to time, be
owed Counterparty Payments.
Principal of the Class A-3L Notes shall be payable on each Quarterly
Distribution Date in an amount equal to the portion of the Class A Principal
Distribution Amount allocable to this Note for such Quarterly Distribution Date.
"Quarterly Distribution Date" means the twenty-fifth (25th) day of each March,
June, September and December or, if such day is not a Business Day, the
immediately succeeding Business Day, commencing December 26, 2007.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Class A-3L Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (a) an Event of Default shall have
occurred and be continuing and (b) either the Trustee or the Registered Owners
of Obligations representing not less than a majority of the Outstanding Amount
of the Highest Priority Obligations shall have declared the Notes to be
immediately due and payable in the manner provided in the Indenture.
The Notes are subject to redemption from the proceeds of a sale of
Financed Eligible Loans in accordance with Section 10.03 or 10.04 of the
Indenture on any Quarterly Distribution Date on or after (a) the September 2021
Quarterly Distribution Date and (b) the Quarterly Distribution Date next
succeeding the date on which the then outstanding Pool Balance is 10% or less of
the Initial Pool Balance (all as defined in the Indenture), in whole only, at a
redemption price equal to the principal amount thereof being redeemed, plus
accrued interest, if any, due and payable on the Notes to such Quarterly
Distribution Date.
B-6-5
Interest on the Class A-3L Notes shall be payable on each Quarterly
Distribution Date on the principal amount outstanding of the Class A-3L Notes
until the principal amount thereof is paid in full, at a rate per annum equal to
the Class A-3L Rate. The "Class A-3L Rate" for each Interest Accrual Period,
other than the first Interest Accrual Period, shall be equal to the applicable
Three-Month LIBOR, plus 0.25%. The "Class A-3L Rate" for the first Interest
Accrual Period shall be determined by reference to the following formula:
x + [29/30 * (y-x)] plus 0.35%, as determined by the Administrator.
where:
x = Three-Month LIBOR, and
y = Four-Month LIBOR.
Payments of interest on this Note on each Quarterly Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be paid to the Person in whose name such Note is
registered on the Record Date by check mailed first-class, postage prepaid to
such Person's address as it appears on the records of the Trustee on such Record
Date, except that, unless definitive Notes have been issued pursuant to the
Indenture, with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment shall be made by wire transfer in immediately available funds to the
account designated by such nominee. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Quarterly Distribution Date, then the Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Quarterly Distribution Date on which
the Issuer expects that the final installment of principal of and interest on
such Note will be paid. Such notice shall be mailed or transmitted by facsimile
prior to such final Quarterly Distribution Date and shall specify that such
final installment will be payable only upon presentation and surrender of such
Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered upon the records of
the Trustee upon surrender for transfer of any Note at the Principal Office of
the Trustee, duly endorsed for transfer or accompanied by an assignment duly
executed by the Registered Owner or his attorney duly authorized in writing, and
thereupon the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new fully registered Note
or Notes of the same interest rate and for a like Class and aggregate principal
amount of the same maturity.
As to any Note, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on any fully registered Note shall be
made only to or upon the written order of the Registered Owner thereof or his
legal representative but such registration may be changed as provided in the
Indenture. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Note to the extent of the sum or sums paid.
B-6-6
Each Registered Owner and each transferee of a Note shall be deemed to
represent and warrant that either (a) it is not acquiring the Note directly or
indirectly for, or on behalf of, an ERISA plan or any entity whose underlying
assets are deemed to be plan assets of such ERISA plan; or (b)(i) the
acquisition and holding of the Notes will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or similar
law and (ii) if the Notes are subsequently deemed to be "plan assets" pursuant
to the regulations set forth at 29 C.F.R. ss. 2510.3-101, it will promptly
dispose of the Notes.
The Trustee shall require the payment by any Registered Owner requesting
exchange or transfer of any tax or other governmental charge required to be paid
with respect to such exchange or transfer. The applicant for any such transfer
or exchange may be required to pay all taxes and governmental charges in
connection with such transfer or exchange, other than exchanges pursuant to the
Indenture.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Registered
Owners under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
B-6-7
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
________________________________________________________________________________
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-----------------------
By *
-----------------------------------------
Name
----------------------------------------
Title
---------------------------------------
Signature Guaranteed:
By *
-----------------------------------------
*NOTICE: Signature(s) should
be guaranteed by a guarantor
institution participating in the
Securities Transfer Agents
Medallion Program or in such
other guarantee program
acceptable to the Trustee. The
Assignor's signature to this
assignment must correspond with
the name as it appears upon the
face of the within note in every
particular without alteration or
any change whatever.
B-6-8
EXHIBIT B-4
FORM OF CLASS A-4AR-1 NOTE
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY
PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (A) PURSUANT TO RULE 144A PROMULGATED UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (B) PURSUANT TO ANOTHER
EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS; OR (C) PURSUANT TO A VALID REGISTRATION
STATEMENT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK LIMITED PURPOSE TRUST COMPANY ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY..
B-4-1
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
SENIOR CLASS A-4AR-1 (AUCTION)
REGISTERED NO. R-__ REGISTERED $__________
DATE OF ISSUANCE MATURITY DATE CUSIP NO. ISIN NO.
August 27, 2007 June 25, 2035 64032F AK 0 US64032FAK03
PRINCIPAL SUM: **DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
Nelnet Student Loan Trust 2007-2, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, on each Auction Rate Distribution Date the principal sum
equal to the portion of the Class A Principal Distribution Amount allocable to
this Note for such Auction Rate Distribution Date, as described in the Indenture
of Trust, dated as of August 1, 2007, between the Issuer (by M&T Trust Company
of Delaware, in its capacity as Delaware Trustee) and Zions First National Bank,
a national banking association, as eligible lender trustee and indenture trustee
(the "Trustee") (capitalized terms used but not defined herein being defined in
Article I of the Indenture, which also contains rules as to usage that shall be
applicable herein); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Maturity Date specified above (the
"Class A-4AR-1 Maturity Date").
The Issuer shall pay interest on this Note at the rate per annum equal
to the Class A-4AR-1 Rate (as defined herein), on each Auction Rate Distribution
Date for the Class A-4AR-1 Notes until the principal of this Note is paid or
made available for payment, on the principal amount of this Note outstanding on
the preceding Auction Rate Distribution Date or the Date of Issuance in the case
of the first Auction Rate Distribution Date (after giving effect to all payments
of principal made on the preceding Auction Rate Distribution Date), subject to
certain limitations contained in the Indenture. Interest on this Note shall
accrue, unless changed as provided in the Indenture in Appendix A thereto,
initially during the period commencing on the Date of Issuance through and not
including the Initial Rate Adjustment Date for the Class A-4AR-1 Notes, and
thereafter, each successive period of generally 28 days, commencing on the first
Business Day following the applicable Auction Date, and ending on and including
the applicable Auction Date (unless such date is not followed by a Business Day,
in which case the next succeeding day that is followed by a Business Day) and,
if the Auction Periods are changed as provided in the Indenture, each period
commencing on an Auction Rate Distribution Date and ending on but excluding the
succeeding Auction Rate Distribution Date (each an "Interest Accrual Period" or
"Auction Period"). Interest shall be calculated on the basis of the actual
number of days elapsed in each Interest Accrual Period divided by 360.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
B-4-2
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
[Remainder of page intentionally left blank]
B-4-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
NELNET STUDENT LOAN TRUST 2007-2
By: M&T TRUST COMPANY OF DELAWARE, not in
its individual capacity but solely as
Delaware Trustee under the Trust
Agreement,
By
----------------------------------------
Authorized Signatory
Date: __________ __, ____
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
ZIONS FIRST NATIONAL BANK, not in its
individual capacity but solely as Trustee,
By
---------------------------------------
Authorized Signatory
Date: __________ __, ____
B-4-4
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Student Loan Asset-Backed Notes, Senior Class A-4AR-1 (the
"Class A-4AR-1 Notes"), which, together with the Issuer's Student Loan
Asset-Backed Notes, Senior Class A-1L, A-2L, A-3L and A-4AR-2 (together with the
Class A-4AR-1 Notes, the "Class A Notes") and the Issuer's Student Loan
Asset-Backed Notes, Subordinate Class B-1 and Class B-2 (the "Class B Notes"
and, together with the Class A Notes, the "Notes"), are issued under and secured
by the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Trustee and the Registered Owners. The
Notes are subject to all terms of 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 are paid on a parity with
interest on the Class A Notes.
The Class A-4AR-1 Notes are and will be secured by the Trust Estate
pledged as security therefor as provided in the Indenture. The Class A Notes are
senior to the Class B Notes as and to the extent provided in the Indenture. The
Class A Notes are, except for certain Termination Payments that are not Priority
Termination Payments, issued on a parity with any Derivative Products entered
into by the Issuer with a Counterparty, pursuant to which the Issuer will, from
time to time, owe Issuer Derivative Payments, and will, from time to time, be
owed Counterparty Payments.
Principal of the Class A-4AR-1 Notes shall be payable on each Auction
Rate Distribution Date in an amount equal to the portion of the Class A
Principal Distribution Amount allocable to this Note for such Auction Rate
Distribution Date. "Auction Rate Distribution Date" means for the Class A-4AR-1
Notes, the Business Day immediately following the Initial Period and each
related Auction Period thereafter; provided, however, that if the duration of
such Auction Period exceeds 90 days, then the Class A-4AR-1 Notes will have
Auction Rate Distribution Dates on (i) the twenty fifth (25th) day of each
March, June, September and December occurring during such Auction Period (or, if
such day is not a Business Day, the immediately succeeding Business Day), and
(ii) the first Business Day immediately following the end of such Auction
Period.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Class A-4AR-1 Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (a) an Event of Default shall have
occurred and be continuing and (b) either the Trustee or the Registered Owners
of Obligations representing not less than a majority of the Outstanding Amount
of the Highest Priority Obligations shall have declared the Notes to be
immediately due and payable in the manner provided in the Indenture.
The Notes are subject to redemption from the proceeds of a sale of
Financed Eligible Loans in accordance with Section 10.03 or 10.04 of the
Indenture on any Quarterly Distribution Date on or after (a) the September 2021
Quarterly Distribution Date and (b) the Quarterly Distribution Date next
succeeding the date on which the then outstanding Pool Balance is 10% or less of
the Initial Pool Balance (all as defined in the Indenture), in whole only, at a
redemption price equal to the principal amount thereof being redeemed, plus
accrued interest, if any, due and payable on the Notes to such Quarterly
Distribution Date.
B-4-5
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
A to the Indenture), 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
Carry-Over Amounts (and any accrued interest thereon) due and payable on such
Class of the Auction Rate Notes to such Auction Rate Distribution Date.
Upon a sale of a Pro rata Portion of the Financed Eligible Loans as
provided in Section 2.04 of Appendix A to the Indenture, each Class of the
Auction Rate Notes is subject to redemption, in whole only, on any Auction Rate
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 Carry-Over Amounts (and any accrued interest thereon)
due and payable on such Class of the Auction Rate Notes to such Auction Rate
Distribution Date.
Each Class of the Auction Rate Notes is subject to mandatory redemption,
in whole or in part, from amounts on deposit in the Retirement Account of the
Debt Service 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, each at
a redemption price equal to the principal balance being redeemed plus accrued
interest, if any (but not including any Carry-Over Amounts, if any, except to
the extent such Carry-Over Amounts is payable on such Auction Rate Distribution
Date pursuant to Section 5.04 of the Indenture), to such Auction Rate
Distribution Date from amounts transferred to the Retirement Account of the Debt
Service Fund representing Principal Distribution Amount or representing amounts
transferred from the Collection Fund pursuant to Section 5.04(c)(xiv) of the
Indenture.
Interest on the Class A-4AR-1 Notes shall be payable on each Auction
Rate Distribution Date on the principal amount outstanding of the Class A-4AR-1
Notes until the principal amount thereof is paid in full, at a rate per annum
equal to the Class A-4AR-1 Rate. The "Class A-4AR-1 Rate" for each Interest
Accrual Period, other than the first Interest Accrual Period, shall be equal to
the Auction Note Interest Rate for the Class A-4AR-1 Notes for such Interest
Accrual Period, and, for the first Interest Accrual Period, the Initial Rate for
such Class. The Auction Note Interest Rate is determined for each Interest
Accrual Period in accordance with the Auction Procedures described in Appendix A
to the Indenture. The Initial Rate for the Class A-4AR-1 Notes is the rate
selected by the Initial Purchasers and specified in the Indenture for such Class
of Notes. Under certain circumstances, the Class A-4AR-1 Notes may be entitled
to payment of certain Carry-Over Amounts for the Class A-4AR-1 Notes, as
described in Appendix A to the Indenture. Payment of such Carry-Over Amounts is
subordinated to the payment of principal and interest on the Notes, and to
payment of other amounts owed by the Issuer, as described in the Indenture.
B-4-6
Payments of interest on this Note on each Auction Rate Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be paid to the Person in whose name such Note
is registered on the Record Date by check mailed first-class, postage prepaid to
such Person's address as it appears on the records of the Trustee on such Record
Date, except that, unless definitive Notes have been issued pursuant to the
Indenture, with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment shall be made by wire transfer in immediately available funds to the
account designated by such nominee. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Auction Rate Distribution Date, then the
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Auction Rate Distribution Date on
which the Issuer expects that the final installment of principal of and interest
on such Note will be paid. Such notice shall be mailed or transmitted by
facsimile prior to such final Auction Rate Distribution Date and shall specify
that such final installment will be payable only upon presentation and surrender
of such Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered upon the records of
the Trustee upon surrender for transfer of any Note at the Principal Office of
the Trustee, duly endorsed for transfer or accompanied by an assignment duly
executed by the Registered Owner or his attorney duly authorized in writing, and
thereupon the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new fully registered Note
or Notes of the same interest rate and for a like Class and aggregate principal
amount of the same maturity.
As to any Note, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on any fully registered Note shall be
made only to or upon the written order of the Registered Owner thereof or his
legal representative but such registration may be changed as provided in the
Indenture. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Note to the extent of the sum or sums paid.
Each Registered Owner and each transferee of a Note shall be deemed to
represent and warrant that either (a) it is not acquiring the Note directly or
indirectly for, or on behalf of, an ERISA plan or any entity whose underlying
assets are deemed to be plan assets of such ERISA plan; or (b)(i) the
acquisition and holding of the Notes will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or similar
law and (ii) if the Notes are subsequently deemed to be "plan assets" pursuant
to the regulations set forth at 29 C.F.R. ss. 2510.3-101, it will promptly
dispose of the Notes.
The Trustee shall require the payment by any Registered Owner requesting
exchange or transfer of any tax or other governmental charge required to be paid
with respect to such exchange or transfer. The applicant for any such transfer
or exchange may be required to pay all taxes and governmental charges in
connection with such transfer or exchange, other than exchanges pursuant to the
Indenture.
B-4-7
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Registered
Owners under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
B-4-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
________________________________________________________________________________
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-----------------------
By *
-----------------------------------------
Name
----------------------------------------
Title
---------------------------------------
Signature Guaranteed:
By *
-----------------------------------------
*NOTICE: Signature(s) should
be guaranteed by a guarantor
institution participating in the
Securities Transfer Agents
Medallion Program or in such
other guarantee program
acceptable to the Trustee. The
Assignor's signature to this
assignment must correspond with
the name as it appears upon the
face of the within note in every
particular without alteration or
any change whatever.
B-4-9
EXHIBIT B-5
FORM OF CLASS A-4AR-2 NOTE
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY
PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (A) PURSUANT TO RULE 144A PROMULGATED UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (B) PURSUANT TO ANOTHER
EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS; OR (C) PURSUANT TO A VALID REGISTRATION
STATEMENT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK LIMITED PURPOSE TRUST COMPANY ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY..
B-5-1
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
SENIOR CLASS A-4AR-2 (AUCTION)
REGISTERED NO. R-__ REGISTERED $__________
DATE OF ISSUANCE MATURITY DATE CUSIP NO. ISIN NO.
August 27, 2007 June 25, 2035 64032F AH 7 US64032FAH73
PRINCIPAL SUM: **DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
Nelnet Student Loan Trust 2007-2, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, on each Auction Rate Distribution Date the principal sum
equal to the portion of the Class A Principal Distribution Amount allocable to
this Note for such Auction Rate Distribution Date, as described in the Indenture
of Trust, dated as of August 1, 2007, between the Issuer (by M&T Trust Company
of Delaware, in its capacity as Delaware Trustee) and Zions First National Bank,
a national banking association, as eligible lender trustee and indenture trustee
(the "Trustee") (capitalized terms used but not defined herein being defined in
Article I of the Indenture, which also contains rules as to usage that shall be
applicable herein); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Maturity Date specified above (the
"Class A-4AR-2 Maturity Date").
The Issuer shall pay interest on this Note at the rate per annum equal
to the Class A-4AR-2 Rate (as defined herein), on each Auction Rate Distribution
Date for the Class A-4AR-2 Notes until the principal of this Note is paid or
made available for payment, on the principal amount of this Note outstanding on
the preceding Auction Rate Distribution Date or the Date of Issuance in the case
of the first Auction Rate Distribution Date (after giving effect to all payments
of principal made on the preceding Auction Rate Distribution Date), subject to
certain limitations contained in the Indenture. Interest on this Note shall
accrue, unless changed as provided in the Indenture in Appendix A thereto,
initially during the period commencing on the Date of Issuance through and not
including the Initial Rate Adjustment Date for the Class A-4AR-2 Notes, and
thereafter, each successive period of generally 28 days, commencing on the first
Business Day following the applicable Auction Date, and ending on and including
the applicable Auction Date (unless such date is not followed by a Business Day,
in which case the next succeeding day that is followed by a Business Day) and,
if the Auction Periods are changed as provided in the Indenture, each period
commencing on an Auction Rate Distribution Date and ending on but excluding the
succeeding Auction Rate Distribution Date (each an "Interest Accrual Period" or
"Auction Period"). Interest shall be calculated on the basis of the actual
number of days elapsed in each Interest Accrual Period divided by 360.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
B-5-2
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
[Remainder of page intentionally left blank]
B-5-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
NELNET STUDENT LOAN TRUST 2007-2
By: M&T TRUST COMPANY OF DELAWARE, not in
its individual capacity but solely as
Delaware Trustee under the Trust
Agreement,
By
-----------------------------------------
Authorized Signatory
Date: __________ __, ____
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
ZIONS FIRST NATIONAL BANK, not in its
individual capacity but solely as Trustee,
By
---------------------------------------
Authorized Signatory
Date: __________ __, ____
B-5-4
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Student Loan Asset-Backed Notes, Senior Class A-4AR-2 (the
"Class A-4AR-2 Notes"), which, together with the Issuer's Student Loan
Asset-Backed Notes, Senior Class A-1L, A-2L, A-3L and A-4AR-1 (together with the
Class A-4AR-2 Notes, the "Class A Notes") and the Issuer's Student Loan
Asset-Backed Notes, Subordinate Class B-1 and Class B-2 (the "Class B Notes"
and, together with the Class A Notes, the "Notes"), are issued under and secured
by the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Trustee and the Registered Owners. The
Notes are subject to all terms of 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 are paid on a parity with
interest on the Class A Notes.
The Class A-4AR-2 Notes are and will be secured by the Trust Estate
pledged as security therefor as provided in the Indenture. The Class A Notes are
senior to the Class B Notes as and to the extent provided in the Indenture. The
Class A Notes are, except for certain Termination Payments that are not Priority
Termination Payments, issued on a parity with any Derivative Products entered
into by the Issuer with a Counterparty, pursuant to which the Issuer will, from
time to time, owe Issuer Derivative Payments, and will, from time to time, be
owed Counterparty Payments.
Principal of the Class A-4AR-2 Notes shall be payable on each Auction
Rate Distribution Date in an amount equal to the portion of the Class A
Principal Distribution Amount allocable to this Note for such Auction Rate
Distribution Date. "Auction Rate Distribution Date" means for the Class A-4AR-2
Notes, the Business Day immediately following the Initial Period and each
related Auction Period thereafter; provided, however, that if the duration of
such Auction Period exceeds 90 days, then the Class A-4AR-2 Notes will have
Auction Rate Distribution Dates on (i) the twenty fifth (25th) day of each
March, June, September and December occurring during such Auction Period (or, if
such day is not a Business Day, the immediately succeeding Business Day), and
(ii) the first Business Day immediately following the end of such Auction
Period.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Class A-4AR-2 Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (a) an Event of Default shall have
occurred and be continuing and (b) either the Trustee or the Registered Owners
of Obligations representing not less than a majority of the Outstanding Amount
of the Highest Priority Obligations shall have declared the Notes to be
immediately due and payable in the manner provided in the Indenture.
The Notes are subject to redemption from the proceeds of a sale of
Financed Eligible Loans in accordance with Section 10.03 or 10.04 of the
Indenture on any Quarterly Distribution Date on or after (a) the September 2021
Quarterly Distribution Date and (b) the Quarterly Distribution Date next
succeeding the date on which the then outstanding Pool Balance is 10% or less of
the Initial Pool Balance (all as defined in the Indenture), in whole only, at a
redemption price equal to the principal amount thereof being redeemed, plus
accrued interest, if any, due and payable on the Notes to such Quarterly
Distribution Date.
B-5-5
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
A to the Indenture), 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
Carry-Over Amounts (and any accrued interest thereon) due and payable on such
Class of the Auction Rate Notes to such Auction Rate Distribution Date.
Upon a sale of a Pro rata Portion of the Financed Eligible Loans as
provided in Section 2.04 of Appendix A to the Indenture, each Class of the
Auction Rate Notes is subject to redemption, in whole only, on any Auction Rate
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 Carry-Over Amounts (and any accrued interest thereon)
due and payable on such Class of the Auction Rate Notes to such Auction Rate
Distribution Date.
Each Class of the Auction Rate Notes is subject to mandatory redemption,
in whole or in part, from amounts on deposit in the Retirement Account of the
Debt Service 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, each at
a redemption price equal to the principal balance being redeemed plus accrued
interest, if any (but not including any Carry-Over Amounts, if any, except to
the extent such Carry-Over Amounts is payable on such Auction Rate Distribution
Date pursuant to Section 5.04 of the Indenture), to such Auction Rate
Distribution Date from amounts transferred to the Retirement Account of the Debt
Service Fund representing Principal Distribution Amount or representing amounts
transferred from the Collection Fund pursuant to Section 5.04(c)(xiv) of the
Indenture.
Interest on the Class A-4AR-2 Notes shall be payable on each Auction
Rate Distribution Date on the principal amount outstanding of the Class A-4AR-2
Notes until the principal amount thereof is paid in full, at a rate per annum
equal to the Class A-4AR-2 Rate. The "Class A-4AR-2 Rate" for each Interest
Accrual Period, other than the first Interest Accrual Period, shall be equal to
the Auction Note Interest Rate for the Class A-4AR-2 Notes for such Interest
Accrual Period, and, for the first Interest Accrual Period, the Initial Rate for
such Class. The Auction Note Interest Rate is determined for each Interest
Accrual Period in accordance with the Auction Procedures described in Appendix A
to the Indenture. The Initial Rate for the Class A-4AR-2 Notes is the rate
selected by the Initial Purchasers and specified in the Indenture for such Class
of Notes. Under certain circumstances, the Class A-4AR-2 Notes may be entitled
to payment of certain Carry-Over Amounts for the Class A-4AR-2 Notes, as
described in Appendix A to the Indenture. Payment of such Carry-Over Amounts is
subordinated to the payment of principal and interest on the Notes, and to
payment of other amounts owed by the Issuer, as described in the Indenture.
B-5-6
Payments of interest on this Note on each Auction Rate Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be paid to the Person in whose name such Note
is registered on the Record Date by check mailed first-class, postage prepaid to
such Person's address as it appears on the records of the Trustee on such Record
Date, except that, unless definitive Notes have been issued pursuant to the
Indenture, with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment shall be made by wire transfer in immediately available funds to the
account designated by such nominee. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Auction Rate Distribution Date, then the
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Auction Rate Distribution Date on
which the Issuer expects that the final installment of principal of and interest
on such Note will be paid. Such notice shall be mailed or transmitted by
facsimile prior to such final Auction Rate Distribution Date and shall specify
that such final installment will be payable only upon presentation and surrender
of such Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered upon the records of
the Trustee upon surrender for transfer of any Note at the Principal Office of
the Trustee, duly endorsed for transfer or accompanied by an assignment duly
executed by the Registered Owner or his attorney duly authorized in writing, and
thereupon the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new fully registered Note
or Notes of the same interest rate and for a like Class and aggregate principal
amount of the same maturity.
As to any Note, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on any fully registered Note shall be
made only to or upon the written order of the Registered Owner thereof or his
legal representative but such registration may be changed as provided in the
Indenture. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Note to the extent of the sum or sums paid.
Each Registered Owner and each transferee of a Note shall be deemed to
represent and warrant that either (a) it is not acquiring the Note directly or
indirectly for, or on behalf of, an ERISA plan or any entity whose underlying
assets are deemed to be plan assets of such ERISA plan; or (b)(i) the
acquisition and holding of the Notes will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or similar
law and (ii) if the Notes are subsequently deemed to be "plan assets" pursuant
to the regulations set forth at 29 C.F.R. ss. 2510.3-101, it will promptly
dispose of the Notes.
The Trustee shall require the payment by any Registered Owner requesting
exchange or transfer of any tax or other governmental charge required to be paid
with respect to such exchange or transfer. The applicant for any such transfer
or exchange may be required to pay all taxes and governmental charges in
connection with such transfer or exchange, other than exchanges pursuant to the
Indenture.
B-5-7
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Registered
Owners under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
B-5-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
________________________________________________________________________________
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-----------------------
By *
-----------------------------------------
Name
----------------------------------------
Title
---------------------------------------
Signature Guaranteed:
By *
-----------------------------------------
*NOTICE: Signature(s) should
be guaranteed by a guarantor
institution participating in the
Securities Transfer Agents
Medallion Program or in such
other guarantee program
acceptable to the Trustee. The
Assignor's signature to this
assignment must correspond with
the name as it appears upon the
face of the within note in every
particular without alteration or
any change whatever.
B-5-9
EXHIBIT B-6
FORM OF CLASS B-1 NOTE
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY
PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (A) PURSUANT TO RULE 144A PROMULGATED UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (B) PURSUANT TO ANOTHER
EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS; OR (C) PURSUANT TO A VALID REGISTRATION
STATEMENT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK LIMITED PURPOSE TRUST COMPANY ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY.
B-6-1
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
SUBORDINATE CLASS B-1 (AUCTION)
REGISTERED NO. R-__ REGISTERED $__________
DATE OF ISSUANCE MATURITY DATE CUSIP NO. ISIN NO.
August 27, 2007 September 25, 2035 64032F AL 8 US64032FAL85
PRINCIPAL SUM: **DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
Nelnet Student Loan Trust 2007-2, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, on each Auction Rate Distribution Date the principal sum
equal to the portion of the Class B Principal Distribution Amount allocable to
this Note for such Auction Rate Distribution Date, as described in the Indenture
of Trust, dated as of August 1, 2007, between the Issuer (by M&T Trust Company
of Delaware, in its capacity as Delaware Trustee) and Zions First National Bank,
a national banking association, as eligible lender trustee and indenture trustee
(the "Trustee") (capitalized terms used but not defined herein being defined in
Article I of the Indenture, which also contains rules as to usage that shall be
applicable herein); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Maturity Date specified above (the
"Class B-1 Maturity Date").
The Issuer shall pay interest on this Note at the rate per annum equal
to the Class B-1 Rate (as defined on the reverse hereof), on each Auction Rate
Distribution Date for the Class B-1 Notes until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Auction Rate Distribution Date or the Date of
Issuance in the case of the first Auction Rate Distribution Date (after giving
effect to all payments of principal made on the preceding Auction Rate
Distribution Date), subject to certain limitations contained in the Indenture.
Interest on this Note shall accrue, unless changed as provided in the Indenture
in Appendix A thereto, initially during the period commencing on the Date of
Issuance through and not including the Initial Rate Adjustment Date for the
Class B-1 Notes, and thereafter, each successive period of generally 28 days,
commencing on the first Business Day following the applicable Auction Date, and
ending on and including the applicable Auction Date (unless such date is not
followed by a Business Day, in which case the next succeeding day that is
followed by a Business Day) and, if the Auction Periods are changed as provided
in the Indenture, each period commencing on an Auction Rate Distribution Date
and ending on but excluding the succeeding Auction Rate Distribution Date (each
an "Interest Accrual Period" or "Auction Period"). Interest shall be calculated
on the basis of the actual number of days elapsed in each Interest Accrual
Period divided by 360. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
B-6-2
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
[Remainder of page intentionally left blank]
B-6-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
NELNET STUDENT LOAN TRUST 2007-2
By: M&T TRUST COMPANY OF DELAWARE, not in
its individual capacity but solely as
Delaware Trustee under the Trust
Agreement,
By
-----------------------------------------
Authorized Signatory
Date: __________ __, ____
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
ZIONS FIRST NATIONAL BANK, not in its
individual capacity but solely as Trustee,
By
---------------------------------------
Authorized Signatory
Date: __________ __, ____
B-6-4
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Student Loan Asset-Backed Notes, Subordinate Class B-1 (the
"Class B-1 Notes"), which, together with the Issuer's Student Loan Asset-Backed
Notes, Subordinate Class B-2 (together with the Class B-1 Notes, the "Class B
Notes") and the Issuer's Student Loan Asset-Backed Notes, Senior Class A-1L,
A-2L, A-3L, A-4AR-1 and A-4AR-2 (collectively, the "Class A Notes" and, together
with the Class B Notes, the "Notes"), are issued under and secured by the
Indenture, to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Trustee and the Registered Owners. The Notes are
subject to all terms of 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 are paid on a parity with
interest on the Class A Notes.
The Class B-1 Notes are and will be secured by the Trust Estate pledged
as security therefor as provided in the Indenture. The Class A Notes are senior
to the Class B Notes as and to the extent provided in the Indenture. The Class A
Notes are, except for certain Termination Payments that are not Priority
Termination Payments, issued on a parity with any Derivative Products entered
into by the Issuer with a Counterparty, pursuant to which the Issuer will, from
time to time, owe Issuer Derivative Payments, and will, from time to time, be
owed Counterparty Payments.
Principal of the Class B-1 Notes shall be payable on each Auction Rate
Distribution Date in an amount equal to the portion of the Class B Principal
Distribution Amount allocable to this Note for such Auction Rate Distribution
Date. "Auction Rate Distribution Date" means for the Class B-1 Notes, the
Business Day immediately following the Initial Period and each related Auction
Period thereafter; provided, however, that if the duration of such Auction
Period exceeds 90 days, then the Class B-1 Notes will have Auction Rate
Distribution Dates on (i) the twenty-fifth (25th) day of each March, June,
September and December occurring during such Auction Period (or, if such day is
not a Business Day, the immediately succeeding Business Day), and (ii) the first
Business Day immediately following the end of such Auction Period.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Class B-1 Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (a) an Event of Default shall have
occurred and be continuing and (b) either the Trustee or the Registered Owners
of Obligations representing not less than a majority of the Outstanding Amount
of the Highest Priority Obligations shall have declared the Notes to be
immediately due and payable in the manner provided in the Indenture.
The Notes are subject to redemption from the proceeds of a sale of
Financed Eligible Loans in accordance with Section 10.03 or 10.04 of the
Indenture on any Quarterly Distribution Date on or after (a) the September 2021
Quarterly Distribution Date and (b) the Quarterly Distribution Date next
succeeding the date on which the then outstanding Pool Balance is 10% or less of
the Initial Pool Balance (all as defined in the Indenture), in whole only, at a
redemption price equal to the principal amount thereof being redeemed, plus
accrued interest, if any, due and payable on the Notes to such Quarterly
Distribution Date.
B-6-5
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
A to the Indenture), 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
Carry-Over Amounts (and any accrued interest thereon) due and payable on such
Class of the Auction Rate Notes to such Auction Rate Distribution Date.
Subject to certain limitations set forth in the Indenture, upon a sale
of a Pro rata Portion of the Financed Eligible Loans as provided in Section 2.04
of Appendix A to the Indenture, each Class of the Auction Rate Notes is subject
to redemption, in whole only, on any Auction Rate 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
Carry-Over Amounts (and any accrued interest thereon) due and payable on such
Class of the Auction Rate Notes to such Auction Rate Distribution Date.
Each Class of the Auction Rate Notes is subject to mandatory redemption,
in whole or in part, from amounts on deposit in the Retirement Account of the
Debt Service 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, each at
a redemption price equal to the principal balance being redeemed plus accrued
interest, if any (but not including any Carry-Over Amounts, if any, except to
the extent such Carry-Over Amounts is payable on such Auction Rate Distribution
Date pursuant to Section 5.04 of the Indenture), to such Auction Rate
Distribution Date from amounts transferred to the Retirement Account of the Debt
Service Fund representing Principal Distribution Amount or representing amounts
transferred from the Collection Fund pursuant to Section 5.04(c)(xiv) of the
Indenture.
Interest on the Class B-1 Notes shall be payable on each Auction Rate
Distribution Date on the principal amount outstanding of the Class B-1 Notes
until the principal amount thereof is paid in full, at a rate per annum equal to
the Class B-1 Rate. The "Class B-1 Rate" for each Interest Accrual Period, other
than the first Interest Accrual Period, shall be equal to the Auction Note
Interest Rate for the Class B-1 Notes for such Interest Accrual Period, and, for
the first Interest Accrual Period, the Initial Rate for such Class. The Auction
Note Interest Rate is determined for each Interest Accrual Period in accordance
with the Auction Procedures described in Appendix A to the Indenture. The
Initial Rate for the Class B-1 Notes is the rate selected by the Initial
Purchasers and specified in the Indenture for such Class of Notes. Under certain
circumstances, the Class B-1 Notes may be entitled to payment of certain
Carry-Over Amounts for the Class B Notes, as described in Appendix A to the
Indenture. Payment of such Carry-Over Amounts is subordinated to the payment of
principal and interest on the Notes, and to payment of other amounts owed by the
Issuer, as described in the Indenture.
B-6-6
Payments of interest on this Note on each Auction Rate Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be paid to the Person in whose name such Note
is registered on the Record Date by check mailed first-class, postage prepaid to
such Person's address as it appears on the records of the Trustee on such Record
Date, except that, unless definitive Notes have been issued pursuant to the
Indenture, with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment shall be made by wire transfer in immediately available funds to the
account designated by such nominee. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on an Auction Rate Distribution Date, then the
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Auction Rate Distribution Date on
which the Issuer expects that the final installment of principal of and interest
on such Note will be paid. Such notice shall be mailed or transmitted by
facsimile prior to such final Auction Rate Distribution Date and shall specify
that such final installment will be payable only upon presentation and surrender
of such Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered upon the records of
the Trustee upon surrender for transfer of any Note at the Principal Office of
the Trustee, duly endorsed for transfer or accompanied by an assignment duly
executed by the Registered Owner or his attorney duly authorized in writing, and
thereupon the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new fully registered Note
or Notes of the same interest rate and for a like Class and aggregate principal
amount of the same maturity.
As to any Note, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on any fully registered Note shall be
made only to or upon the written order of the Registered Owner thereof or his
legal representative but such registration may be changed as provided in the
Indenture. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Note to the extent of the sum or sums paid.
Each Registered Owner and each transferee of a Note shall be deemed to
represent and warrant that either (a) it is not acquiring the Note directly or
indirectly for, or on behalf of, an ERISA plan or any entity whose underlying
assets are deemed to be plan assets of such ERISA plan; or (b)(i) the
acquisition and holding of the Notes will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or similar
law and (ii) if the Notes are subsequently deemed to be "plan assets" pursuant
to the regulations set forth at 29 C.F.R. ss. 2510.3-101, it will promptly
dispose of the Notes.
The Trustee shall require the payment by any Registered Owner requesting
exchange or transfer of any tax or other governmental charge required to be paid
with respect to such exchange or transfer. The applicant for any such transfer
or exchange may be required to pay all taxes and governmental charges in
connection with such transfer or exchange, other than exchanges pursuant to the
Indenture.
B-6-7
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Registered
Owners under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
B-6-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
________________________________________________________________________________
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-----------------------
By *
-----------------------------------------
Name
----------------------------------------
Title
---------------------------------------
Signature Guaranteed:
By *
-----------------------------------------
*NOTICE: Signature(s) should
be guaranteed by a guarantor
institution participating in the
Securities Transfer Agents
Medallion Program or in such
other guarantee program
acceptable to the Trustee. The
Assignor's signature to this
assignment must correspond with
the name as it appears upon the
face of the within note in every
particular without alteration or
any change whatever.
B-6-9
EXHIBIT B-7
FORM OF CLASS B-2 NOTE
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF, BY
PURCHASING THIS NOTE, AGREES THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (A) PURSUANT TO RULE 144A PROMULGATED UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (B) PURSUANT TO ANOTHER
EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS; OR (C) PURSUANT TO A VALID REGISTRATION
STATEMENT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK LIMITED PURPOSE TRUST COMPANY ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY.
B-7-1
NELNET STUDENT LOAN TRUST 2007-2
STUDENT LOAN ASSET-BACKED NOTES
SUBORDINATE CLASS B-2 (AUCTION)
REGISTERED NO. R-__ REGISTERED $__________
DATE OF ISSUANCE MATURITY DATE CUSIP NO. ISIN NO.
August 27, 2007 September 25, 2035 64032F AM 6 US64032FAM68
PRINCIPAL SUM: **DOLLARS**
REGISTERED OWNER: **CEDE & CO.**
Nelnet Student Loan Trust 2007-2, a statutory trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, on each Auction Rate Distribution Date the principal sum
equal to the portion of the Class B Principal Distribution Amount allocable to
this Note for such Auction Rate Distribution Date, as described in the Indenture
of Trust, dated as of August 1, 2007, between the Issuer (by M&T Trust Company
of Delaware, in its capacity as Delaware Trustee) and Zions First National Bank,
a national banking association, as eligible lender trustee and indenture trustee
(the "Trustee") (capitalized terms used but not defined herein being defined in
Article I of the Indenture, which also contains rules as to usage that shall be
applicable herein); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Maturity Date specified above (the
"Class B-2 Maturity Date").
The Issuer shall pay interest on this Note at the rate per annum equal
to the Class B-2 Rate (as defined on the reverse hereof), on each Auction Rate
Distribution Date for the Class B-2 Notes until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Auction Rate Distribution Date or the Date of
Issuance in the case of the first Auction Rate Distribution Date (after giving
effect to all payments of principal made on the preceding Auction Rate
Distribution Date), subject to certain limitations contained in the Indenture.
Interest on this Note shall accrue, unless changed as provided in the Indenture
in Appendix A thereto, initially during the period commencing on the Date of
Issuance through and not including the Initial Rate Adjustment Date for the
Class B-2 Notes, and thereafter, each successive period of generally __ days,
commencing on the first Business Day following the applicable Auction Date, and
ending on and including the applicable Auction Date (unless such date is not
followed by a Business Day, in which case the next succeeding day that is
followed by a Business Day) and, if the Auction Periods are changed as provided
in the Indenture, each period commencing on an Auction Rate Distribution Date
and ending on but excluding the succeeding Auction Rate Distribution Date (each
an "Interest Accrual Period" or "Auction Period"). Interest shall be calculated
on the basis of the actual number of days elapsed in each Interest Accrual
Period divided by 360. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
B-7-2
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
[Remainder of page intentionally left blank]
B-7-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
NELNET STUDENT LOAN TRUST 2007-2
By: M&T TRUST COMPANY OF DELAWARE, not in
its individual capacity but solely as
Delaware Trustee under the Trust
Agreement,
By
------------------------------------------
Authorized Signatory
Date: __________ __, ____
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
ZIONS FIRST NATIONAL BANK, not in its
individual capacity but solely as Trustee,
By
---------------------------------------
Authorized Signatory
Date: __________ __, ____
B-7-4
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Student Loan Asset-Backed Notes, Subordinate Class B-2 (the
"Class B-2 Notes"), which, together with the Issuer's Student Loan Asset-Backed
Notes, Subordinate Class B-1 (together with the Class B-2 Notes, the "Class B
Notes") and the Issuer's Student Loan Asset-Backed Notes, Senior Class A-1L,
A-2L, A-3L, A-4AR-1 and A-4AR-2 (collectively, the "Class A Notes" and, together
with the Class B Notes, the "Notes"), are issued under and secured by the
Indenture, to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Trustee and the Registered Owners. The Notes are
subject to all terms of 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 are paid on a parity with
interest on the Class A Notes.
The Class B-2 Notes are and will be secured by the Trust Estate pledged
as security therefor as provided in the Indenture. The Class A Notes are senior
to the Class B Notes as and to the extent provided in the Indenture. The Class A
Notes are, except for certain Termination Payments that are not Priority
Termination Payments, issued on a parity with any Derivative Products entered
into by the Issuer with a Counterparty, pursuant to which the Issuer will, from
time to time, owe Issuer Derivative Payments, and will, from time to time, be
owed Counterparty Payments.
The Class B-2 Notes are and will be secured by the Trust Estate pledged
as security therefor as provided in the Indenture. The Class A Notes are senior
to the Class B Notes as and to the extent provided in the Indenture. The Class A
Notes are, except for certain Termination Payments that are not Priority
Termination Payments, issued on a parity with any Derivative Products entered
into by the Issuer with a Counterparty, pursuant to which the Issuer will, from
time to time, owe Issuer Derivative Payments, and will, from time to time, be
owed Counterparty Payments.
Principal of the Class B-2 Notes shall be payable on each Auction Rate
Distribution Date in an amount equal to the portion of the Class B Principal
Distribution Amount allocable to this Note for such Auction Rate Distribution
Date. "Auction Rate Distribution Date" means for the Class B-2 Notes, the
Business Day immediately following the Initial Period and each related Auction
Period thereafter; provided, however, that if the duration of such Auction
Period exceeds 90 days, then the Class B-2 Notes will have Auction Rate
Distribution Dates on (i) the twenty-fifth (25th) day of each March, June,
September and December occurring during such Auction Period (or, if such day is
not a Business Day, the immediately succeeding Business Day), and (ii) the first
Business Day immediately following the end of such Auction Period.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Class B-2 Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (a) an Event of Default shall have
occurred and be continuing and (b) either the Trustee or the Registered Owners
of Obligations representing not less than a majority of the Outstanding Amount
of the Highest Priority Obligations shall have declared the Notes to be
immediately due and payable in the manner provided in the Indenture.
B-7-5
The Notes are subject to redemption from the proceeds of a sale of
Financed Eligible Loans in accordance with Section 10.03 or 10.04 of the
Indenture on any Quarterly Distribution Date on or after (a) the September 2021
Quarterly Distribution Date and (b) the Quarterly Distribution Date next
succeeding the date on which the then outstanding Pool Balance is 10% or less of
the Initial Pool Balance (all as defined in the Indenture), in whole only, at a
redemption price equal to the principal amount thereof being redeemed, plus
accrued interest, if any, due and payable on the Notes to such Quarterly
Distribution Date.
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
A to the Indenture), 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
Carry-Over Amounts (and any accrued interest thereon) due and payable on such
Class of the Auction Rate Notes to such Auction Rate Distribution Date.
Subject to certain limitations set forth in the Indenture, upon a sale
of a Pro rata Portion of the Financed Eligible Loans as provided in Section 2.04
of Appendix A to the Indenture, each Class of the Auction Rate Notes is subject
to redemption, in whole only, on any Auction Rate 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
Carry-Over Amounts (and any accrued interest thereon) due and payable on such
Class of the Auction Rate Notes to such Auction Rate Distribution Date.
Each Class of the Auction Rate Notes is subject to mandatory redemption,
in whole or in part, from amounts on deposit in the Retirement Account of the
Debt Service 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, each at
a redemption price equal to the principal balance being redeemed plus accrued
interest, if any (but not including any Carry-Over Amounts, if any, except to
the extent such Carry-Over Amounts is payable on such Auction Rate Distribution
Date pursuant to Section 5.04 of the Indenture), to such Auction Rate
Distribution Date from amounts transferred to the Retirement Account of the Debt
Service Fund representing Principal Distribution Amount or representing amounts
transferred from the Collection Fund pursuant to Section 5.04(c)(xiv) of the
Indenture.
Interest on the Class B-2 Notes shall be payable on each Auction Rate
Distribution Date on the principal amount outstanding of the Class B-2 Notes
until the principal amount thereof is paid in full, at a rate per annum equal to
the Class A B-2 Rate. The "Class B-2 Rate" for each Interest Accrual Period,
other than the first Interest Accrual Period, shall be equal to the Auction Note
Interest Rate for the Class B-2 Notes for such Interest Accrual Period, and, for
the first Interest Accrual Period, the Initial Rate for such Class. The Auction
Note Interest Rate is determined for each Interest Accrual Period in accordance
with the Auction Procedures described in Appendix A to the Indenture. The
Initial Rate for the Class B-2 Notes is the rate selected by the Initial
Purchasers and specified in the Indenture for such Class of Notes. Under certain
circumstances, the Class B-2 Notes may be entitled to payment of certain
Carry-Over Amounts for the Class B Notes, as described in Appendix A to the
Indenture. Payment of such Carry-Over Amounts is subordinated to the payment of
principal and interest on the Notes, and to payment of other amounts owed by the
Issuer, as described in the Indenture.
B-7-6
Payments of interest on this Note on each Auction Rate Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be paid to the Person in whose name such Note
is registered on the Record Date by check mailed first-class, postage prepaid to
such Person's address as it appears on the records of the Trustee on such Record
Date, except that, unless definitive Notes have been issued pursuant to the
Indenture, with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment shall be made by wire transfer in immediately available funds to the
account designated by such nominee. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on an Auction Rate Distribution Date, then the
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Auction Rate Distribution Date on
which the Issuer expects that the final installment of principal of and interest
on such Note will be paid. Such notice shall be mailed or transmitted by
facsimile prior to such final Auction Rate Distribution Date and shall specify
that such final installment will be payable only upon presentation and surrender
of such Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered upon the records of
the Trustee upon surrender for transfer of any Note at the Principal Office of
the Trustee, duly endorsed for transfer or accompanied by an assignment duly
executed by the Registered Owner or his attorney duly authorized in writing, and
thereupon the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new fully registered Note
or Notes of the same interest rate and for a like Class and aggregate principal
amount of the same maturity.
As to any Note, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of either principal or interest on any fully registered Note shall be
made only to or upon the written order of the Registered Owner thereof or his
legal representative but such registration may be changed as provided in the
Indenture. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Note to the extent of the sum or sums paid.
Each Registered Owner and each transferee of a Note shall be deemed to
represent and warrant that either (a) it is not acquiring the Note directly or
indirectly for, or on behalf of, an ERISA plan or any entity whose underlying
assets are deemed to be plan assets of such ERISA plan; or (b)(i) the
acquisition and holding of the Notes will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or similar
law and (ii) if the Notes are subsequently deemed to be "plan assets" pursuant
to the regulations set forth at 29 C.F.R. ss. 2510.3-101, it will promptly
dispose of the Notes.
B-7-7
The Trustee shall require the payment by any Registered Owner requesting
exchange or transfer of any tax or other governmental charge required to be paid
with respect to such exchange or transfer. The applicant for any such transfer
or exchange may be required to pay all taxes and governmental charges in
connection with such transfer or exchange, other than exchanges pursuant to the
Indenture.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Registered
Owners under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
B-7-8
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
________________________________________________________________________________
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
-----------------------
By *
-----------------------------------------
Name
----------------------------------------
Title
---------------------------------------
Signature Guaranteed:
By *
-----------------------------------------
*NOTICE: Signature(s) should
be guaranteed by a guarantor
institution participating in the
Securities Transfer Agents
Medallion Program or in such
other guarantee program
acceptable to the Trustee. The
Assignor's signature to this
assignment must correspond with
the name as it appears upon the
face of the within note in every
particular without alteration or
any change whatever.
B-7-9
EXHIBIT C
FORM OF ADMINISTRATOR'S
MONTHLY DISTRIBUTION DATE CERTIFICATE
This Administrator's Monthly Distribution Date Certificate (the
"Certificate") is being provided by National Education Loan Network, Inc., as
Administrator (the "Administrator") to Nelnet Student Loan Trust 2007-2 (the
"Issuer"), pursuant to Section 5.04(c) of the Indenture of Trust, dated as of
August 1, 2007 (the "Indenture"), among the Issuer, Zions First National Bank,
as eligible lender trustee, and Zions First National Bank, as trustee (the
"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 Administrator hereby directs the
Trustee to make the following deposits and distributions to the Persons or to
the Funds or Account specified below by 3:00 p.m. (Eastern time) on __________
__, _____ (the "Monthly Distribution Date"), to the extent of, (A) the amount of
Available Funds received during the immediately preceding Collection Period in
the Collection Fund (or, if necessary, other Available Funds on deposit in the
Collection Fund as provided in Section 5.04(c) of the Indenture), (B) the amount
transferred from the Reserve Fund pursuant to Section 5.05(b), (c) and (d) of
the Indenture, (C) the amount transferred from the Acquisition Fund pursuant to
Section 5.02 of the Indenture, (D) the amount transferred from the Capitalized
Interest Fund pursuant to Section 5.03 of the Indenture, and (E) the amount
transferred from the Department Rebate Fund pursuant to Section 5.13 of the
Indenture. The Trustee shall make the following deposits and distributions in
the following order of priority, and the Trustee shall comply with such
instructions:
(i) To the Administration Fund for the payment of: $ -
--------------
(a) The Servicing Fee to be paid to the Master Servicer $ -
--------------
(b) The Trustee Fee to be paid to the Trustee, $ -
--------------
(c) The Auction Agent Fee to be paid to the Auction Agent, $ -
--------------
(d) The Broker-Dealer Fee to be paid to the Broker-Dealer, and $ -
--------------
(e) The Delaware Trustee Fee to the Delaware Trustee, $ -
--------------
payments described in (a) through (e) above to be made ratably, without
preference or priority of any kind, due prior to the next succeeding
Monthly Distribution Date in each case with such fees remaining unpaid
from prior Monthly Distribution Dates;
(ii) (a)The Administration Fee to the Administrator, and $ -
--------------
(b)Any unpaid Administration Fees, if any, from prior Quarterly $ -
Distribution Dates to the Administrator due on the Quarterly --------------
Distribution Date;
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(iii) To the Debt Service Fund for the payment of: $ -
--------------
(a)Interest on the Class A-1L Notes, $ -
--------------
Interest on the Class A-2L Notes, $ -
--------------
Interest on the Class A-3L Notes, $ -
--------------
Interest on the Class A-4AR-1 Notes, $ -
--------------
Interest on the Class A-4AR-2 Notes, and $ -
--------------
(b)Issuer Derivative Payments (excluding Termination Payments other $ -
than Priority Termination Payments) to the Counterparties, pro - --------------
rata, without preference or priority of any kind, according to the
amounts payable to each such party;
(iv) To the Debt Service Fund for the payment of: $ -
--------------
(a)Interest on the Class B-1 Notes, and $ -
--------------
(b)Interest on the Class B-2 Notes, pro rata, without preference or $ -
priority of any kind, according to the amounts payable to each such --------------
party;
(v) An amount equal to the unpaid interest accrued on the Financed Student $ -
Loans subsequent to the Cutoff Date but prior to the Date of Issuance, --------------
until such amount has been paid in full, to the Depositor;
(vi) On a Quarterly Distribution Date, to the Debt Service Fund for the $ -
payment of: --------------
(a)Class A Principal Distribution Amount on the Class A-1L Notes, $ -
--------------
(b)Class A Principal Distribution Amount on the Class A-2L Notes, $ -
--------------
(c)Class A Principal Distribution Amount on the Class A-3L Notes, $ -
--------------
(d)Class A Principal Distribution Amount on the Class A-4AR-1 Notes, $ -
and --------------
(e)Class A Principal Distribution Amount on the Class A-4AR-2 Notes; $ -
--------------
(vii) On a Quarterly Distribution Date on and after the Stepdown Date (and $ -
no Trigger Event is in effect), to the Debt Service Fund for the --------------
payment of:
(a)Class B Principal Distribution Amount on the Class B-1 Notes, and $ -
--------------
(b)Class B Principal Distribution Amount on the Class B-2 Notes; $ -
--------------
(viii) On a Quarterly Distribution Date, amounts to be deposited to the $ -
Reserve Fund necessary to reinstate the balance of the Reserve Fund up --------------
to the Specified Reserve Fund Balance;
(ix) On a Quarterly Distribution Date, amounts due to the Master Servicer $ -
representing the aggregate unpaid amount of the Carryover Servicing --------------
Fee;
(x) On a Quarterly Distribution Date, to the Debt Service Fund for the $ -
payment of: --------------
(a)Carry-Over Amount on the Class A-4AR-1 Notes, and $ -
--------------
(b)Carry-Over Amount on the Class A-4AR-1 Notes; $ -
--------------
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(xi) On a Quarterly Distribution Date, to the Debt Service Fund for the $ -
payment of: --------------
(a)Carry-Over Amount on the Class B-1 Notes, and $ -
--------------
(b)Carry-Over Amount on the Class B-2 Notes; $ -
--------------
(xii) On a Quarterly Distribution Date, amounts due to the Counterparties, $ -
pro rata, without preference or priority (representing any accrued and --------------
unpaid Termination Payments due under any Derivative Product Payments);
(xiii) On a Quarterly Distribution Date, if the Financed Eligible Loans have $ -
not been sold pursuant to Section 10.03 or 10.04 of the Indenture, --------------
amounts payable to the Noteholders as an accelerated payment of
principal balance on the Notes pursuant to Section 5.07(b) of the
Indenture; and
(xiv) On a Quarterly Distribution Date, any remaining Available Revenues, at $ -
the option of the Issuer: --------------
(a)Redeem Class B Notes pursuant to Section 2.11(a) of the Indenture, $ -
and --------------
(b)Released to the Issuer. $ -
--------------
Total Distributions $ -
--------------
The Available Funds from the immediately preceding Collection Period $ -
on this Monthly Distribution Date. --------------
The Available Funds remaining from the prior Monthly Distribution Date. $ -
--------------
If required, other Available Funds on deposit in the Collection Fund. $ -
--------------
If required, Issuer, Master Servicer or Subservicer contributions for $ -
Borrower Incentive Program deficiencies. --------------
The Parity Ratio as of such Quarterly Distribution Date. ____%
Specified Reserve Fund Balance for such Quarterly Distribution Date. $ -
--------------
Pool Balance for such Quarterly Distribution Date. $ -
--------------
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FUND TRANSFERS
Pursuant to this Certificate, if applicable, the Administrator further
hereby directs the Trustee to withdraw from:
(a) the Prefunding Account of the Acquisition Fund for deposit to
the Collection Fund (i) an amount equal to $__________, representing the
amount of insufficient Available Funds in the Collection Fund to make
the transfers required by Sections 5.04(b) (other than transfers to fund
"add-on consolidation loans" or repurchase student loans from the Master
Servicer, any Subservicer or any Guaranty Agency) and 5.04(c)(i) through
(iv) of the Indenture and (ii) an amount equal to $__________,
representing the remaining amount on deposit in the Prefunding Account
of the Acquisition Fund on the Quarterly Distribution Date immediately
following the one-year anniversary of the Date of Issuance;
(b) the Capitalized Interest Fund for deposit to the Collection
Fund (i) an amount equal to $__________, representing the amount of
insufficient Available Funds in the Collection Fund to make the
transfers required by Sections 5.04(b) (other than transfers to fund
"add-on consolidation loans" or repurchase student loans from the Master
Servicer, any Subservicer or any Guaranty Agency) and 5.04(c)(i) through
(iv) of the Indenture, and (ii) an amount equal to $__________,
representing the amount required to be transferred to the Collection
Fund on such Monthly Distribution Date; and
(c) the Reserve Fund for deposit to the Collection Fund to the
extent moneys are not available to make the transfers from the
Capitalized Interest Fund, (i) an amount equal to $__________,
representing the amount of insufficient Available Funds in the
Collection Fund to make the transfers required by Sections 5.04(b)
(other than transfers to fund "add-on consolidation loans" or repurchase
student loans from the Master Servicer, any Subservicer or any Guaranty
Agency) and 5.04(c)(i) through (iv) of the Indenture, and (ii) an amount
equal to $__________, representing the amount on deposit in the Reserve
Fund in excess of the Specified Reserve Fund Balance.
PAYMENTS FROM THE ADMINISTRATION FUND
The Trustee is hereby instructed to pay the amount set forth above to be
deposited to the Administration Fund for the Servicing Fees to the Master
Servicer on such Monthly Distribution Date.
The Trustee is hereby instructed to pay the amount set forth above to be
deposited to the Administration Fund for the Trustee Fee to the Trustee on
__________ __, ____.
The Trustee is hereby instructed to pay the amount set forth above to be
deposited to the Administration Fund for the Delaware Trustee Fee to the
Delaware Trustee on __________ __, ____.
The Trustee is hereby instructed to pay the amount set forth above to be
deposited to the Administration Fund for the Auction Agent Fee and the
Broker-Dealer Fees to the Auction Agent for distribution to the Auction Agent
and the Broker-Dealers on the dates and in the amounts set forth on the Schedule
attached hereto.
The Administrator hereby certifies that the information herein is true
and accurate in all material respects, is in compliance with the provisions of
the Indenture and that the Trustee may conclusively rely on this Certificate
with no further duty to examine or determine the information contained herein.
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IN WITNESS WHEREOF, the Administrator has caused this Certificate to be
duly executed and delivered as of the date written below.
NATIONAL EDUCATION LOAN NETWORK, INC., as
Administrator
By
---------------------------------------
Authorized Signatory
Date
-------------------------
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EXHIBIT D
REPORT TO REGISTERED OWNERS
EXHIBIT E
FORM OF INVESTMENT LETTER
FOR QUALIFIED INSTITUTIONAL BUYERS
---------- --, ----
Nelnet Student Loan Trust 2007-2
Zions First National Bank
Banc of America Securities LLC
Citigroup Global Markets Inc.
Barclays Capital Inc.
J.P. Morgan Securities Inc.
Greenwich Capital Markets, Inc.
SunTrust Robinson Humphrey, Inc.
Re: NELNET STUDENT LOAN TRUST SERIES 2007-2,
Student Loan Asset-Backed Notes, Series 2007-2
Ladies and Gentlemen:
The undersigned (the "Purchaser") intends to purchase certain of the
above referenced Notes (the "Notes") issued by NELNET STUDENT LOAN TRUST SERIES
2007-2 (the "Issuer") pursuant to the Indenture of Trust, dated as of August 1,
2007 (the "Indenture"), among the Issuer, Zions First National Bank, as eligible
lender trustee, and Zions First National Bank, as trustee (the "Trustee").
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Indenture.
THIS LETTER, OR A FACSIMILE COPY HEREOF, WILL BE DELIVERED TO THE ABOVE
ADDRESSEES NO LATER THAN THE DATE OF PURCHASE.
In connection with the purchase of the Notes, the undersigned, as an
authorized officer or agent of the Purchaser and on behalf of the Purchaser
hereby agrees to the following terms and conditions and makes the
representations and warranties stated herein with the express understanding that
the truth and accuracy of the representations and warranties will be relied upon
by the Issuer, the Trustee, and Banc of America Securities LLC, Citigroup Global
Markets Inc., Barclays Capital Inc., J.P. Morgan Securities Inc., Greenwich
Capital Markets, Inc. and SunTrust Robinson Humphrey, Inc. (collectively, the
"Initial Purchasers"):
1. The Purchaser is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its creation and is authorized to
purchase and invest in the Notes. The person executing this investment letter on
behalf of the Purchaser is duly authorized to do so on the Purchaser's behalf.
2. The person executing this investment letter on behalf of the
Purchaser and making the certifications included herein is the chief financial
officer, a person fulfilling an equivalent function, or other executive or
authorized officer of the Purchaser or, if the Purchaser is a member of a
"family of investment companies," the certification is submitted by an executive
officer of the Purchaser's investment advisor.
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3. The Purchaser acknowledges that it is familiar with Rule 144A ("Rule
144A") promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), and certifies that it is described in one or more of the categories set
forth in Appendix A attached hereto and is a "qualified institutional buyer" (a
"QIB") as that term is defined in Rule 144A. The person executing this
investment letter on behalf of the Purchaser further certifies as follows:
(a) The Purchaser owned and/or invested on a discretionary basis
at least (i) $100,000,000 in "eligible securities" (as defined in
Appendix A attached hereto); or (ii) if the Purchaser is a dealer
registered under Section 15 of the Securities Exchange Act of 1934 (the
"Exchange Act"), at least $100,000,000 in "eligible securities," in each
as of the end of the Purchaser's most recent fiscal year (such amounts
being calculated in accordance with Rule 144A);
(b) If the amount specified in clause (a) above is less than
$100,000,000, the Purchaser is a dealer registered pursuant to Section
15 of the Exchange Act acting in a riskless principal transaction on
behalf of a QIB; and
(c) If the Purchaser decides to purchase Notes for the accounts
of others, it will only purchase Notes for accounts that independently
qualify as QIBs as defined in Rule 144A (unless the undersigned is an
insurance company (as described in Appendix A) and is purchasing for the
account of one or more of its "separate accounts" (as defined in
Appendix A hereto)).
4. The Purchaser is acquiring the Notes for its own account or for the
account of a QIB, in each case for investment, or for investment purposes and
not with a view toward selling or transferring the Notes or any portion thereof
in connection with any distribution thereof, in whole or in part, subject to any
requirement of law that the disposition of the Purchaser's property or the
property of such investor account or accounts be at all times within its or
their control and subject to its or their ability to resell the Notes pursuant
any applicable exemption from registration available under the Securities Act.
5. Neither the undersigned nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred the Notes, any
interest in the Notes or any other similar security to any Person in any manner;
(b) solicited any offer to buy or accept a pledge, disposition or other transfer
of the Notes, any interest in the Notes or any other similar security from any
Person in any manner; (c) otherwise approached or negotiated with respect to the
Notes, any interest in the Notes or any other similar security with any Person
in any manner; (d) made any general solicitation by means of general advertising
or in any other manner; or (e) taken any other action, that (in the case of any
of the acts described in clauses (a) through (d) above) would constitute a
distribution of the Notes under the Securities Act, would render the disposition
of the Notes a violation of Section 5 of the Securities Act or any state
securities law or would require registration or qualification of the Notes
pursuant thereto. The undersigned will not act, nor has it authorized or will it
authorize any Person to act, in any manner set forth in the foregoing sentence
with respect to the Notes, any security issued in exchange therefor or in lieu
thereof or any interest in the foregoing (but without prejudice to its right at
all times to sell or otherwise dispose of the Notes in accordance with the
requirements of the Indenture and this Investment Letter).
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6. The Purchaser understands that the Notes have not been registered
under the Securities Act or any state securities or "Blue Sky" laws and are
being sold in reliance on exemptions from the registration requirements of the
Securities Act and any such laws for nonpublic offerings. The Purchaser further
understands that the Notes and any security issued in exchange therefore or in
lieu thereof must be held indefinitely unless subsequently registered under the
Securities Act and any applicable state securities or "Blue Sky" laws or unless
exemptions from the registration requirements of the Securities Act and such
laws are available.
7. The Purchaser has received a copy of the Offering Memorandum dated
August __, 2007 (the "Private Offering Memorandum") relating to the Notes, and
recognizes that an investment in the Notes involves significant risks. The
Purchaser understands that [other than through the auction of the Notes as
described in the Private Offering Memorandum, if any,] there is no established
market for the Purchaser's Notes and that none will develop and, accordingly,
that the Purchaser must bear the economic risk of an investment in the Notes for
an indefinite period of time.
8. The Purchaser acknowledges that none of the Issuer, the Trustee, the
Initial Purchasers or any person representing the Issuer, the Trustee or the
Initial Purchasers has made any representation to it with respect to the Issuer
or the offering or sale of any of the Notes, other than the information
contained in the Private Offering Memorandum, which has been delivered to it and
upon which it is relying in making its investment decision to acquire Notes.
9. The Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
investments in the Notes. The undersigned understands that there may be
restrictions on the ability of certain investors, including, without limitation,
depository institutions, either to purchase the Notes or to purchase investments
having characteristics similar to those of the Notes representing more than a
specified percentage of the investor's assets. The Purchaser has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision, and is able to bear the economic risks of such an
investment for an indefinite period of time and can afford a complete loss of
such investment.
10. The Purchaser has had the opportunity to ask questions of and
receive answers from the Issuer concerning the purchase of the Notes and all
matters relating thereto or any additional information deemed necessary to its
decision to purchase the Notes. The Purchaser has reviewed and has made its
decision to invest on its review of the Indenture and the Private Offering
Memorandum and on certain other information it has obtained and that it deems
relevant to its investment in the Notes. The Purchaser has made its own
independent review of credit and related matters applicable to the Issuer, the
purchase and holding of the Notes and otherwise to its investment in the Notes.
11. The Purchaser understands that none of the Issuer, the Trustee or
the Initial Purchasers makes any representation as to the proper
characterization of the Notes for legal investment or other purposes, or as to
the ability of particular investors to purchase the Notes for legal investment
or other purposes, or as to the ability of particular investors to purchase the
Notes under applicable investment restrictions.
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12. The Purchaser agrees on its own behalf and on behalf of any investor
account for which it is purchasing the Notes, to offer, sell or otherwise
transfer such Notes only (a) in a transaction complying with Rule 144A, to a
person it reasonably believes is a QIB purchasing for its own account or for the
account of a QIB to whom notice is given that the resale or other transfer is
being made in reliance on Rule 144A; or (b) pursuant to another exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act. If at some future time the Purchaser wishes to dispose of or
exchange any of the Notes, the Purchaser will not do so unless before any such
sale, transfer or other disposition the Purchaser has furnished to the Trustee
an Investor Letter substantially in the form of Exhibit E to the Indenture,
executed by the proposed transferee.
13. The Purchaser agrees that the Purchaser is bound by and will abide
by the provisions of the Indenture, the restrictions noted on the face of the
Notes and this Investment Letter. The Purchaser agrees that it will provide to
each person to whom it transfers such Notes notice of the restrictions on
transfer of the Notes. The Purchaser will comply with all applicable federal and
state securities laws, rules and regulations in connection with any resale or
transfer of the Notes by the Purchaser.
14. The Purchaser acknowledges that any proposed assignee of a
beneficial ownership interest in the Notes will be deemed under the Indenture to
have made agreements and representations substantially similar to those set
forth above. The Purchaser understands that each of the Purchaser's Notes will
bear a legend restricting transfer of the Notes substantially to the effect set
forth in the Private Offering Memorandum under "Notice to Investors: Transfer
Restrictions."
15. The Purchaser understands that it is the Issuer's intention that the
Notes be treated as debt of the Issuer for federal income tax purposes, and by
its acceptance of its Note, agrees to so treat the Note and to take no action
inconsistent therewith.
16. The interpretation of the provisions hereof shall be governed and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws.
17. The Purchaser hereby certifies to the Issuer, the Trustee and the
Initial Purchasers that either (a) it is not an employee benefit or other plan
subject to Title I 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") (each, a "Plan"), and it is not acquiring the Series 2007-2
Notes directly or indirectly for, or on behalf of, a Plan or any entity whose
underlying assets are deemed to be "plan assets" (within the meaning of 29 CFR
ss. 2510.3-101 (the "Plan Assets Regulation")) of such a Plan; or (b)(i) the
acquisition and holding of the Notes will not result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or other
similar, applicable federal and state laws; and (ii) if the Notes are
subsequently deemed to be "plan assets" (within the meaning of the Plan Assets
Regulation), it will promptly dispose of the Notes.
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18. The Purchaser understands that the offer and sale of the Notes to it
is being made in reliance on Rule 144A and that applicable exemptions from the
registration or qualification requirements under state securities laws require
that the Purchaser be a QIB under the applicable state securities law. The
Purchaser will notify each of the addressees of this Investment Letter of any
changes in the information and conclusions herein on or before the date of
purchase. Until such notice is given, each purchase of Notes by the Purchaser
will constitute a reaffirmation of the statements made in this Investment Letter
as of the date of such purchase and the addressees of this Investment Letter
will continue to rely on the statements and agreements made herein in connection
with sales of Notes to the Purchaser made in reliance on Rule 144A.
19. If the Purchaser is acquiring any Notes as a fiduciary or agent for
one or more investor accounts, the Purchaser represents that it has sole
investment discretion with respect to each such account and that it has full
power to make on behalf of such account the representations, confirmations,
acknowledgments and agreements set forth in this investment letter.
20. If the Purchaser proposes that the Notes be registered in the name
of a nominee, such nominee has completed the Nominee Acknowledgment below.
21. This Investment Letter will be deemed valid for the institution
named on the signature page below. If there are additional institutions (e.g.,
subaccounts or mutual funds) to be designated as a QIB by this Certificate, the
undersigned will provide a list of such institutions.
Dated ___________________ Very truly yours,
[NAME OF PURCHASER]
By
---------------------------------------
Name
-------------------------------------
Title
------------------------------------
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NOMINEE ACKNOWLEDGMENT
The undersigned hereby acknowledges and agrees that as to the Note 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.
Dated _____________________ Very truly yours,
[NAME OF PURCHASER]
By
-------------------------------------
Name
-----------------------------------
Title
----------------------------------
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APPENDIX A
1. Qualified Institutional Buyer ("QIB") means any of the following
institutions:
(a) An institution referred to in any of clauses (i) through
(xiii) below that in the aggregate owns or invests on a discretionary
basis at least $100 million in "eligible securities"(defined in Section
2 below); provided, that such institution is buying for its own account
or for the accounts of other QIBs.
(i) INSURANCE COMPANY. An insurance company as defined in
Section 2(13) of the Securities Act of 1933, as amended (the
"Securities Act"). A purchase by an insurance company for one or
more of its separate accounts (as defined in Section 2(a)(37) of
the Investment Company Act of 1940, as amended (the "Investment
Company Act")), which are neither registered under Section 8 of
the Investment Company Act nor required to be so registered, is
deemed to be a purchase for the account of the insurance company.
(ii) INVESTMENT COMPANY. An investment company registered
under the Investment Company Act.
(iii) INVESTMENT ADVISER. An investment adviser registered
under the Investment Advisers Act of 1940, as amended (the
"Investment Advisers Act").
(iv) ISSUER. A corporation (other than a bank as defined
in Section 3(a)(2) of the Securities Act or a savings and loan
association or other institution referenced in Section 3(a)(5)(A)
of the Securities Act of a foreign bank or savings and loan
association equivalent institution).
(v) PARTNERSHIP; BUSINESS TRUST. A partnership,
Massachusetts or similar business trust.
(vi) PLAN. A plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a
state or its political subdivisions for the benefit of its
employees.
(vii) EMPLOYEE BENEFIT PLAN. An employee benefit plan
within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, as amended.
(viii) TRUST FUND. A trust fund whose trustee is a bank or
trust company and whose participants are exclusively plans of the
types identified in paragraph (vi) or (vii) above, except trust
funds that include as participants individual retirement accounts
or H.R. 10 plans.
(ix) 501(C)(3) ORGANIZATION. Any organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended.
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(x) BUSINESS DEVELOPMENT COMPANY, SECTION 2(A)(48). A
business development company as defined in Section 2(a)(48) of
the Investment Company Act.
(xi) BUSINESS DEVELOPMENT COMPANY, SECTION 202(A)(22). A
business development company as defined in Section 202(a)(22) of
the Investment Advisers Act.
(xii) SMALL BUSINESS INVESTMENT COMPANY. A small business
investment company licensed by the U.S. Small Business Company
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958, as amended.
(xiii) BANK; SAVINGS AND LOAN. A bank as defined in
Section 3(a)(2) of the Securities Act, a savings and loan
association or other institution as referenced in Section
3(a)(5)(A) of the Securities Act or a foreign bank or savings and
loan association or equivalent institution that has an audited
net worth of at least $25 million in its latest annual financial
statements, as of a date not more than 16 months preceding the
date of sale in the case of a U.S. bank or savings and loan
association, and not more than 18 months preceding such date of
sale for a foreign bank or savings and loan association or
equivalent institution.
(b) DEALER. A dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") acting
for its own account or the accounts of other QIBs, that in the aggregate
owns or invests on a discretionary basis at least $10 million of
securities of issuers that are not affiliated with the dealer; provided,
that securities constituting the whole or a part of an unsold allotment
to or subscription by a dealer as a participant in a public offering
shall not be deemed to be owned by such dealer.
(c) DEALER ACTING IN A RISKLESS PRINCIPAL TRANSACTION. A dealer
registered pursuant to Section 15 of the Exchange Act, acting in a
riskless principal transaction (as defined in Rule 144A) on behalf of a
QIB.
(d) INVESTMENT COMPANY, PART OF A FAMILY. An investment company
registered under the Investment Company Act, acting for its own account
or for the accounts of other QIBs, that is part of a family of
investment companies (as defined in Rule 144A) which own in the
aggregate at least $100 million in eligible securities.
(e) ENTITY, ALL OF THE EQUITY OWNERS OF WHICH ARE QIBS. Any
entity, all of the equity owners of which are QIBs, acting for its own
account or the accounts of other QIBs.
2. ELIGIBLE SECURITIES/DISCRETIONARY BASIS. In determining the aggregate
amount of securities owned or invested on a discretionary basis by an entity,
the following instruments and interests shall be excluded: securities issued by
issuers that are affiliated with the purchaser or, if the purchaser is an
investment company seeking to qualify as a QIB pursuant to Section 1(d) above,
are part of that purchasers "family of investment companies;" bank deposit notes
and certificates of deposit; loan participations; repurchase agreements;
securities owned but subject to a repurchase agreement; and currency, interest
rate and commodity swaps.
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The value of eligible securities must be calculated based on cost to the
purchaser (or on the basis of market value if (a) the entity reports its
securities holdings in its financial statements on the basis of their market
value and (b) no current information with respect to the cost of those
securities has been published).
In determining the aggregate amount of securities owned by an entity or
invested by the entity on a discretionary basis, securities owned by
subsidiaries of the entity that are consolidated with the entity in its
financial statements prepared in accordance with generally accepted accounting
principles may be included if the investments of such subsidiaries are managed
under the direction of the entity, except that, unless the entity is a reporting
company under Section 13 or 15(d) of the Exchange Act, securities owned by such
subsidiaries may not be included if the entity itself is a majority owned
subsidiary that would be included in consolidated financial statements of
another enterprise.
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