TRUST AGREEMENT
Dated as of April 1, 2001
among
NELNET Student Loan Corporation-1
as Depositor
MELMAC LLC
as Depositor
NELnet, Inc.
as Administrator
The Chase Manhattan Bank,
as Collateral Agent, Note
Registrar and Note Paying Agent
and
Wilmington Trust Company
as Trustee, Certificate Registrar and Certificate Paying Agent
THE NELNET GROUP TRUST I
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.....................................................5
Section 1.2. Usage of Terms.................................................18
Section 1.3. Calculations...................................................18
Section 1.4. Section References.............................................18
Section 1.5. Action by or Consent of Noteholders and/or Subordinated
Certificateholders.............................................18
ARTICLE II
CREATION OF TRUST
Section 2.1. Creation of Trust..............................................19
Section 2.2. Office.........................................................19
Section 2.3. Purposes and Powers............................................19
Section 2.4. Appointment of Trustee, Certificate Paying Agent,
Certificate Registrar, Note Paying Agent and Note Registrar....20
Section 2.5. Conveyance of Underlying Residual Rights, Maintenance and
Operating Expenses and the Underlying Ancillary Rights.........21
Section 2.6. Declaration of Trust...........................................25
Section 2.7. Liability of the Noteholders and Subordinated
Certificateholders.............................................25
Section 2 8. Title to Trust Property........................................25
Section 2.9. Situs of Trust.................................................26
Section 2.10. Representations and Warranties of the Depositor................26
Section 2.11. Federal Income Tax Allocations.................................29
Section 2.12. Transfer of Interest to the Holder of the Special Interest.....30
Section 2.13. Covenants of the Noteholders...................................30
Section 2.14. Covenants of the Trust, the Trustee, the Administrator and
Subordinated Certificateholders................................30
Section 2.15. Note Insurer's Rights Regarding Actions, Proceedings
or Investigations..............................................32
ARTICLE IIA
THE ADMINISTRATOR
Section 2.1A. Representations and Warranties of the Administrator............33
Section 2.2A. Merger or Consolidation of Administrator.......................34
Section 2.3A. Liability and Indemnities......................................35
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Section 2.4A. Administrator Not to Resign....................................35
Section 2.5A. Administrator Default..........................................36
Section 2.6A. Appointment of Successor.......................................37
Section 2.7A. Notification to Noteholders and Subordinated
Certificateholders.............................................38
Section 2.8A. Waiver of Past Defaults........................................38
Section 2.9A. Sub-Administrators.............................................38
Section 2.10A. Cash Flow Certificates.........................................39
Section 2.11A. Perfected Security Interest....................................39
Section 2.12A. Administrative Duties..........................................39
ARTICLE III
THE NOTES AND THE SUBORDINATED CERTIFICATES
Section 3.1. Initial Ownership..............................................40
Section 3.2. Conditions to Issuance of the Notes and the Subordinated
Certificates...................................................41
Section 3.3. The Notes and Subordinated Certificates........................41
Section 3.4. Unconditional Rights of Noteholders to Receive Principal
Amount and Interest............................................41
Section 3.5. Authentication of Notes and Subordinated Certificates..........41
Section 3.6. Registration of Transfer and Exchange of Notes and
Subordinated Certificates......................................42
Section 3.7. Mutilated, Destroyed, Lost or Stolen Notes or
Subordinated Certificates......................................46
Section 3.8. Persons Deemed Noteholders and Subordinated
Certificateholders.............................................46
Section 3.9. Access to List of Noteholders' and Subordinated
Certificateholders' Names and Addresses........................47
Section 3.10. Disposition by the Holder of the Special Interest..............48
ARTICLE IV
ADMINISTRATION OF COLLECTION ACCOUNT, RESERVE ACCOUNT
AND DISTRIBUTION ACCOUNT; CERTAIN DUTIES
Section 4.1. Collection Account, Reserve Account and Distribution
Account........................................................48
Section 4.2. Use of Funds in Collection Accounts, Distribution
Account and Reserve Account....................................50
Section 4.3. Method of Payment or Distribution..............................52
Section 4.4. No Segregation of Moneys; No Interest..........................53
Section 4.5. Accounting; Reports; Tax Returns...............................53
Section 4.6. Optional Redemption of Notes...................................53
Section 4.7. Reports........................................................54
Section 4.8. Optional Advances..............................................55
Section 4.9. The Policies...................................................55
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ARTICLE V
THE TRUSTEE, THE COLLATERAL AGENT, THE NOTE PAYING AGENT, THE CERTIFICATE
PAYING AGENT, THE NOTE REGISTRAR AND THE CERTIFICATE REGISTRAR
Section 5.1. General Authority and Duties...................................57
Section 5.2. Action Upon Instruction........................................58
Section 5.3. No Duties Except as Specified in This Agreement or in
Instructions; Not Acting in Individual Capacity................60
Section 5.4. Representations and Warranties.................................61
Section 5.5. Reliance; Advice of Counsel....................................62
Section 5.6. May Own Notes..................................................63
Section 5.7. Doing Business in Other Jurisdictions..........................63
Section 5.8. Indemnification................................................63
Section 5.9. Acceptance of Trusts and Duties................................64
Section 5.10. Trustee, Collateral Agent, Note Registrar and Note
Paying Agent Not Liable for Subordinated Certificates or
Underlying Certificates........................................65
Section 5.11. Payments from Trust Property...................................66
Section 5.12. Consent of the Note Insurer with Respect to Certain Matters....66
Section 5.13. Actions by Subordinated Certificateholders with Respect
to Bankruptcy..................................................68
Section 5.14. Restrictions on the Subordinated Certificateholders' Powers....68
Section 5.14. Fiduciary Duties of the Trustee................................68
ARTICLE VI
COMPENSATION OF TRUSTEE AND OTHERS
Section 6.1. Fees and Expenses..............................................69
ARTICLE VII
DEFAULT
Section 7.1. Events of Default..............................................69
Section 7.2. Rights Upon an Event of Default................................70
Section 7.3. Distributions..................................................70
Section 7.4. Restrictions on Noteholders' Power.............................71
ARTICLE VIII
DISSOLUTION OF THE TRUST
Section 8.1. Dissolution of the Trust.......................................72
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ARTICLE IX
SUCCESSOR TRUSTEES, PAYING AGENTS AND REGISTRARS AND ADDITIONAL TRUSTEES
Section 9.1. Eligibility Requirements for Trustee...........................72
Section 9.2. Resignation or Removal of Trustee and Others...................73
Section 9.3. Successor Trustee..............................................74
Section 9.4. Merger or Consolidation........................................75
Section 9.5. Appointment of Co-Trustee or Separate Trustee..................75
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. Amendment......................................................76
Section 10.2. No Recourse....................................................77
Section 10.3. Governing Law..................................................78
Section 10.4. Severability of Provisions.....................................78
Section 10.5. Third-Party Beneficiaries......................................78
Section 10.6. Counterparts...................................................79
Section 10.7. Notices........................................................79
Section 10.8. Successors and Assigns.........................................79
Section 10.9. No Petition....................................................80
Section 10.10. Headings.......................................................80
Section 10.11. Administrator..................................................80
Section 10.12. Furnishing Information.........................................80
Section 10.13. Amendments to Underlying Agreements; Underlying Trusts Not
to Issue Additional Securities.................................81
Section 10.14. The Note Insurer...............................................81
Section 10.15. Security Agreement.............................................82
SCHEDULE I Targeted Balance Schedule
SCHEDULE II List of Underlying Agreements
EXHIBIT A Form of Certificate of Trust
EXHIBIT B Form of Note
EXHIBIT C Form of Subordinated Certificate
EXHIBIT D Form of Payment Date Report
EXHIBIT E Form of Representation Letter and Affidavit
EXHIBIT F Debt Service Reserve Surety Bond
EXHIBIT G Note Insurance Policy
EXHIBIT H Form of Cash Flow Certificate
EXHIBIT I Form of Notice to Note Insurer
EXHIBIT J Form of Demand for Payment to Note Insurer
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THIS TRUST AGREEMENT dated as of April 1, 2001, is made among NELNET
Student Loan Corporation-1 (formally known as Union Financial Services-1, Inc.),
a Nevada corporation, as a depositor (the "NELNET Depositor"), MELMAC LLC, a
Delaware limited liability company, as a depositor (the "MELMAC Depositor" and
together with the NELNET Depositor, the "Depositors"), NELnet, Inc. ("NELnet"),
a Nevada Corporation, as administrator (the "Administrator"), The Chase
Manhattan Bank, a New York banking corporation, as collateral agent, note
registrar and note paying agent (in such capacities, the "Collateral Agent," the
"Note Registrar" and the "Note Paying Agent," respectively) and Wilmington Trust
Company, a Delaware banking corporation and trust company headquartered in
Wilmington Delaware, as trustee, certificate registrar and certificate paying
agent (in such capacities, the "Trustee," "Certificate Registrar" and
"Certificate Paying Agent," respectively).
In consideration of the mutual agreements herein contained, and of other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
Administration Fee: The fee payable to the Administrator on each Payment
Date pursuant to Section 4.2(a)(iv) for performing its services hereunder, which
fee shall equal $15,000 per year, payable semi-annually in equal installments of
$7,500 each.
Administrator: Means NELnet, Inc., a Nevada corporation, and its
successors and assigns.
Administrator Default: Has the meaning set forth in Section 2.5A.
Agreement: This Trust Agreement, all amendments and supplements thereto
and all exhibits and schedules to any of the foregoing.
Amount Available: With respect to any Payment Date, the aggregate amount
contained in the Collection Account on such Payment Date, but not including the
portion thereof representing Surety Bond Payments or Insured Payments or amounts
transferred from the first sub-account of the Reserve Account.
Assignment Agreements: Collectively, the MELMAC Assignment Agreement and
the NELNET Assignment Agreement.
Bankruptcy Action: The meaning set forth in Section 5.12 hereof.
Beneficial Owner: With respect to any Book-Entry Note, the beneficial
owner of such Book-Entry Note.
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Book-Entry Note: Any Note registered in the name of the Depository or
its nominee, beneficial ownership of which is reflected on the books of the
Depository or on the books of a Direct Participant or Indirect Participant.
Business Day: Any day other than (a) a Saturday or a Sunday or (b)
another day on which banking institutions in the city in which a Person is
taking action hereunder are authorized or obligated by law, executive order, or
governmental decree to be closed.
Business Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12
Del. Codess. 3801 et seq., as the same may be amended from time to time.
Cash Flow Certificate: Each annual certificate prepared by the Cash Flow
Consultant and delivered by the Administrator to the Trustee, the Collateral
Agent, the Note Insurer and the Rating Agency pursuant to Section 2.10A.
Cash Flow Consultant: Xxxxxxx Xxxxx Xxxxxx Inc., or any successor
thereto approved by the Note Insurer.
Certificate of Trust: The Certificate of Trust in the form of Exhibit A
hereto filed for the Trust pursuant to Section 3810(a) of the Business Trust
Statute.
Certificate Paying Agent: Initially, the Trustee or its successor in
interest and any successor certificate paying agent appointed as provided in
this Agreement.
Certificate Register: The Certificate Register referred to in Section
3.6(a).
Certificate Registrar: Initially, the Trustee or its successor in
interest and any successor certificate registrar appointed as provided in this
Agreement.
Closing Date: April 3, 2001.
Collateral Agent: The Chase Manhattan Bank, not in its individual
capacity but solely as collateral agent for the Note Insurer hereunder and under
the Security Agreement, and any successor appointed as provided therein or
hereunder.
Collateral Agent Fee: The fee payable to the Collateral Agent as
provided in a separate fee agreement between the Collateral Agent and NELnet.
Code: The Internal Revenue Code of 1986, as amended.
Collection Account: The account designated as the Collection Account in,
and which is established and maintained pursuant to, Section 4.1.
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Corporate Trust Office: With respect to the Trustee, its office at which
at any particular time its corporate trust business shall be administered, which
office at the Closing Date is located at Xxxxxx Square North, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust
Administration; or at such other address as the Trustee may designate by notice
to the Noteholders, the Note Insurer, the Administrator and the Depositors, or
the principal corporate trust office of any successor Trustee. With respect to
the Collateral Agent, its office at which at any particular time its corporate
trust business shall be administered, which office at the Closing Date is
located at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Structured
Finance Services, or at such other address as the Collateral Agent may designate
by notice to the Noteholders, the Note Insurer, the Administrator and the
Depositors, or the principal corporate trust office of any successor Collateral
Agent.
Debt Service Available Amount: For any Payment Date, an amount equal to
(i) the initial amount of the Debt Service Reserve Surety Bond, minus (ii) all
Debt Service Payments made prior to such Payment Date, plus (iii) all amounts
reimbursed to the Note Insurer pursuant to Section 4.2(a)(vi) (other than
amounts representing interest on Surety Bond Payments) prior to such Payment
Date in respect of prior Surety Bond Payments.
Debt Service Payment: For any Payment Date, an amount equal to the
excess, if any, of (i) the Interest Amount for such Payment Date over (ii) the
amount remaining in the Collection Account on such Payment Date, after giving
effect to the receipt of Optional Advances, if any, cash transfers from the
first sub-account of the Reserve Account pursuant to Section 4.1(a), and
payments made pursuant to Section 4.2(a)(i), (ii), (iii) and (iv).
Debt Service Reserve Surety Bond: The debt service reserve surety bond
dated the Closing Date in the initial amount of $1,822,750 and issued by the
Note Insurer for the benefit of the holders of the Notes, pursuant to which the
Note Insurer guarantees Surety Bond Payments, a copy of which is attached hereto
as Exhibit F.
Deficiency Amount: (a) For any Payment Date, an amount equal to the
excess, if any, of the Interest Amount over the Amount Available in the
Collection Account to pay the Interest Amount, after giving effect to the
payments made pursuant to Section 4.2(a)(i), (ii), (iii) and (iv) of this
Agreement and the receipt of an Optional Advance, if any, and a Surety Bond
Payment, if any, and (b) on the Maturity Date, an amount equal to the excess, if
any, of the outstanding Principal Amount of the Notes over the Amount Available
in the Collection Account to pay the outstanding Principal Amount of the Notes,
after giving effect to the payments made pursuant to Section 4.2(a)(i), (ii)
(iii), (iv), (v), and (vi) of this Agreement.
Definitive Note: Any Note registered in the name of a Person other than
the Depository or its nominee.
Depositors: Collectively, the MELMAC Depositor and the NELNET Depositor.
Depository: The Depository Trust Company, and any successor Depository
hereafter named.
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Depository Representation Letter: Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Notes
registered in the Note Register under the nominee name of the Depository.
Direct Participant: Any broker-dealer, bank or other financial
institution for which the Depository holds Book-Entry Notes from time to time as
a securities depository.
Distribution Account: The account designated as the Distribution Account
in, and which is established and maintained pursuant to, Section 4.1.
Eligible Account: An account which is any of the following: (i) an
account maintained with an Eligible Institution; (ii) an account or accounts the
deposits in which are fully insured by either the Bank Insurance Fund or the
Savings Association Insurance Fund of the Federal Deposit Insurance Corporation;
(iii) a trust account (which shall be a "segregated trust account") maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Trustee, the Note Paying Agent or the Collateral
Agent hereunder, which depository institution or trust company shall have
capital and surplus of not less than $50,000,000 and the obligations of such
depository institution (or, if such depository institution is a subsidiary of a
bank holding company system and such depository institution's securities are not
rated, the obligations of the bank holding company) shall have a credit rating
from each Rating Agency in one of its generic credit rating categories which
signifies investment grade; or (iv) an account acceptable to the Note Insurer
and that will not cause any Rating Agency to downgrade or withdraw its then
current rating assigned to the Notes (without giving effect to the Note
Insurance Policy), as evidenced in writing by each Rating Agency.
Eligible Institution: Any depository institution (which may be the
Trustee, the Note Paying Agent or the Collateral Agent or an affiliate of the
Trustee, the Note Paying Agent or the Collateral Agent) organized under the laws
of the United States or any State, the deposits of which are insured to the full
extent permitted by law by the Bank Insurance Fund or the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation, which is subject to
supervision and examination by federal or state authorities and whose short-term
obligations have been rated A-1 or higher by S&P and F-1 or higher by Fitch, or
whose unsecured long-term obligations has been rated one of the three highest
categories by each Rating Agency.
Eligible Investments: Any of the following:
(i) direct obligations of, and obligations fully guaranteed by,
the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, or any agency or
instrumentality of the United States of America the obligations of which
are backed by the full faith and credit of the United States of America;
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(ii)(A)demand and time deposits in, certificates of deposit of
and bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Trustee, the
Collateral Agent or their respective agents acting in their respective
commercial capacities) incorporated under the laws of the United States
of America or any state thereof and subject to supervision and
examination by federal and/or state authorities, so long as, at the time
of such investment or contractual commitment providing for such
investment, such depository institution or trust company or its ultimate
parent has a short-term unsecured debt rating in one of the two highest
available rating categories of S&P and Fitch and the highest available
rating category of Xxxxx'x and provided that each such investment has an
original maturity of no more than 365 days; and (B) any other demand or
time deposit or certificate of deposit which is fully insured by the
Federal Deposit Insurance Corporation;
(iii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and entered
into with a depository institution or trust company (acting as a
principal) rated "A" or higher by S&P and Fitch and rated "A2" or higher
by Xxxxx'x; provided, however, that the collateral transferred pursuant
to such repurchase obligation must be of the type described in clause
(i) above and must (a) be valued daily at current market price plus
accrued interest, (b) pursuant to such valuation, be equal, at all
times, to 105% of the cash transferred by the Trust in exchange for such
collateral and (c) be delivered to the Trustee, Note Paying Agent or
Collateral Agent or, if the Trustee, Note Paying Agent or Collateral
Agent is supplying the collateral, an agent for the Trustee, in such a
manner as to accomplish perfection of a security interest in the
collateral by possession of certificated securities;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of
America or any State thereof which has a long-term unsecured debt rating
in the highest available rating category of each of S&P, Xxxxx'x and
Fitch;
(v) commercial paper having an original maturity of less than 365
days and issued by an institution having a short-term unsecured debt
rating in the highest available rating category of each of S&P, Xxxxx'x
and Fitch at the time of such investment;
(vi) a guaranteed investment contract approved by each of S&P,
Xxxxx'x and Fitch and the Note Insurer and issued by an insurance
company or other corporation having a long-term unsecured debt rating in
the highest available rating category of each of S&P, Xxxxx'x and Fitch
(if Fitch is rating such insurance company) at the time of such
investment;
(vii) money market funds having ratings in the highest available
rating category of Xxxxx'x and one of the two highest available rating
categories of S&P and Fitch (if Fitch is rating such money market fund)
at the time of such investment which invest only in other Eligible
Investments, any such money market funds which provide for demand
withdrawals being conclusively deemed to satisfy any maturity
requirement for Eligible Investments set forth herein; and
9
(viii) Any other investment acceptable to each Rating Agency and
the Note Insurer, written confirmation of which shall be furnished by
the Administrator to the Trustee.
The Trustee, the Note Paying Agent or the Collateral Agent may trade
with itself or an affiliate as principal or agent, in the purchase or sale of
Eligible Investments.
Event of Default: The meaning assigned to such term in Section 7.1.
Financial Guaranty Agreement: The Financial Guaranty Agreement dated as
of the Closing Date by and between the Note Insurer and the Trust, as amended
from time to time by the parties thereto.
Fitch: Fitch, Inc., and its successors and assigns.
Holder: A Noteholder, a Subordinated Certificateholder and the Holder of
the Special Interest.
Holder of the Special Interest: Shall mean NELnet.
Indemnification Agreement: Means the Indemnification Agreement dated as
of April 3, 2001 among the Note Insurer, the Depositors, the Administrator,
Xxxxxxx Xxxxx Xxxxxx Inc., UBS Warburg LLC and UFS Securities, L.L.C., as
amended from time to time by the parties thereto.
Indentures: Means, collectively the NELNET Indenture and the MELMAC
Indenture.
Indirect Participant: Any financial institution for whom any Direct
Participant holds an interest in a Book-Entry Note.
Insolvency Event: With respect to a specified Person, (a) the filing of
a decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an involuntary
case under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver (including any
receiver appointed under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended), liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or ordering the winding-up or liquidation of such Person's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the foregoing.
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Institutional Accredited Investor: An institutional accredited investor
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
of 1933, as amended.
Insurance Agreement: The insurance agreement dated as of the Closing
Date by and among the Note Insurer, the Depositors, the Administrator and the
Trust, as amended from time to time by the parties thereto.
Insurance Paying Agent: The Chase Manhattan Bank, or any successor as
appointed herein.
Insured Payment: (i) As of any Payment Date, any Deficiency Amount and
(ii) any Preference Amount.
Interest Amount: For any Payment Date, interest at the Interest Rate on
the outstanding Principal Amount of the Notes immediately following the
preceding Payment Date (or, in the case of the first Payment Date, the Closing
Date) for the period beginning on the immediately preceding Payment Date (or, in
the case of the first Payment Date, the Closing Date) to but not including such
Payment Date, plus any Interest Shortfall with respect to prior Payment Dates
together (to the extent legally permissible) with interest thereon at the
Interest Rate.
Interest Rate: 6.34% per annum, payable semi-annually at one-half of the
annual rate (calculated on the basis of a 360-day year of twelve 30-day months).
Interest Shortfall: With respect to any Payment Date, the amount, if
any, by which the amount distributed to the Noteholders on such Payment Date is
less than the Interest Amount after giving effect to Optional Advances, if any,
and Surety Bond Payments and Insured Payments.
Maintenance and Operating Expenses: The NELNET Depositor's right to
receive the Estimated Amount (as defined in the NELNET Indenture) from the
Underlying NELNET Trust pursuant to Section 5.03 of the NELNET Indenture, which
rights are being conveyed to the Trust pursuant to the NELNET Assignment
Agreement and Section 2.5(b) hereof.
Maturity Date: July 2, 2020.
MELMAC Assignment Agreement: The Assignment Agreement dated as of April
1, 2001 between the MELMAC Depositor and the Trust relating to the Underlying
MELMAC Residual Rights.
MELMAC Depositor: MELMAC LLC, a Delaware limited liability company.
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MELMAC Indenture: The Amended and Restated Indenture of Trust dated as
of January 1, 1999 by and between MELMAC LLC (as assignee of Maine Educational
Loan Marketing Corporation), as issuer, and People's Heritage Bank, as trustee
(as amended or supplemented from time to time).
Moody's: Xxxxx'x Investors Service, Inc., and its successors and
assigns.
NELnet: NELnet, Inc., a Nevada corporation, and its successors and
assigns.
NELNET Assignment Agreement: The Assignment Agreement dated as of April
1, 2001 between the NELNET Depositor and the Trust relating to the Underlying
NELNET Residual Rights and the right to receive the Maintenance and Operating
Expenses.
NELNET Depositor: NELNET Student Loan Corporation-1, a Nevada
corporation.
NELNET Indenture: The Second Amended and Restated Indenture of Trust
dated as of November 1, 1996 by and between the NELNET Student Loan
Corporation-1 (formerly known as Union Financial Services-1, Inc.), as issuer,
and Zions First National Bank, as successor trustee (as amended or supplemented
from time to time).
Note: A 6.34% Student Loan Interest Margin Security evidencing the
obligation of the Trust to pay the Principal Amount specified therein together
with interest at the Interest Rate, substantially in the form of Exhibit B.
Noteholder: A Person in whose name a Note is registered on the Note
Register. Such Person shall be a creditor of the Trust.
Note Insurance Policy: The note guaranty insurance policy dated the
Closing Date and issued by the Note Insurer to the Note Paying Agent for the
benefit of the Holders of the Notes, pursuant to which the Note Insurer
guarantees Insured Payments, a copy of which is attached hereto as Exhibit G.
Note Insurer: MBIA Insurance Corporation, a New York stock insurance
corporation, or any successor thereof, as issuer of the Note Insurance Policy
and the Debt Service Reserve Surety Bond.
Note Insurer Premium: For any Payment Date, the semi-annual premium
payable to the Note Insurer equal to the sum of (i) with respect to the Debt
Service Reserve Surety Bond, the product of (A) the applicable percentage set
forth in the Insurance Agreement and (B) the Debt Service Available Amount
immediately prior to such Payment Date and (ii) with respect to the Note
Insurance Policy, the product of (A) the applicable percentage set forth in the
Insurance Agreement and (B) the outstanding Principal Amount of the Notes
immediately prior to such Payment Date.
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Note Paying Agent: Initially, the Collateral Agent or its successor in
interest and any successor note paying agent appointed as provided in this
Agreement.
Note Register: The Note Register referred to in Section 3.6(a).
Note Registrar: Initially, the Collateral Agent or its successor in
interest and any successor note registrar appointed as provided in this
Agreement.
Optional Advance: For any Payment Date, the amount, if any, advanced by
NELnet pursuant to Section 4.8(a).
Payment Date: The second Business Day of each January and July,
commencing January 3, 2002.
Payment Date Report: The report provided for by Section 4.7 and
substantially in the form of Exhibit D.
Percentage Interest: With respect to any Subordinated Certificate, the
percentage evidenced on such Subordinated Certificate. The aggregate Percentage
Interest of all the Subordinated Certificates shall equal 100%.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
Policies: Collectively, the Debt Service Reserve Surety Bond and the
Note Insurance Policy.
Preference Amount: Any amount previously distributed to a Noteholder
that is recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.),
as amended from time to time, in accordance with a final nonappealable order of
a court having competent jurisdiction.
Principal Amount: With respect to any Note, as of any date of
determination, the original principal amount of such Note less all amounts
previously distributed on such Note in respect of principal pursuant to Section
4.2(a)(vii) and (viii).
Principal Payment Amount: With respect to any Payment Date, the amount
remaining in the Collection Account after payment of all amounts set forth in
Section 4.2(a)(i), (ii), (iii), (iv), (v) and (vi) provided, however, that the
Principal Payment Amount shall not exceed the lesser of (A) the amount necessary
to reduce the Recalculated Targeted Amount of the Notes below the Targeted
Balance for such Payment Date or (B) the outstanding Principal Amount of the
Notes immediately prior to such Payment Date.
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Principal Subsidy Payment: For any Payment Date, the amount, if any,
deposited by the Trust into the Collection Account pursuant to Section 4.8(b).
Qualified Institutional Buyer: A qualified institutional buyer within
the meaning of Rule 144A under the Securities Act of 1933, as amended.
Rating Agency: Each of S&P and Fitch, so long as each such agency
maintains a rating on the Notes; and if any such organization no longer
maintains a rating on the Notes, such other nationally recognized statistical
rating organization as may be selected by the Administrator.
Recalculated Targeted Amount: For any Payment Date, the sum of (i) the
Principal Amount of the Notes immediately prior to such Payment Date and (ii)
all Special Principal Payments, if any, received by the Holders of the Notes on
or prior to such Payment Date.
Record Date: With respect to any Payment Date, the close of business on
the second Business Day immediately preceding such Payment Date.
Reimbursement Amount: To the extent not otherwise reimbursed under
Sections 4.2(a)(vi) and 4.2(a)(x) hereof, all costs and expenses of the Note
Insurer in connection with any action, proceeding or investigation affecting the
Trust, Trust Property or the rights or obligations of the Note Insurer hereunder
or under the Policies or the Related Documents, including (without limitation)
any judgment or settlement entered into affecting the Note Insurer or the Note
Insurer's interests, together with interest thereon at a rate equal to the Late
Payment Rate (as defined in the Insurance Agreement).
Related Documents: The Notes, the Subordinated Certificates, the
Assignment Agreements, the Security Agreement, the Financial Guaranty Agreement,
the Indemnification Agreement and the Insurance Agreement. The Related Documents
executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
Representation Letter and Affidavit: A letter and an affidavit in
substantially the form of Exhibit E executed by the Person to which is being
transferred a Definitive Note or a Subordinated Certificate.
Reserve Account: The account designated as the Reserve Account in, and
which is established and maintained pursuant to, Section 4.1.
Responsible Officer: When used with respect to the Trustee, the
Collateral Agent, the Note Paying Agent or the Note Registrar, any officer
within its respective Corporate Trust Office including any Managing Director,
Vice President, Assistant Vice President, Secretary, Assistant Secretary,
Treasurer, Assistant Treasurer, Financial Services Officer or any other officer
customarily performing functions similar to those performed by any of the above
designated officers having primary responsibility for matters relating to the
Trust.
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Xxxxxxxxx xx Xxxxx: The Secretary of State of the State of Delaware.
Securities Act of 1933: Means the Securities Act of 1933, as amended.
Security Agreement: The Security Agreement dated as of April 1, 2001
among the Trust, the Collateral Agent, the Administrator and the Note Insurer,
as amended or supplemented from time to time.
S&P: Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
Companies, and its successors and assigns.
Special Event: With respect to (i) the Underlying MELMAC Trust, the
occurrence of an event described in Article II (Bond Details, Form of Bonds,
Redemption of Bonds and Use of Proceeds of Bonds) or Article VI (Defaults and
Remedies) of the MELMAC Indenture and (ii) the Underlying NELNET Trust, the
occurrence of an event described in Article II (Note Details, Form of Notes,
Redemption of Notes and Use of Proceeds of Notes) or Article VI (Defaults and
Remedies) of the NELNET Indenture.
Specified Reserve Account Requirement: For each Payment Date, an amount
equal to the sum of (i) the Interest Amount for the NEXT Payment Date and (ii)
the amount necessary to reduce the Recalculated Targeted Amount of the Notes
(calculated after giving effect to all payments of principal received on the
Notes on the Payment Date for which such calculation is being determined) to the
Targeted Balance for the NEXT Payment Date.
Special Interest: Shall have the meaning assigned to such term in
Section 2.12.
Special Principal Payments: For any Payment Date for which a Special
Event has occurred since the last Payment Date (or since the Closing Date in the
case of the first Payment Date) an amount equal to the least of (i) the portion,
if any, of the Amount Available remaining after application of Section
4.2(a)(i)-(vii), inclusive, on such Payment Date, (ii) the portion of the Amount
Available for such Payment Date representing payments received from each
Underlying Trust for which a Special Event occurred and (iii) the outstanding
Principal Amount of the Notes after application of Section 4.2 (a)(i)-(vii),
inclusive, on such Payment Date. If a Special Event has not occurred for such
period, the Special Principal Payment for such Payment Date shall be zero.
Subordinated Certificate: A Subordinated Student Loan Interest Margin
Certificate evidencing a fractional undivided beneficial interest in the Trust,
substantially in the form of Exhibit C.
Subordinated Certificateholder: A Person in whose name a Subordinated
Certificate is registered on the Certificate Register (which shall include the
Holder of the Special Interest unless the context clearly requires otherwise).
Such Person shall be a beneficial owner of the Trust within the meaning of the
Business Trust Statute.
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Surety Bond Payment: An amount equal to the Debt Service Payment
required to be made by the Trust under this Agreement, as certified in a Demand
for Payment (as defined in the Financial Guaranty Agreement).
Targeted Balance: For any Payment Date, the amount set forth under the
heading "Targeted Balance" for such Payment Date on Schedule I hereto.
Trust: The trust created by this Agreement, the estate of which consists
of the Trust Property.
Trust Company: Wilmington Trust Company, or any successor thereto, in
its individual capacity.
Trust Property: The property and proceeds of every description, conveyed
to the Trust pursuant to Section 2.5, together with the Collection Account, the
Distribution Account, the Reserve Account and the Policies (including all
investments therein and all proceeds therefrom).
Trustee: Wilmington Trust Company, or its successor in interest, not in
its individual capacity but solely as trustee of the Trust, and any successor
trustee appointed as provided in this Agreement.
Trustee Fee: The fee payable to the Trustee as provided in a separate
fee agreement between the Trustee and the Administrator.
Underlying Agreements: The Indentures and other related agreements
listed on Schedule II hereto, as such Schedule II may be amended from time to
time.
Underlying Ancillary Rights: Collectively, the Underlying MELMAC
Ancillary Rights and the Underlying NELNET Ancillary Rights.
Underlying Bonds: Collectively, the Underlying MELMAC Bonds and the
Underlying NELNET Bonds.
Underlying MELMAC Ancillary Rights: All of the following rights of the
MELMAC Depositor under the MELMAC Indenture:
(a) the right to deliver or to direct the delivery of any Cash Flow
Certificate and to do all other acts of the Issuer under the MELMAC
Indenture (E.G., ss. 5.12 of the MELMAC Indenture) to cause the Trust to
receive the proceeds of the Underlying MELMAC Residual Rights;
(b) the right to optionally redeem the Underlying MELMAC Bonds pursuant
to ss.ss.2.14, 2.26, 2.33 and 2.41, it being understood that the
Underlying MELMAC Ancillary Rights shall not include the right to redeem
Underlying MELMAC Bonds resulting from the Underlying MELMAC Trust's
inability to acquire Eligible Loans (as defined in the MELMAC Indenture)
during the applicable acquisition and recycling periods; and
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(c) the right to sell Eligible Loans (as defined in the MELMAC
Indenture) pursuant to the fifth unnumbered paragraph of ss.5.02 of the
MELMAC Indenture (provided, however, that the Underlying MELMAC
Ancillary Rights shall not include the right to sell Eligible Loans in
order to avoid a default under the MELMAC Indenture).
Underlying MELMAC Bonds: The meaning set forth in Section 10.13 hereof.
Underlying MELMAC Residual Rights: The MELMAC Depositor's rights to
receive all cash payments from the Underlying MELMAC Trust, including but not
limited to, pursuant to Section 5.12(a) of the MELMAC Indenture, which rights
are being conveyed to the Trust pursuant to the MELMAC Assignment Agreement and
Section 2.5 (a) hereof.
Underlying MELMAC Trust: The separate master trust estate established
and maintained in accordance with the MELMAC Indenture.
Underlying NELNET Ancillary Rights: All of the following rights of the
NELNET Depositor under the NELNET Indenture:
(a) the right to deliver or cause the delivery of any Cash Flow
Certificate and to do all other acts of the Issuer under the NELNET
Indenture (e.g., ss.5.10 of the NELNET Indenture) to cause the Trust to
receive the proceeds of the Underlying NELNET Residual Rights and the
Maintenance and Operating Expenses;
(b) the right to optionally redeem the Underlying NELNET Bonds, it being
understood that the Underlying NELNET Ancillary Rights shall not include
the right to redeem the Underlying NELNET Bonds resulting from the
Underlying NELNET Trust's inability to acquire Eligible Loans (as
defined in the NELNET Indenture) during the applicable acquisition and
recycling periods; and
(c) the right to sell Eligible Loans (as defined in the NELNET
Indenture) pursuant to the sixth unnumbered paragraph of ss.5.02 of the
NELNET Indenture (provided, however, that the Underlying NELNET
Ancillary Rights shall not include the right to sell Eligible Loans in
order to avoid a default under the NELNET Indenture).
Underlying NELNET Bonds: The meaning set forth in Section 10.13 hereof.
Underlying NELNET Residual Rights: The NELNET Depositor's rights to
receive all cash payments from the Underlying NELNET Trust, including but not
limited to, pursuant to Section 5.10 of the NELNET Indenture, which rights are
being conveyed to the Trust pursuant to the NELNET Assignment Agreement and
Section 2.5(b) hereof.
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Underlying NELNET Trust: The separate master trust estate established
and maintained in accordance with the NELNET Indenture.
Underlying Residual Rights: Collectively, the Underlying MELMAC Residual
Rights and the Underlying NELNET Residual Rights.
Underlying Trusts: Collectively, the Underlying MELMAC Trust and the
Underlying NELNET Trust.
Section 1.2. Usage of Terms.
With respect to all terms used in this Agreement, the singular includes
the plural and the plural the singular; words importing any gender include the
other genders; references to "writing" include printing, typing, lithography,
and other means of reproducing words in a visible form; references to agreements
and other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the terms "include" or "including" mean "include
without limitation" or "including without limitation". To the extent that
definitions are contained in this Agreement, or in any such certificate or other
document, such definitions shall control.
Section 1.3. Calculations.
All calculations of the amount of interest accrued on the Notes shall be
made on the basis of a 360-day year consisting of twelve 30-day months.
Section 1.4. Section References.
All references to Articles, Sections, paragraphs, subsections, exhibits
and schedules shall be to such portions of this Agreement unless otherwise
specified.
Section 1.5. Action by or Consent of Noteholders and/or Subordinated
Certificateholders.
Whenever any provision of this Agreement refers to action to be taken,
or consented to, by Noteholders and/or Subordinated Certificateholders, such
provision shall be deemed to refer to Noteholders and/or Subordinated
Certificateholders of record as of the close of business on the second day
immediately preceding the date on which such action is to be taken, or consent
given, by Noteholders and/or Subordinated Certificateholders. Solely for the
purposes of any action to be taken, or consented to, by Noteholders, any Notes
registered on the Note Register in the name of the Depositors or any affiliate
thereof shall be deemed not to be outstanding and the aggregate Principal Amount
of the Notes represented thereby shall not be taken into account in determining
whether the requisite aggregate Principal Amount of the Notes necessary to
effect any such action or consent has been obtained unless the Depositors and/or
its affiliates are the Holders of all the Notes; provided, however, that, solely
for the purpose of determining whether the Trustee is entitled to rely upon any
such action or consent, only Notes which the Trustee knows to be so owned shall
be so disregarded.
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ARTICLE II
CREATION OF TRUST
Section 2.1. Creation of Trust.
There is hereby formed a trust to be known as "The NELnet Group Trust
I," in which name the Trust may, and the Trustee on behalf of the Trust shall
have power and authority and is hereby authorized and empowered to, conduct
business, make and execute contracts and other instruments and xxx and be sued.
The Trustee shall have power and authority and is hereby authorized and
empowered to execute and file with the Secretary of State the Certificate of
Trust.
Section 2.2. Office.
The office of the Trust shall be in care of the Trustee at its Corporate
Trust Office or at such other address in Delaware as the Trustee may designate
by written notice to the Noteholders, the Subordinated Certificateholders and
the Depositors.
Section 2.3. Purposes and Powers.
The purpose of the Trust is, and the Trust shall have the power and
authority, and the Trustee shall have power and authority and is hereby
authorized and empowered in the name and on behalf of the Trust to do or cause
to be done all acts and things necessary, advisable or convenient to cause the
Trust, to engage in the following activities:
(i) to acquire the Underlying MELMAC Residual Rights from the MELMAC
Depositor, to acquire the Maintenance and Operating Expenses and the Underlying
NELNET Residual Rights from the NELNET Depositor, and to acquire from the
Depositors and to exercise all of the Underlying Ancillary Rights as provided in
this Agreement;
(ii) to authorize, execute, authenticate, deliver and issue the Notes,
the Subordinated Certificates and the Special Interest pursuant to this
Agreement to or upon the written direction of the Administrator;
(iii) to pay the organizational, start-up and transactional expenses of
the Trust, to the extent not paid by the Depositors or the Administrator, and to
pay the balance of any proceeds of the Notes or the Subordinated Certificates to
the Depositors, pro rata based upon the fair market value of the assets
contributed to the Trust by each;
(iv) to enter into, execute, deliver, and perform its obligations
under the Related Documents to which it is to be a party and to consummate the
transactions contemplated hereby and thereby;
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(v) to engage in those activities, including entering into
agreements, that are necessary or suitable to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Related Documents, to engage in
such other activities as may be required in connection with conservation of the
Trust Property, payment of the Notes and making distributions to the
Subordinated Certificateholders.
The Trust is hereby authorized to engage in the foregoing activities.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or expressly authorized by the terms of this
Agreement or the Related Documents and as may be suitable or convenient to
accomplish such activities.
The Administrator shall exercise all of the Underlying Ancillary Rights
on behalf of the Trust; provided, however, that neither the Trust nor the
Administrator may exercise any of the Underlying MELMAC Ancillary Rights or any
of the Underlying NELNET Ancillary Rights described in clauses (b) or (c) of the
definitions thereof without the consent of all of the Subordinated
Certificateholders other than the Holder of the Special Interest and without
complying with the provisions of Section 10.13 hereof.
Section 2.4. Appointment of Trustee, Certificate Paying Agent,
Certificate Registrar, Note Paying Agent and Note Registrar.
(a) The Depositors hereby appoint Wilmington Trust Company as Trustee
of the Trust, effective as of the date hereof, to have all the rights, powers
and duties of the Trustee set forth herein, and Wilmington Trust Company accepts
such appointment as Trustee.
(b) The Depositors hereby appoint Wilmington Trust Company as
Certificate Paying Agent and Certificate Registrar of the Trust, effective as of
the date hereof, to have all the rights, powers and duties of the Certificate
Paying Agent and the Certificate Registrar, respectively, set forth herein, and
Wilmington Trust Company hereby accepts such appointment as Certificate Paying
Agent and Certificate Registrar. A successor Certificate Paying Agent or
successor Certificate Registrar may be appointed by the Trustee. Written notice
of any such appointment shall be given to the Depositors. Any successor
Certificate Paying Agent or successor Certificate Registrar shall be required to
deliver to the Trustee a written instrument under which such successor agrees to
be subject to the obligations of the Certificate Paying Agent or Certificate
Registrar, as the case may be, under this Agreement.
(c) The Depositors hereby appoint The Chase Manhattan Bank as Note
Paying Agent and Note Registrar, effective as of the date hereof, to have all
the rights, powers and duties of the Note Paying Agent and Note Registrar,
respectively, set forth herein and The Chase Manhattan Bank hereby accepts such
appointment as Note Paying Agent and Note Registrar. A successor Note Paying
Agent and Note Registrar may be appointed by the Administrator, subject to the
prior written consent of the Note Insurer. Written notice of any appointment
shall be given to the Depositors. Any successor Note Paying Agent or successor
Note Registrar shall be required to deliver to the trustee a written instrument
under which such successor agrees to be subject to the obligations of the Note
Paying Agent or Note Registrar, as the case may be, under this Agreement.
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Section 2.5. Conveyance of Underlying Residual Rights, Maintenance and
Operating Expenses and the Underlying Ancillary Rights.
(a) The MELMAC Depositor hereby contributes, assigns, delivers, sets
over and otherwise conveys to the Trust without recourse except as otherwise set
forth herein, all the MELMAC Depositor's right, title and interest, whether now
owned or hereafter acquired, now existing or hereafter arising wherever located,
in and to all the Underlying MELMAC Residual Rights and the Underlying MELMAC
Ancillary Rights.
In that connection, the MELMAC Depositor will deliver to the Trustee on
behalf of the Trust on or before the Closing Date the following instruments
relating to the Underlying MELMAC Residual Rights:
(i) the MELMAC Assignment Agreement;
(ii) a copy of the MELMAC Indenture and the other Underlying
Agreements relating to the Underlying MELMAC Trust listed on Schedule II
hereto;
(iii) any documents required under the Indenture or the other
Underlying Agreements relating to the Underlying MELMAC Trust to be
delivered in connection with such transfer;
(iv) any documents required under the MELMAC Indenture or the
other Underlying Agreements relating to the Underlying MELMAC Trust to
be signed by the Trustee as transferee of the Underlying MELMAC Residual
Rights;
(v) properly completed Uniform Commercial Code -1 Financing
Statements relating to the assignment by the MELMAC Depositor to the
Trust of the Underlying MELMAC Residual Rights; and
(vi) signed acknowledgments from the trustee under the MELMAC
Indenture (a) to remit all amounts payable to the Collateral Agent as
set forth in the related Cash Flow Certificates directly to the
Collateral Agent for deposit in the Collection Account until instructed
in writing to the contrary by the Administrator and the Note Insurer,
which written instructions shall be consented to by the Rating Agencies,
and (b) to look solely to the Trust, acting through the Administrator
and the Note Insurer, to consent to certain amendments to the MELMAC
Indenture.
The MELMAC Depositor also shall deliver to the Trustee on behalf of the
Trust copies of each amendment or supplement to the Underlying Agreements
relating to the Underlying MELMAC Trust promptly after the MELMAC Depositor
receives any such copy.
21
The Trustee shall have power and authority and is hereby authorized and
empowered to sign, in the name and on behalf of the Trust, each document
delivered to it pursuant to clauses (iv) and (v) above as requested by the
MELMAC Depositor and return such document to the MELMAC Depositor for proper
filing with the trustee under the MELMAC Indenture for the Underlying MELMAC
Residual Rights, or proper recording office, as the case may be, and the Trustee
shall be fully protected in so doing.
The contribution of the Underlying MELMAC Residual Rights is absolute.
Except as otherwise provided herein and under the Security Agreement, and to the
fullest extent permitted by applicable law, the Trust shall not assign, sell,
dispose of or transfer any interest in the Underlying MELMAC Residual Rights or
the Underlying MELMAC Ancillary Rights or any other asset constituting the Trust
Property or permit the Underlying MELMAC Residual Rights or the Underlying
MELMAC Ancillary Rights or any other asset constituting the Trust Property to be
subjected to any lien, claim or encumbrance arising by, through or under the
Trust or any Person claiming by through or under the Trust.
It is intended that the conveyance of the Underlying MELMAC Residual
Rights by the MELMAC Depositor to the Trust as provided in this Section 2.5 be,
and be construed as, an absolute contribution of the Underlying MELMAC Residual
Rights by the MELMAC Depositor to the Trust and thereafter for the benefit of
the Subordinated Certificateholders. Nevertheless, if, notwithstanding the
intent of the parties, the Underlying MELMAC Residual Rights are held to be the
property of the MELMAC Depositor, or, if for any other reason this Agreement is
held or deemed to create a security interest in the Underlying MELMAC Residual
Rights, then it is intended that (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code of any applicable jurisdiction; (b) the conveyance provided for
in this Section 2.5 shall be deemed to be a grant by the MELMAC Depositor to the
Trust of a security interest in all the MELMAC Depositor's right, title and
interest in and to the Underlying MELMAC Residual Rights and all amounts payable
to the holders of the Underlying MELMAC Residual Rights after the Closing Date
in accordance with the terms thereof, all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, security or other
property, including without limitation all amounts from time to time held or
invested in the Collection Account, the Distribution Account or the Reserve
Account, whether in the form of cash, instruments, securities or other property;
and (c) the possession by the Trust or its agent of the Underlying MELMAC
Residual Rights and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to the Uniform Commercial Code of any applicable jurisdiction. The Trustee, upon
receipt of written direction from the Administrator or the Note Insurer, shall
take such actions, including but not limited to filing Uniform Commercial Code
Financing Statements and continuation statements, as the Administrator or the
Note Insurer may direct as necessary to ensure that the security interests
created hereby would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement. Neither the Administrator nor the Note Insurer shall direct
the Trustee to take any action inconsistent with this Agreement.
22
(b) The NELNET Depositor hereby contributes, assigns, delivers, sets
over and otherwise conveys to the Trust without recourse except as otherwise set
forth herein, all the NELNET Depositor's right, title and interest, whether now
owned or hereafter acquired, now existing or hereafter arising wherever located,
in and to all the Underlying NELNET Residual Rights, the Maintenance and
Operating Expenses and the Underlying NELNET Ancillary Rights.
In that connection, the NELNET Depositor will deliver to the Trustee on
behalf of the Trust on or before the Closing date the following instruments
relating to the Underlying NELNET Residual Rights and the Maintenance and
Operating Expenses:
(i) the NELNET Assignment Agreement;
(ii) a copy of the NELNET Indenture and the other Underlying
Agreements relating to the Underlying NELNET Trust listed on Schedule II
hereto;
(iii) any documents required under the NELNET Indenture or the
other Underlying Agreements relating to the Underlying NELNET Trust to
be delivered in connection with such transfer;
(iv) any documents required under the NELNET Indenture or the
other Underlying Agreements relating to the Underlying NELNET Trust to
be signed by the Trustee as transferee of the Underlying NELNET Residual
Rights and the Maintenance and Operating Expenses;
(v) properly completed Uniform Commercial Code - 1 Financing
Statements relating to the assignment by the NELNET Depositor to the
Trust of the Underlying NELNET Residual Rights and the Maintenance and
Operating Expenses; and
(vi) signed acknowledgments from the trustee under the NELNET
Indenture (a) to remit all amounts payable to the Collateral Agent for
deposit in the Collection Account until instructed in writing to the
contrary by the Administrator and the Note Insurer, which written
instructions shall be consented to by the Rating Agencies, and (b) to
look solely to the Trust, acting through the Administrator and the Note
Insurer, to consent to certain amendments to the NELNET Indenture.
The NELNET Depositor also shall deliver to the Trustee on behalf of the
Trust copies of each amendment or supplement to the Underlying Agreements
relating to the Underlying NELNET Trust promptly after the NELNET Depositor
receives any such copy.
The Trustee shall have power and authority and is hereby authorized and
empowered to sign, in the name and on behalf of the Trust, each document
delivered to it pursuant to clauses (iv) and (v) above as required by the NELNET
Depositor and return such document to the NELNET Depositor for proper filing
with the trustee under the NELNET Indenture for the Underlying NELNET Residual
Rights, or proper recording office, as the case may be, and the Trustee shall be
fully protected in so doing.
23
The contribution of the Underlying NELNET Residual Rights and the
Maintenance and Operating Expenses is absolute. Except as otherwise provided
herein and under the Security Agreement, the Trust shall not assign, sell,
dispose of or transfer any interest in the Underlying NELNET Residual Rights,
the Maintenance and Operating Expenses, or the Underlying NELNET Ancillary
Rights or any other asset constituting the Trust Property or permit the
Underlying NELNET Residual Rights, the Maintenance and Operating Expenses or the
Underlying NELNET Ancillary Rights or any other asset constituting the Trust
Property to be subjected to any lien, claim or encumbrance arising by, through
or under the Trust or any Person claiming by through or under the Trust.
It is intended that the conveyance of the Underlying NELNET Residual
Rights and the Maintenance and Operating Expenses by the NELNET Depositor to the
Trust as provided in this Section 2.5 be, and be construed as, an absolute
contribution of the Underlying NELNET Residual Rights and the Maintenance and
Operating Expenses by the NELNET Depositor to the Trust and thereafter for the
benefit of the Subordinated Certificateholders. Nevertheless, if,
notwithstanding the intent of the parties, the Underlying NELNET Residual Rights
and the Maintenance and Operating Expenses are held to be the property of the
NELNET Depositor, or, if for any other reason this Agreement is held or deemed
to create a security interest in the Underlying NELNET Residual Rights and the
Maintenance and Operating Expenses, then it is intended that (a) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles 8
and 9 of the Uniform Commercial Code of any applicable jurisdiction; (b) the
conveyance provided for in this Section 2.5 shall be deemed to be a grant by the
NELNET Depositor to the Trust of a security interest in all the NELNET
Depositor's right, title and interest in and to the Underlying NELNET Residual
Rights and the Maintenance and Operating Expenses and all amounts payable to the
holders of the Underlying NELNET Residual Rights and the Maintenance and
Operating Expenses after the Closing Date in accordance with the terms thereof,
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, security or other property, including without limitation all
amounts from time to time held or invested in the Collection Account, the
Distribution Account or the Reserve Account, whether in the form of cash,
instruments, securities or other property; and (c) the possession by the Trust
or its agent of the Underlying NELNET Residual Rights and the Maintenance and
Operating Expenses and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to the Uniform Commercial Code of any applicable jurisdiction. The Trustee, upon
receipt of written direction from the Administrator or the Note Insurer, shall
take such actions, including but not limited to filing Uniform Commercial Code
Financing Statements and continuation statements, as the Administrator or the
Note Insurer may direct as necessary to ensure that the security interests
created hereby would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement. Neither the Administrator nor the Note Insurer shall direct
the Trustee to take any action inconsistent with this Agreement.
24
Section 2.6. Declaration of Trust.
The Trustee hereby declares that it will hold the Trust Property in
trust upon and subject to the conditions set forth herein first to secure the
payment of the Notes and payments due and owing to the Note Insurer under this
Agreement, the Insurance Agreement and the Financial Guaranty Agreement and
thereafter for the use and benefit of the Subordinated Certificateholders. It is
the intention and agreement of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute of which the Subordinated
Certificateholders are the beneficial owners and that this Agreement constitute
the governing instrument of such business trust. It is the intention and
agreement of the parties hereto that, solely for income and franchise tax
purposes, the Trust shall be treated as a grantor trust. Nevertheless, if,
notwithstanding the intent of the parties the Trust is not held to be a grantor
trust, solely for income and franchise tax purposes the Trust shall be treated
as a partnership, with the Subordinated Certificateholders as the sole partners
thereof. The parties agree that, unless otherwise required by appropriate tax
authorities, the Trust will file or cause to be filed annual or other necessary
returns, reports and other forms consistent with the characterization of the
Trust as a grantor trust or, if necessary, a partnership for such tax purposes.
Effective as of the date hereof, the Trustee shall have all rights, powers,
authority, and authorization set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Trust.
Section 2.7. Liability of the Noteholders and Subordinated
Certificateholders.
Except as otherwise set forth in Section 2.12, no Noteholder or
Subordinated Certificateholder shall have any personal liability for any
liability or obligation of the Trust or by reason of any action taken by the
parties to this Agreement pursuant to any provisions of this Agreement or any
Related Document. The Subordinated Certificateholders shall be entitled to the
same limitation of personal liability extended to shareholders of corporations
under the General Corporation Law of the State of Delaware.
Section 2.8. Title to Trust Property.
(a) Legal title to all the Trust Property shall be vested at all
times in the Trust as a separate legal entity except where applicable law in any
jurisdiction requires title to any part of the Trust Property to be vested in a
trustee or trustees, in which case title shall be deemed to be vested in the
Trustee, a co-trustee and/or a separate trustee, as the case may be.
(b) Neither the Noteholders nor the Subordinated Certificateholders
shall have legal title to any part of the Trust Property. The Noteholders shall
be entitled to receive payments, and the Subordinated Certificateholders shall
be entitled to receive distributions, only in accordance with Articles IV, VII
and VIII. No transfer, by operation of law or otherwise, of any right, title or
interest by any Noteholder or Subordinated Certificateholder of its ownership
interest in any Note or Subordinated Certificate shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Trust Property.
25
Section 2.9. Situs of Trust.
The Trust will be located and administered in the State of Delaware. The
Trust shall not have any employees; provided, however, that nothing herein shall
restrict or prohibit the Trustee, the Depositors or any agent of the Trust from
having employees within or without the State of Delaware. All bank accounts
maintained by the Trust shall be in Delaware or New York. The only office of the
Trust shall be the Corporate Trust Office in Delaware.
Section 2.10. Representations and Warranties of the Depositors.
(a) By execution of this Agreement, the MELMAC Depositor makes the
following representations and warranties on which each of the Trust and the
Trustee relies in accepting the Trust Property in trust and issuing the Notes
and the Subordinated Certificates:
(i) Organization and Good Standing. It has been duly
organized and is validly existing as a limited liability company
in good standing under the laws of the State of Delaware, with
power and authority to own its properties and to conduct its
business as such properties are currently owned and as such
business is currently conducted and is proposed to be conducted
pursuant to this Agreement and the Related Documents
(ii) Due Qualification. It is duly qualified to do
business as a foreign limited liability company in good standing,
and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property,
the conduct of its business and the performance of its
obligations under this Agreement and the Related Documents
requires such qualification.
(iii) Power and Authority. It has the power and authority
to execute and deliver this Agreement and its Related Documents
and to perform its obligations pursuant thereto; and the
execution, delivery and performance of this Agreement and its
Related Documents have been duly authorized by all necessary
corporate action.
(iv) No Consent Required. No consent, license, approval or
authorization or registration or declaration with, any Person or
with any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance of this
Agreement and the Related Documents and the assignment of the
Underlying MELMAC Residual Rights, except for such as have been
obtained, effected or made.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of its obligations under this Agreement and its
Related Documents 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 its Certificate of
26
Formation, limited liability company agreement or any indenture
(including but not limited to the MELMAC Indenture and the other
Underlying Agreements relating to the MELMAC Depositor),
agreement, mortgage, deed of trust or other instrument to which
it is a party or by which it is bound, or result in the creation
or imposition of any lien upon any of its properties except as
otherwise contemplated by this Agreement or any of its Related
Documents, or violate any law, order, rule or regulation
applicable to it of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or any of its
properties.
(vi) No Proceedings. There are not any proceedings or
investigations pending or, to its knowledge, threatened against
it before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the
invalidity of this Agreement or any of its Related Documents, (B)
seeking to prevent the issuance of the Notes or the Subordinated
Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of its Related Documents,
(C) seeking any determination or ruling that might materially and
adversely affect its performance of its obligations under, or the
validity or enforceability of, this Agreement or any of the
Related Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Notes or the Subordinated Certificates.
(viii) Enforceability. It has duly executed and delivered
its Related Documents and each such agreement constitutes a
legal, valid and binding agreement on its part, enforceable
against it in accordance with its terms.
(b) By execution of this Agreement, the NELNET Depositor makes the
following representations and warranties on which the Trust and the Trustee
relies in accepting the Trust Property in trust and issuing the Notes and the
Subordinated Certificates:
(i) Organization and Good Standing. It has been duly
organized and is validly existing as a corporation in good
standing under the laws of the State of Nevada, with power and
authority to own its properties and to conduct its business as
such properties are currently owned and as such business is
currently conducted and is proposed to be conducted pursuant to
this Agreement and the Related Documents.
(ii) Due Qualification. It is duly qualified to do
business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property,
the conduct of its business and the performance of its
obligations under this Agreement and the Related Documents
requires such qualification.
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(iii) Power and Authority. It has the power and authority
to execute and deliver this Agreement and its Related Documents
and to perform its obligations pursuant thereto; and the
execution, delivery and performance of this Agreement and its
Related Documents have been duly authorized by all necessary
corporate action.
(iv) No Consent Required. No consent, license, approval or
authorization or registration or declaration with, any Person or
with any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance of this
Agreement and the Related Documents and the assignment of the
Underlying NELNET Residual Rights and the Maintenance and
Operating Expenses, except for such as have been obtained,
effected or made.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of its obligations under this Agreement and its
Related Documents 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 its Articles of
Incorporation, By-Laws, or any indenture (including but not
limited to the NELNET Indenture and the other Underlying
Agreements), agreement, mortgage, deed of trust or other
instrument to which it is a party or by which it is bound, or
result in the creation or imposition of any lien upon any of its
properties except as otherwise contemplated by this Agreement or
any of its Related Documents, or violate any law, order, rule or
regulation applicable to it of any court or of any federal or
state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or any
of its properties.
(vi) No Proceedings. There are not any proceedings or
investigations pending or, to its knowledge, threatened against
it before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the
invalidity of this Agreement or any of its Related Documents, (B)
seeking to prevent the issuance of the Notes or the Subordinated
Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of its Related Documents,
(C) seeking any determination or ruling that might materially and
adversely affect its performance of its obligations under, or the
validity or enforceability of, this Agreement or any of the
Related Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Notes or the Subordinated Certificates.
(viii) Enforceability. It has duly executed and delivered
its Related Documents and each such agreement constitutes a
legal, valid and binding agreement on its part, enforceable
against it in accordance with its terms.
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Section 2.11. Federal Income Tax Allocations.
Net income of the Trust for any month as determined for federal income
tax purposes (and each item of income, gain, loss, deduction and credit, if any,
entering into the computation thereof) shall be allocated: to the Subordinated
Certificateholders in accordance with their Percentage Interests; provided,
however, if the Noteholders are deemed to be partners, together with the
Subordinated Certificateholders, for federal income tax purposes:
(a) Income of the Trust shall be allocated among such Noteholders as
of the first Record Date following the end of any such month in proportion to
their ownership of the Notes on such date, in an amount up to the sum of the
Interest Amount for such month, and the balance of the income of the Trust shall
be allocated to the Subordinated Certificateholders, and, if such income is
insufficient in any month for such allocations to the Noteholders, such income
in subsequent months shall first be allocated to the Noteholders to make up such
shortfall (and interest thereon) before being allocated to Subordinated
Certificateholders.
(b) Net losses of the Trust, if any, for any month as determined for
federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated to the Subordinated
Certificateholders to the extent the Subordinated Certificateholders are
reasonably expected to bear the economic burden of such net losses, then net
losses shall be allocated among the Noteholders as of the first Record Date
following the end of such month in proportion to their ownership of the Notes on
such Record Date.
(c) Notwithstanding anything in this Agreement to the contrary, the
Subordinated Certificateholders shall be allocated an aggregate of at least 1%
of each item of income, profit, gain or loss of the Trust.
(d) The Subordinated Certificateholders are authorized to modify the
allocations in this Section if necessary or appropriate, for the allocations to
reflect fairly the economic income, gain or loss to the Subordinated
Certificateholders or the Noteholders or to comply with the provisions of the
Code and the accompanying Treasury Regulations.
(e) All federal income tax allocations are to be calculated and
prepared by the Administrator.
Section 2.12. Payment of Expenses.
NELnet, as holder of no less than 1% Percentage Interest in the Trust
(the "Special Interest"), shall pay, to the extent not paid by the
Administrator, organizational expenses of the Trust as they may arise or shall,
upon the request of the Trustee, promptly reimburse the Trustee for any such
expenses paid by the Trustee.
29
Section 2.13. Covenants of the Noteholders.
Each Noteholder by becoming an owner of a Note (and each Beneficial
Owner) agrees and covenants for the benefit of each other Noteholder (and each
Beneficial Owner), the Note Insurer, the Subordinated Certificateholders, the
Collateral Agent and the Trustee, during this term of this Agreement, and to the
fullest extent permitted by applicable law:
(a) to be bound by the terms and conditions of the Notes and of this
Agreement, including any supplements or amendments hereto, for the benefit of
the Trust, the Trustee, the Collateral Agent, the Note Insurer, and all other
Noteholders (and Beneficial Owners of Notes) and the Subordinated
Certificateholders present and future; and
(b) to treat the Trust, for purposes of federal income, state and
local income and franchise and any other income taxes, as a partnership and the
Subordinated Certificateholders as partners of that partnership and the Notes as
debt of the Trust for all tax purposes and not to take any position inconsistent
with such treatment in any tax returns filed by it.
Section 2.14. Covenants of the Trust, the Trustee, the Administrator and
Subordinated Certificateholders.
The Trust, the Trustee, the Administrator and each Subordinated
Certificateholder agree and covenant as follows:
(a) neither the Trustee, the Administrator nor any Subordinated
Certificateholder shall cause the funds and other assets of the Trust to 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;
(b) neither the Trustee, the Administrator nor any Subordinated
Certificateholder shall cause the Trust to be, become or hold itself out as
being liable for the debts of any other party or guarantee any of the debts or
obligations of any other party (excepting only the indemnification of the
Trustee in its individual capacity under the Trust Agreement by a Subordinated
Certificateholder);
(c) the Trust and the Subordinated Certificateholder shall not act as
agents for each other;
(d) the Trust shall (1) act solely in its name and through its
Trustee and any duly authorized officers or agents in the conduct of its
business, (2) prepare all correspondence in the Trust name, and (3) conduct its
business so as not to mislead others as to the identity of the entity with which
they are concerned;
(e) except in the case of a Subordinated Certificateholder that is an
Administrator, no Subordinated Certificateholder shall be involved in the
day-to-day management of the Trust;
30
(f) the Trustee shall maintain on behalf of the Trust all business
trust records and books of account of the Trust and neither the Trustee nor any
Subordinated Certificateholder shall cause the Trust to commingle its business
trust records and books of account with the corporate records and books of
account of any other entity, and the books and records maintained by the
Subordinated Certificateholders or the Trustee on behalf of the Trust shall
reflect the separate existence of the Trust;
(g) the Trustee shall comply with such formalities as may be
necessary under the Business Trust Statute to authorize all of the Trust's
actions as may be required by law;
(h) the Trustee shall cause the Trust to (1) conduct its business in
an office separate from that of each Subordinated Certificateholder and each
Depositor, (2) maintain stationery separate from that of each Subordinated
Certificateholder and each Depositor, (3) pay all of its own expenses, (4)
observe all statutory formalities, and (5) keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware; and the Administrator shall cause the Trust to obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or will be necessary to protect the validity and enforceability of this Trust
Agreement;
(i) the persons performing financial and operational services,
including, without limitation, maintenance of the books and records of the Trust
or incurring expenses in connection with such services shall receive
compensation for such services rendered or expenses incurred in an amount equal
to the fair value of such services and expenses; to the extent that the Trust
leases premises from a Subordinated Certificateholder or affiliates of a
Subordinated Certificateholder, each of the foregoing shall pay appropriate
reasonable compensation or rental; and the Trust shall be directly responsible
for the costs of its own outside legal, auditing and other similar services and
shall provide for its own operating expenses and liabilities from its own funds;
and
(j) any consolidated financial statements which consolidate the
assets and earnings of a Subordinated Certificateholder with those of the Trust
shall contain a footnote or other statement stating that the assets of the Trust
will not be available to creditors of the Subordinated Certificateholder; the
financial statements (if any) of the Trust shall disclose that the assets of the
Trust are not available to pay creditors of any Subordinated Certificateholder.
Section 2.15. Note Insurer's Rights Regarding Actions, Proceedings or
Investigations.
Until the Noteholders have been paid in full, all amounts owed to the
Note Insurer have been paid in full, the Insurance Agreement and Financial
Guaranty Agreement have terminated and the Policies have been returned to the
Note Insurer for cancellation, and subject to the provisions of Section 10.14,
the following provisions shall apply:
(a) Notwithstanding anything contained herein or in the Related
Documents to the contrary, the Note Insurer shall have the right to participate
in, to direct the enforcement or defense of, and, at the Note Insurer's sole
option, to institute or assume the defense of, any action, proceeding or
investigation that could adversely affect the Trust or the Trust Property or the
31
rights or obligations of the Note Insurer hereunder or under the Policies or the
Related Documents, including (without limitation) any insolvency or bankruptcy
proceeding in respect of the Administrator, the Depositors, the Trust or any
affiliate thereof. Following notice to the Trustee, the Note Insurer shall have
exclusive right to determine, in its sole discretion, the actions necessary to
preserve and protect the Trust and the Trust Property. All costs and expenses of
the Note Insurer in connection with such action, proceeding or investigation,
including (without limitation) any judgment or settlement entered into affecting
the Note Insurer or the Note Insurer's interests, shall be included in
Reimbursement Amount.
(b) In connection with any action, proceeding or investigation that
could adversely affect the Trust, the Trust Property or the rights or
obligations of the Note Insurer hereunder or under the Policies or the Related
Documents, including (without limitation) any insolvency or bankruptcy
proceeding in respect of the Administrator, the Depositors, the Trust or any
affiliate thereof, the Trustee hereby agrees to cooperate with, and to take such
action as directed by, the Note Insurer, including (without limitation) entering
into such agreements and settlements as the Note Insurer shall direct, in its
sole discretion, without the consent of any Noteholder or Subordinated
Certificateholder. Notwithstanding any other provision herein or in any of the
other Related Documents, the Trustee shall not require any bond or
indemnification from any Person for taking of any action at the direction of the
Note Insurer, and the Trustee shall not be liable to the Note Insurer or any
Noteholder or Subordinated Certificateholder for any such action that conforms
to the direction of the Note Insurer. The Trustee's reasonable out-of-pocket
costs and expenses (including attorneys' fees and expenses) with respect to any
such action shall be reimbursed pursuant to Section 5.8 hereof.
(c) Any judgment or settlement entered against or affecting the
Trust, the Trust Property or the Trustee, on behalf of the Noteholders or the
Subordinated Certificateholders in connection with any action, proceeding or
investigation shall be paid by the Trustee from the Trust Property.
(d) The Trustee hereby agrees to provide to the Note Insurer prompt
written notice of any action, proceeding or investigation that names the Trust
or the Trustee as a party or that could adversely affect the Trust, the Trust
Property or the rights or obligations of the Note Insurer hereunder or under the
Policies or the Related Documents, including (without limitation) any insolvency
or bankruptcy proceeding in respect of the Administrator, the Depositors, the
Trust or any affiliate thereof.
(e) Notwithstanding anything contained herein or in any of the other
Related Documents to the contrary, the Trustee shall not, without the Note
Insurer's prior written consent or unless directed by the Note Insurer,
undertake or join any litigation or agree to any settlement of any action,
proceeding or investigation affecting the Trust, the Trust Property or the
rights or obligations of the Note Insurer hereunder or under the Policies or the
Related Documents.
(f) Each Noteholder or Subordinated Certificateholder, by acceptance
of its Note or Certificate as the case may be, and the Trustee agree that the
Note Insurer shall have such rights as set forth in this Section, which are in
addition to any rights of the Note Insurer pursuant to the other provisions of
the Related Documents, that the rights set forth in this Section may be
32
exercised by the Note Insurer, in its sole discretion, without the need for the
consent or approval of any Noteholder or Subordinated Certificateholder or the
Trustee, notwithstanding any other provision contained herein or in any of the
other Related Documents, and that nothing contained in this Section shall be
deemed to be an obligation of the Note Insurer to exercise any of the rights
provided for herein.
ARTICLE IIA
THE ADMINISTRATOR
Section 2.1A. Representations and Warranties of the Administrator.
By execution of this Agreement, the Administrator makes the following
representations and warranties on which the Trust, the Trustee and the Note
Insurer rely:
(a) Organization and Good Standing. It has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Nevada, with power and authority to own its properties and to conduct its
business as such properties are currently owned and as such business is
currently conducted and is proposed to be conducted pursuant to this Agreement
and the Related Documents.
(b) Due Qualification. It is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of its
property, the conduct of its business and the performance of its obligations
under this Agreement and the Related Documents requires such qualification.
(c) Power and Authority. It has the power and authority to execute
and deliver this Agreement and its Related Documents and to perform its
obligations pursuant thereto; and the execution, delivery and performance of
this Agreement and its Related Documents have been duly authorized by all
necessary corporate action.
(d) No Consent Required. No consent, license, approval or
authorization or registration or declaration with, any Person or with any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and its Related Documents,
except for such as have been obtained, effected or made.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and its Related Documents and the fulfillment of its
obligations under this Agreement and its Related Documents 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, its Articles of
Incorporation or By-Laws, or any indenture, agreement, mortgage, deed of trust
or other instrument to which it is a party or by which it is bound, or result in
the creation or imposition of any lien upon any of its properties except as
otherwise contemplated by this Agreement or any of its Related Documents, or
violate any law, order, rule or regulation applicable to it of any court or of
any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or any of its
properties.
33
(f) No Proceedings. There are not any proceedings or investigations
pending or, to its knowledge, threatened against it before any court, regulatory
body, administrative agency or other tribunal or governmental instrumentality
having jurisdiction over it or its properties (i) asserting the invalidity of
this Agreement or any of its Related Documents, (ii) seeking to prevent the
issuance of the Notes or the Subordinated Certificates or the consummation of
any of the transactions contemplated by this Agreement or any of its Related
Documents, (iii) seeking any determination or ruling that might materially and
adversely affect its performance of its obligations under, or the validity or
enforceability of, this Agreement or any of its Related Documents, or (iv)
seeking to adversely affect the federal income tax or other federal, state or
local tax attributes of the Notes or the Subordinated Certificates.
(g) Enforceability. It has duly executed and delivered this Agreement
and its Related Documents and each such agreement constitutes a legal, valid and
binding agreement on its part it, enforceable against it in accordance with its
terms.
Section 2.2A. Merger or Consolidation of Administrator.
Any Person (a) into which the Administrator may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Administrator shall be a party or (c) which may succeed to the properties and
assets of the Administrator, substantially as a whole, shall be the successor to
the Administrator, without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided, however, that the
Administrator hereby covenants that it will not consummate any of the foregoing
transactions except upon satisfaction of the following: (i) the surviving
Administrator executes an agreement of assumption to perform every obligation of
the Administrator under this Agreement, (ii) immediately after giving effect to
such transaction, no Administrator Default shall have occurred and be
continuing, (iii) the Administrator shall have delivered to the Trustee and the
Note Insurer an officer's certificate and an opinion of counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, and (iv)
the Administrator shall have delivered to the Trustee and the Note Insurer an
opinion of counsel stating that such transaction will not result in a material
adverse Federal or state tax consequence to the Trust relating to its tax
classification, or to the Noteholders, considered as a whole, relating to a
change in the characterization of the Notes.
Section 2.3A. Liability and Indemnities.
(a) The Administrator shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Administrator under
this Agreement.
The Administrator and any of its directors, officers, employees or
agents may rely in good faith on the advice of counsel or on any document of any
kind, prima facie properly executed and submitted by any Person.
34
Except as provided in this Agreement, the Administrator shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties in accordance with this Agreement, and
that in its opinion may involve it in any expense or liability; provided,
however, that the Administrator may undertake any reasonable action that it may
deem necessary or desirable in respect of this Agreement and its other Related
Documents and the rights and duties of the parties to this Agreement and its
other Related Documents and the interests of the Noteholders, the Note Insurer
and the Subordinated Certificateholders under this Agreement and its other
Related Documents.
(b) The Administrator shall indemnify, defend and hold harmless from its
funds, the Trust, the Trustee, the Collateral Agent, the Note Insurer, the
Noteholders and the Subordinated Certificateholders and the officers, directors,
employees and agents of the Trust, the Trustee, the Collateral Agent, the
Noteholders, the Note Insurer and the Subordinated Certificateholders from and
against any and all costs, expenses, losses, claims, damages and liabilities
arising out of, or imposed upon such Person through, the Administrator's willful
misfeasance, bad faith or negligence in the performance of its duties under this
Agreement, or by reason of reckless disregard of its obligations and duties
under this Agreement; provided, however, the Administrator shall not be liable
for any such costs, expenses, losses, claims, damages and liabilities imposed
upon such Person to the extent that they arise out of or result from such
Person's gross negligence, willful malfeasance or bad faith or a breach of the
representations and warranties of such Person in this Agreement.
Section 2.4A. Administrator Not to Resign.
Subject to the provisions of Section 2.2A, NELnet shall not resign from
the obligations and duties imposed on it as Administrator under this Agreement
except upon determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law or shall violate
any final order of a court or administrative agency with jurisdiction over it or
its properties. Notice of any such determination permitting resignation shall be
communicated to the Trustee and the Note Insurer at the earliest practicable
time (and, if such communication is not in writing, shall be confirmed in
writing at the earliest practicable time) and any such determination shall be
evidenced by an opinion of counsel to such effect delivered to the Trustee and
the Note Insurer concurrently with or promptly after such notice. No such
resignation shall become effective until the Trustee or a successor
Administrator, with the consent of the Note Insurer, shall have assumed the
responsibilities and obligations of NELnet in accordance with Section 2.6A.
Section 2.5A. Administrator Default.
If any one of the following events (an "Administrator Default") shall
occur and be continuing:
(1) any failure by the Administrator to direct the Trustee or the
trustee of an Underlying Trust, as applicable, to make any required
distributions with respect to the Underlying Residual Rights, the
35
Maintenance and Operating Expenses or any other item of Trust Property
within the time period specified herein or therein, which failure
continues unremedied for three Business Days after written notice of
such failure is received by the Administrator from the Trustee or the
Note Insurer or after discovery of such failure by an officer of the
Administrator; or
(2) any failure by the Administrator duly to observe or to
perform in any material respect any other covenants or agreements of the
Administrator set forth in this Agreement, which failure shall (i)
materially and adversely affect the rights of the Note Insurer or
Noteholders and (ii) continue unremedied for a period of 30 days after
the date on which written notice of such failure, requiring the same to
be remedied, shall have been given (A) to the Administrator by the
Trustee or the Note Insurer or (B) to the Administrator and to the
Trustee and the Note Insurer by the Noteholders representing not less
than 66 2/3% of the aggregate outstanding Principal Amount of the Notes
with the prior written consent of the Note Insurer;
(3) an Insolvency Event shall have occurred with respect to the
Administrator;
then, and in each and every case, so long as the Administrator Default shall not
have been remedied, the Trustee or the Noteholders evidencing not less than 25%
of the aggregate outstanding Principal Amount of the Notes, with the consent of
the Note Insurer, or the Note Insurer, by notice then given in writing to the
Administrator (and to the Trustee and the Note Insurer if given by the
Noteholders) may terminate all the rights and obligations (other than the
obligations set forth in Sections 2.3A and 5.8 hereof) of the Administrator
under this Agreement. On or after the receipt by the Administrator of such
written notice, all authority and power of the Administrator under this
Agreement shall, without further action, pass to and be vested in the Trustee or
such successor Administrator consented to by the Note Insurer as may be
appointed under Section 2.6A; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, for the benefit of the
predecessor Administrator, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination. The predecessor Administrator shall cooperate with the successor
Administrator and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Administrator under this
Agreement. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with amending this Agreement to reflect such succession
as Administrator pursuant to this Section shall be paid by the predecessor
Administrator upon presentation of reasonable documentation of such costs and
expenses. Upon receipt of notice of the occurrence of an Administrator Default,
the Trustee shall give notice thereof to the Rating Agencies and the Note
Insurer.
Section 2.6A. Appointment of Successor.
(a) Upon receipt by the Administrator of notice of termination pursuant
to Section 2.5A, or the resignation by the Administrator in accordance with the
terms of this Agreement, the predecessor Administrator shall continue to perform
its functions as Administrator under this Agreement in the case of termination,
36
only until the date specified in such termination notice or, if no such date is
specified in a notice of termination, until receipt of such notice and, in the
case of resignation, until the later of (x) the date 120 days from the delivery
to the Trustee and the Note Insurer of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Administrator shall become
unable to act as Administrator, as specified in the notice of resignation and
accompanying opinion of counsel. In the event of the termination hereunder of
the Administrator, the Depositors shall appoint a successor Administrator
acceptable to the Note Insurer and the Trustee, and the successor Administrator
shall accept its appointment by a written assumption in form acceptable to the
Note Insurer and the Trustee. In the event that a successor Administrator has
not been appointed at the time when the predecessor Administrator has ceased to
act as Administrator, in accordance with this Section, the Trustee without
further action shall automatically be appointed the successor Administrator and
the Trustee shall be entitled to the Administration Fee in accordance with the
provisions of this Agreement. Notwithstanding the above, the Trustee shall, if
it shall be unwilling or legally unable so to act, or if requested by the Note
Insurer, appoint or petition a court of competent jurisdiction to appoint, with
the consent of the Note Insurer, any established institution whose regular
business shall include the servicing of student loans, as the successor to the
Administrator, as the case may be, under this Agreement; provided, however, that
such right to appoint or to petition for the appointment of any such successor
servicer shall in no event relieve the Trustee from any obligations otherwise
imposed on it until such successor has in fact assumed such appointment.
(b) Upon appointment, the successor Administrator (including the Trustee
acting as successor Administrator) shall be the successor in all respects to the
predecessor Administrator and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Administrator and shall be entitled to an amount agreed to by such
successor Administrator as the case may be (which shall not exceed the
Administration Fee without the consent of the Note Insurer) and all the rights
granted to the predecessor Administrator by the terms and provisions of this
Agreement.
(c) The Administrator may not resign unless it is prohibited from
serving as such by law as evidenced by an opinion of counsel to such effect
delivered to the Trustee and the Note Insurer. Notwithstanding the foregoing or
anything to the contrary herein or in the other Related Documents, the Trustee,
to the extent it is acting as successor Administrator pursuant hereto shall be
entitled to resign within 30 days of its appointment as successor Administrator.
Section 2.7A. Notification to Noteholders and Subordinated
Certificateholders.
Upon any termination or resignation of, or appointment of a successor
to, the Administrator pursuant to this Article IIA, the Trustee shall give
prompt written notice thereof to Note Registrar (who shall then give prompt
written notice thereof to the Noteholders), Subordinated Certificateholders, the
Note Insurer and the Rating Agencies (which, in the case of any such appointment
of a successor, shall consist of prior written notice thereof to the Rating
Agencies).
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Section 2.8A. Waiver of Past Defaults.
The Noteholders of Notes evidencing not less than a majority of the
aggregate outstanding Principal Amount of the Notes with the consent of the Note
Insurer, or the Note Insurer, may, on behalf of all Noteholders and Subordinated
Certificateholders, waive in writing any default by the Administrator in the
performance of its obligations hereunder and any consequences thereof, except a
default in making any required deposits to or payments from the Collection
Account (or giving instructions regarding the same) in accordance with this
Agreement. Upon any such waiver of a past default, such default shall cease to
exist, and any Administrator Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereto.
Section 2.9A. Sub-Administrators.
(a) The Administrator, as an independent contractor, shall administer
the Trust Property and shall have full power and authority, acting alone, to do
any and all things in connection with such administration which the
Administrator may deem necessary or desirable and consistent with the terms of
this Agreement. The Administrator may enter into agreements with affiliated
entities for purposes of carrying out any or all of the Administrator's duties
hereunder. The Administrator shall give notice to the Note Insurer of the
appointment of any such affiliate. Any such agreement shall be consistent with
and not violate the provisions of this Agreement.
(b) Notwithstanding any such agreement, the Administrator shall remain
obligated and primarily liable to the Trustee, the Noteholders, the Subordinated
Certificateholders and the Note Insurer for the administering of the Trust
Property in accordance with the provisions of this Agreement without diminution
of such obligation or liability by virtue of such agreements or arrangements to
the same extent and under the same terms and conditions as if the Administrator
alone were servicing the administering the Trust Property.
Section 2.10A. Cash Flow Certificates.
Not more than 60 and not less than 30 days prior to each December 31,
commencing with December 31, 2001, the Administrator shall cause the Cash Flow
Consultant to prepare and deliver to the Administrator, the Collateral Agent and
the Trustee, with a copy to the Depositors, the Note Insurer and the Rating
Agencies, a Cash Flow Certificate for each of the Underlying Trusts. Each Cash
Flow Certificate shall be in substantially the form set forth in Exhibit H
hereto and shall set forth, the maximum amount that may be withdrawn from the
applicable Underlying Trust and remitted to the Collateral Agent no later than
three Business Days prior to the January 2 and July 2 next succeeding the date
of such Cash Flow Certificate (the "Withdrawal Amounts") and shall set forth the
assumptions and methodology used in calculating such Withdrawal Amounts. Not
later than 5 Business Days following the Administrator's receipt of a Cash Flow
Certificate, the Administrator shall submit to the trustee of the applicable
Underlying Trust the related Cash Flow Certificate along with a request that
each such trustee remit to the Collateral Agent, no later than three Business
Days prior to the related January 2 and July 2 the applicable Withdrawal Amount.
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Section 2.11A. Perfected Security Interest.
The Administrator shall provide written directions to the Trustee to
take such actions, including but not limited to filing Uniform Commercial Code
Financing Statements and continuation statements, as the Administrator
determines to be necessary to ensure that the security interest created pursuant
to Section 2.5 would be deemed a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement.
Section 2.12A. Administrative Duties
(a) The Administrator shall perform all of its duties and obligations
under the Related Documents. In addition, the Administrator shall consult with
the Trustee as the Administrator deems appropriate regarding the duties of the
Trust under the Related Documents. The Administrator shall monitor the
performance of the Trust and shall advise the Trustee when action is necessary
to comply with the Administrator's duties under the Related Documents. The
Administrator shall prepare for execution by the Trust or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Administrator or the Trust to prepare, file or deliver pursuant to the Related
Documents. Notwithstanding the foregoing, the Administrator shall not have any
duty or obligation to make any payments with respect to the Notes or the
Subordinated Certificates or to make any payments or assume any financial
obligations to the Note Insurer or, except as specifically set forth in this
Agreement, the Trust.
(b) The Administrator shall obtain and preserve the Trust's
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement and the Related Documents and each other instrument and agreement to
which the Trust is a party.
(c) Notwithstanding anything in this Agreement or any of the Related
Documents to the contrary, the Administrator shall be responsible for promptly
notifying the Trustee, the Note Paying Agent and the Certificate Paying Agent in
the event that any withholding tax is imposed on the Trust's payments (or
allocations of income) to a Noteholder or Subordinated Certificateholder. Any
such notice shall be in writing and specify the amount of any withholding tax
required to be withheld by the Trustee, the Note Paying Agent or the Certificate
Paying Agent pursuant to such provision.
(d) The Administrator shall perform any other duties expressly required
to be performed by the Administrator under this Agreement or any of the Related
Documents.
(e) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions with or
otherwise deal with any of its affiliates; provided, however, that the terms of
any such transactions or dealings shall be in accordance with any directions
received from the Trust or the Trustee and shall be, in the Administrator's
opinion, no less favorable to the Trust in any material respect than could have
been obtained with other non-affiliated parties.
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(f) The Administrator shall furnish to the Trustee from time to time
such additional information regarding the Trust or the Related Documents as the
Trustee shall reasonably request.
ARTICLE III
THE NOTES AND THE SUBORDINATED CERTIFICATES
Section 3.1. Initial Ownership.
Upon the formation of the Trust and until the issuance of the
Subordinated Certificates, the Depositors shall be the sole beneficial owners of
the Trust. Upon the issuance of the Subordinated Certificates, the Holders
thereof shall be the sole beneficial owners of the Trust.
Section 3.2. Conditions to Issuance of the Notes and the Subordinated
Certificates.
On or before the delivery of the Notes and the Subordinated
Certificates, the Depositors shall deliver or cause to be delivered to the
Trustee on behalf of the Trust (i) the documents specified in Section 2.5 and
(ii) the Policies.
Section 3.3. The Notes and Subordinated Certificates.
(a) Notes, in an aggregate principal amount of $57,500,000, shall be
issued in denominations of $100,000 initial Principal Amount and integral
multiples of $1,000 in excess thereof.
(b) Subordinated Certificates shall be issued in minimum denominations
corresponding to a Percentage Interest of 10% and multiples of 1% in excess
thereof; provided, however, that Subordinated Certificates may be issued to the
Holder of the Special Interest and MELMAC, Inc. in minimum denominations
corresponding to a Percentage Interest of 1%.
(c) The Notes and the Subordinated Certificates shall be executed on
behalf of the Trust by the Trustee by manual or facsimile signature of any
authorized signatory of the Trustee. Notes and Subordinated Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures were affixed, authorized to sign on behalf of the Trustee shall
be validly issued and entitled to the benefits of this Agreement,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Notes and the
Subordinated Certificates; provided that such Notes and Subordinated
Certificates shall have been authenticated by the Registrar pursuant to Section
3.5.
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Section 3.4. Unconditional Rights of Noteholders to Receive Principal
Amount and Interest.
Subject to Sections 4.2 and 7.3, the Holder of any Note shall have the
right, which is absolute and unconditional, to receive payments equal to the
Principal Amount of and interest on such Note on or before the Maturity Date;
provided, however, that no provisions contained herein shall restrict the right
of the Trust to retire the Notes prior to the Maturity Date.
Section 3.5. Authentication of Notes and Subordinated Certificates.
On the Closing Date, the Note Registrar shall authenticate and deliver
the Notes to the Persons designated by the Depositors against delivery to the
Trustee and the Note Registrar, in the case of any Notes that are not Book-Entry
Notes, of affidavits of such Persons substantially in the form of Exhibit E. No
Note or Subordinated Certificate shall entitle its Holder to any benefit under
this Agreement, or shall be valid for any purpose, unless there shall appear
thereon a certificate of authentication substantially in the form set forth in
(i) Exhibit B in the case of a Note or (ii) Exhibit C in the case of a
Subordinated Certificate, executed by the Note Registrar or the Certificate
Registrar, as the case may be, by manual or facsimile signature; such
authentication shall constitute conclusive evidence that such Note or
Subordinated Certificate is entitled to the benefits of this Agreement and has
been duly executed, authenticated, authorized, issued and delivered hereunder.
All Notes and Subordinated Certificates shall be dated the date of their
authentication. Concurrently with the contribution of the Underlying Residual
Rights and the Maintenance and Operating Expenses to the Trust, and without
further action by the Depositors, the Trustee, in the name and on behalf of the
Trust, shall cause, and shall have power and authority and is hereby authorized
and empowered to cause, the Special Interest (which shall include a 1%
Percentage Interest) and a Subordinated Certificate therefor to be issued to,
and registered in the name of, the Holder of the Special Interest, and the
balance of the Subordinated Certificates to be executed, authenticated, issued
and delivered to and in the name of, and registered in the name of the
following: 98% of the Percentage Interest to NELnet, Inc. and 1% of the
Percentage Interest to MELMAC, Inc. Thereupon, all such Subordinated
Certificates and the Special Interest shall be duly authorized and validly
issued, shall be fully paid and non-assessable interests in the Trust and shall
be entitled to the benefits of this Agreement.
Section 3.6. Registration of Transfer and Exchange of Notes and
Subordinated Certificates.
(a) The Certificate Registrar shall maintain, or cause to be maintained,
at its Corporate Trust Office or such other location designated in writing to
the Trustee, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of the Subordinated Certificates and of transfers and exchanges as
provided in this Agreement. The Note Registrar shall maintain, or cause to be
maintained, at its Corporate Trust Office or such other location designated in
writing to the Collateral Agent and the Note Insurer, a Note Register in which,
subject to such reasonable regulations as it may prescribe, the Note Registrar
shall provide for the registration of Notes and of transfers and exchanges as
provided in this Agreement.
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(b) Upon surrender of any Subordinated Certificate at the Corporate
Trust Office of the Certificate Registrar, the Trustee on behalf of the Trust
shall execute, and the Certificate Registrar shall authenticate and deliver one
or more new Subordinated Certificates, in authorized denominations of a like
Percentage Interest, dated the date of authentication and registered, in the
case of a registration of transfer, in the name of the transferee or transferees
or, in the case of an exchange, in the name of the Holder; provided that, upon a
registration of transfer, the Certificate Registrar shall have received a
Representation Letter and Affidavit.
(c) Upon surrender of any Note at the Corporate Trust Office of the Note
Registrar, the Trustee on behalf of the Trust shall execute, and the Note
Registrar shall authenticate and deliver, one or more new Notes, in authorized
denominations of a like original Principal Amount, dated the date of
authentication and registered, in the case of a registration of transfer, in the
name of the designated transferee or transferees or, in the case of an exchange,
in the name of the Holder; provided, that:
(i) upon the registration of transfer of a Definitive Note by
delivery to the transferee of a new Definitive Note, or the transfer by
a Beneficial Owner of its beneficial interest in a Book-Entry Note by
delivery to the new transferee of a new Definitive Note, the Note
Registrar shall have received a Representation Letter and Affidavit,
and, in the case of a transferee that is identified as an Institutional
Accredited Investor, the Note Registrar may, upon advice of counsel,
require additional information, certifications or opinions to confirm
that the proposed transfer is not required to be registered under the
Securities Act of 1933;
(ii) upon the registration of transfer of a Definitive Note by
delivery to the transferee of an interest in a Book-Entry Note, the Note
Registrar shall have received a Representation Letter and Affidavit to
the effect that the transferee is a Qualified Institutional Buyer;
(iii) a transfer by a Beneficial Owner of an interest in a
Book-Entry Note to another Beneficial Owner shall be effected solely in
accordance with the rules of the Depository;
(iv) a Holder of a Definitive Note may at any time exchange such
Definitive Note for another Definitive Note or Definitive Notes;
(v) a Beneficial Owner of an interest in a Book-Entry Note may at
any time exchange such beneficial interest for a Definitive Note or
Definitive Notes; and
(vi) a Holder of a Definitive Note may exchange such Definitive
Note for an interest in a Book-Entry Note by delivering to the Note
Registrar a Representation Letter and Affidavit to the effect that it is
a Qualified Institutional Buyer.
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(d) Upon registration of transfer or exchange of a Definitive Note for
an interest in a Book-Entry Note, the Note Registrar shall (or shall request the
Depository to) endorse on the applicable Book-Entry Note an appropriate notation
evidencing the increase in the original principal balance of the Book-Entry Note
and the date thereof. Upon registration of transfer or exchange of an interest
in a Book-Entry Note for a Definitive Note, the Note Registrar shall (or shall
request the Depository to) endorse on the applicable Book-Entry Note an
appropriate notation evidencing the decrease in the original principal balance
of the Book-Entry Note and the date thereof.
(e) All Notes or Subordinated Certificates issued upon any registration
of transfer or exchange shall be the valid obligations, or evidences of
ownership, as the case may be, of the Trust, duly authorized, validly issued,
and entitled to the same benefits under this Agreement as the Notes or
Subordinated Certificates surrendered upon such registration of transfer or
exchange.
(f) Every Note or Subordinated Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Note Registrar or the
Certificate Registrar, as the case may be, duly executed by the Holder or his
attorney duly authorized in writing. Each Note or Subordinated Certificate
surrendered for registration of transfer or exchange shall be canceled and
subsequently disposed of by the Trustee (or the Note Registrar or the
Certificate Registrar, as the case may be, on behalf of the Trustee) in
accordance with its customary practice.
(g) No service charge shall be made for any registration of transfer or
exchange of Notes or Subordinated Certificates, but the Note Registrar or the
Certificate Registrar, as applicable, may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
such transfer or exchange.
(h) Neither the Trustee, the Note Registrar nor the Certificate
Registrar shall be responsible for determining compliance with the restrictions
on transfer in this Agreement provided it receives the documents referred to
above in this Section 3.6.
(i) The Holder (and Beneficial Owner) of a Note or the Holder of a
Subordinated Certificate effecting transfer thereof shall be deemed to indemnify
each of the Trustee, the Collateral Agent, the Note Registrar and the Note
Paying Agent or the Certificate Registrar and the Certificate Paying Agent, as
applicable, each in its individual and fiduciary capacities, the Depositors, the
Administrator, the Note Insurer and the Subordinated Certificateholders against
any liability that may result if the transfer is not exempt from the
registration requirements of the Securities Act of 1933. Each Noteholder (and
each Beneficial Owner) or Subordinated Certificateholder shall be deemed by its
acceptance and holding of its Note or Subordinated Certificate to agree that
none of the Depositors, the Trustee, the Collateral Agent, the Note Registrar,
the Certificate Registrar, the Note Insurer, the Subordinated Certificateholder,
the Note Paying Agent or the Certificate Paying Agent is under an obligation to
register the Notes or the Subordinated Certificates under the Securities Act of
1933 or any other securities law.
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(j) Any transfer in violation of this Section 3.6 (whether pursuant to a
purchase, a transfer resulting from a default under a secured lending agreement
or otherwise) to a nonresident alien or a foreign corporation shall be deemed to
be of no legal force or effect whatsoever and any nonresident alien or foreign
corporation shall not be deemed to be a Holder for any purpose hereunder.
(k) It is intended that the Book-Entry Notes be registered so as to
participate in a global book entry system with the Depository, as set forth
herein. The Book-Entry Notes shall be initially issued in the form of a single
fully registered Note. Upon initial issuance, the ownership of the Book-Entry
Notes shall be registered in the Note Register in the name of Cede & Co., or any
successor thereto, as nominee for the Depository.
The Trustee and the Note Paying Agent in the name and on behalf of the
Trust and the Note Paying Agent shall have power and authority and are hereby
authorized and empowered to execute and deliver the Depository Representation
Letter with the Depository.
With respect to the Book-Entry Notes registered in the Note Register in
the name of Cede & Co., as nominee of the Depository, the Note Paying Agent
shall have no responsibility or obligation to Direct or Indirect Participants or
beneficial owners for which the Depository holds Book-Entry Notes from time to
time as a Depository. Without limiting the immediately preceding sentence, the
Note Paying Agent shall have no responsibility or obligation with respect to (i)
the accuracy of the records of the Depository, Cede & Co., or any Direct or
Indirect Participant with respect to the ownership interest in the Book-Entry
Notes, (ii) the delivery to any Direct or Indirect Participant or any other
Person, other than a Holder of a Note as shown in the Note Register, of any
notice with respect to the Notes or (iii) the payment to any Direct or Indirect
Participant or any other Person, other than a Holder of a Note as shown in the
Note Register, of any amount with respect to any distribution of principal or
interest on the Notes. No Person other than a Holder of a Note as shown in the
Note Register shall receive a certificate evidencing such Note.
Upon delivery by the Depository to the Note Registrar of written notice
to the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the Holders of Notes
as shown in the Note Register on a Record Date, the name "Cede & Co." in this
Agreement shall refer to such new nominee of the Depository. The Note Registrar
shall provide a copy of such written notice to the Note Paying Agent.
(l) In the event that (i) the Depository or the Administrator advise the
Note Registrar in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Book-Entry Notes and neither the Depositors nor the Note Registrar is
able to locate a qualified successor or (ii) the Depositors at their sole option
elect to terminate the book-entry system through the Depository, the Book-Entry
Notes shall no longer be restricted to being registered in the Note Register in
the name of Cede & Co. (or a successor nominee) as nominee of the Depository. At
that time, the Depositors may determine that the Book-Entry Notes shall be
registered in the name of and deposited with a successor depository operating a
44
global book-entry system, as may be acceptable to the Administrator and at their
expense, or such depository's agent or designee but, if the Administrator does
not select such alternative global book-entry system, then the Book-Entry Notes
may be registered in whatever name or names Holders of Notes shall designate and
Definitive Notes issued, in accordance with the provisions hereof. The Note
Registrar shall provide a copy of such written notice to the Note Paying Agent.
(m) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Book-Entry Note is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Book-Entry Notes and all notices with respect to such Book-Entry Notes
shall be made and given, respectively, in the manner provided in the Depository
Representation Letter.
(n) A Person which becomes the Beneficial Owner of a Book-Entry Note
shall be deemed to make the representations set forth in Exhibit E to the Trust,
the Trustee, the Collateral Agent, the Note Paying Agent, the Note Registrar,
the Note Insurer, the other Noteholders and the Subordinated Certificateholders.
(o) No offer, sale, transfer or other disposition (including pledge) of
the Subordinated Certificates shall be made to any Person which is, or is
purchasing for, or on behalf of (1) an employee benefit plan, retirement
arrangement, individual retirement account or Xxxxx plan subject to either Title
I of the Employee Retirement Income Security Act of 1974, as amended, or Section
4975 of the Internal Revenue Code of 1986, as amended, or (2) an entity
(including an insurance company general account) whose underlying assets include
plan assets by reason of any such plan's arrangements or account's investment in
any such entity.
Section 3.7. Mutilated, Destroyed, Lost or Stolen Notes or Subordinated
Certificates.
If (a) any mutilated Note or Subordinated Certificate is surrendered to
the Note Registrar or the Certificate Registrar, as the case may be, or (b) the
Note Registrar or the Certificate Registrar, as the case may be, receives
evidence to its satisfaction of the destruction, loss or theft of any Note or
Subordinated Certificate and there is delivered to the Note Registrar or the
Certificate Registrar, as the case may be, such security or indemnity as may be
required by it to save it harmless, then, in the absence of written notice to
the Registrar that such Note or Subordinated Certificate has been acquired by a
bona fide purchaser, the Trustee on behalf of the Trust shall execute, and the
Note Registrar or the Certificate Registrar, as the case may be, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note or Subordinated Certificate, a new Note or
Subordinated Certificate of like original Principal Amount or Percentage
Interest. In connection with the issuance of any new Note or Subordinated
Certificate under this Section 3.7, the Note Registrar or the Certificate
Registrar, as the case may be, may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Note Registrar or the Certificate Registrar, as the case may be)
connected therewith. Any duplicate Note or Subordinated Certificate issued
pursuant to this Section 3.7 shall be duly authorized, validly issued, and
entitled to the benefits of this Agreement and shall constitute conclusive
evidence of ownership, as if originally issued, whether or not the lost, stolen
or destroyed Note or Subordinated Certificate shall be found at any time.
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Section 3.8. Persons Deemed Noteholders and Subordinated
Certificateholders.
Prior to due presentation of a Note or Subordinated Certificate for
registration of transfer, the Trustee, the Collateral Agent, the Note Paying
Agent, the Note Registrar or the Certificate Paying Agent and the Certificate
Registrar, as the case may be and their agents may treat the person in whose
name any Note or Subordinated Certificate is registered as the owner thereof for
the purpose of receiving payments or distributions pursuant to Section 4.2 and
for all other purposes whatsoever, and none of the Trustee, the Collateral
Agent, the Note Paying Agent, the Note Registrar or the Certificate Paying Agent
and the Certificate Registrar, as the case may be, or any of their agents shall
be affected by any notice to the contrary.
Section 3.9. Access to List of Noteholders' and Subordinated
Certificateholders' Names and Addresses.
(a) The Note Registrar shall furnish or cause to be furnished to the
Depositors, the Administrator, the Holder of the Special Interest or one or more
Subordinated Certificateholders holding not less than 25% of the Percentage
Interest of the Subordinated Certificates within 15 days after receipt by the
Note Registrar of a written request therefor, a list of the names and addresses
of the Noteholders as of the most recent Record Date for payments to
Noteholders. If three or more Noteholders, or one or more Noteholders holding
not less than 25% of the aggregate Principal Amount of the Notes (hereinafter
referred to as "Applicants"), apply in writing to the Note Registrar, and such
application states that the Applicants desire to communicate with other
Noteholders with respect to their rights under this Agreement or under the
Notes, then the Note Registrar shall, within five Business Days after the
receipt of such application, afford such Applicants access, during normal
business hours, to the current list of Noteholders. Every Noteholder, by
receiving and holding a Note, agrees that none of the Depositors, the Trustee,
the Note Insurer, the Note Paying Agent and Note Registrar or any of their
agents shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Noteholders under this
Agreement, regardless of the source from which such information was derived.
(b) The Certificate Registrar shall furnish or cause to be furnished to
the Depositors, the Administrator, or the Holder of the Special Interest within
15 days after receipt by the Registrar of a written request therefor, a list of
the names and addresses of the Subordinated Certificateholders as of the most
recent Record Date for distributions to Subordinated Certificateholders. If
three or more Subordinated Certificateholders, or one or more Subordinated
Certificateholders holding not less than 25% of the Percentage Interests
(hereinafter referred to as "Applicants"), apply in writing to the Certificate
Registrar, and such application states that the Applicants desire to communicate
with other Subordinated Certificateholders with respect to their rights under
46
this Agreement or under the Subordinated Certificates, then the Certificate
Registrar shall, within five Business Days after the receipt of such
application, afford such Applicants access, during normal business hours, to the
current list of Subordinated Certificateholders. Every Subordinated
Certificateholder, by receiving and holding a Subordinated Certificate, agrees
that none of the Depositors, the Trustee, the Note Insurer, the Certificate
Paying Agent, the Certificate Registrar or any of their agents shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Subordinated Certificateholders under this Agreement,
regardless of the source from which such information was derived.
Section 3.10. Disposition by the Holder of the Special Interest.
On and after the Closing Date, the Holder of the Special Interest shall
retain beneficial and record ownership of Subordinated Certificates representing
at least 1% (but not more than 99%) of the Percentage Interest. To the fullest
extent permitted by applicable law, any attempted transfer of any Subordinated
Certificate that would reduce such interest of the Holder of the Special
Interest below 1% of the Percentage Interest shall be void. The Trust
Certificate representing the 1% Special Interest issued to the Holder of the
Special Interest shall contain a legend stating "TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THIS CERTIFICATE IS NOT TRANSFERABLE."
ARTICLE IV
ADMINISTRATION OF COLLECTION ACCOUNT, RESERVE ACCOUNT
AND DISTRIBUTION ACCOUNT; CERTAIN DUTIES
Section 4.1. Collection Account, Reserve Account and Distribution
Account.
(a) The Collateral Agent shall establish and maintain the Collection
Account in the name of the Trust, which shall be an Eligible Account and
initially will be a segregated trust account maintained at the Collateral Agent
or an affiliate thereof and shall be entitled "The NELnet Group Trust I
Collection Account."
The Collateral Agent also shall establish and maintain the Reserve
Account in the name of the Trust, which shall be an Eligible Account and
initially will be a segregated trust account maintained at the Collateral Agent
or an affiliate thereof and shall be entitled "The NELnet Group Trust I Reserve
Account." The Reserve Account will be divided into two sub-accounts. On each
Payment Date, the Collateral Agent will transfer from the Collection Account to
the first sub-account of the Reserve Account the amount, if any, remaining in
the Collection Account on such Payment Date, after giving effect to payments
made pursuant to Section 4.2(a)(i) through (xi), inclusive, until the amount of
cash in the first sub-account of the Reserve Account equals the Specified
Reserve Account Requirement. For the purpose of funding the second sub-account
of the Reserve Account, the Trust shall deliver the Debt Service Reserve Surety
Bond to the Note Paying Agent. If on the Business Day prior to any Payment Date
(other than the first Payment Date), the amount in the Collection Account is
less than the amount to be paid on such Payment Date pursuant to Section
4.2(a)(i) through (vii), inclusive, the Collateral Agent shall withdraw from the
first sub-account of the Reserve Account and deposit in the Collection Account
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the lesser of (x) the amount then on deposit in the first sub-account of the
Reserve Account and (y) the amount of such shortfall. If on the Business Day
prior to any Payment Date (other than the first Payment Date) the amount on
deposit in the first sub-account of the Reserve Account would exceed the
Specified Reserve Account Requirement for such Payment Date (after giving effect
to all payments to be made on such Payment Date pursuant to Section 4.2(a) (i)
through (xiii), inclusive), the Collateral Agent shall withdraw from the first
sub-account of the Reserve Account and deposit in the Collection Account an
amount equal to such excess. For purposes of this Agreement, when the Note
Paying Agent is entitled to draw on the second sub-account of the Reserve
Account, the Note Paying Agent shall draw on the Debt Service Reserve Surety
Bond in the manner provided in Section 4.9 of this Agreement.
The Collateral Agent shall deposit in the Collection Account (within one
Business Day of receipt thereof) all amounts received on account of the
Underlying Residual Rights, any Optional Advances received pursuant to Section
4.8(a) and any Principal Subsidy Payments received pursuant to Section 4.8(b).
In connection therewith, the Depositors and the Administrator shall take, or
cause to be taken, all actions required or permitted under the terms of the
Indentures and the other Underlying Agreements so that amounts entitled to be
received on account of the Underlying Residual Rights and the Maintenance and
Operating Expenses are received in a timely manner to make payments on the
Notes. Such actions shall include, but not be limited to, the procedures set
forth in Section 2.10A.
The Trustee shall establish and maintain the Distribution Account in the
name of the Trust, which shall be an Eligible Account and initially will be a
segregated trust account maintained at Wilmington Trust Company or an affiliate
thereof and shall be entitled "The NELnet Group Trust I Distribution Account."
On each Payment Date, the Note Paying Agent shall withdraw all amounts
then on deposit in the Collection Account and apply the funds in the manner set
forth in Section 4.2 of this Agreement. The Note Paying Agent also shall deposit
in the Collection Account, promptly upon receipt thereof, all Surety Bond
Payments and Insured Payments received from the Note Insurer.
(b) The Trust will possess all right, title and interest in all funds on
deposit from time to time in the Collection Account, the Reserve Account and the
Distribution Account and all proceeds thereof subject to the terms of the
Security Agreement. The Note Paying Agent is authorized to draw upon the
Collection Account and the Reserve Account and the Certificate Paying Agent is
authorized to draw on the Distribution Account for the purposes of making all
payments therefrom required or permitted by this Agreement. If, at any time, the
Collection Account, the Reserve Account or the Distribution Account, ceases to
be an Eligible Account, the Collateral Agent, in the case of the Collection
Account and the Reserve Account, or the Trustee, in the case of the Distribution
Account, shall within five Business Days after a Responsible Officer thereof
shall obtain actual knowledge thereof (or such longer period, not to exceed 30
calendar days, as to which the Rating Agency may consent) establish a new
Collection Account, Reserve Account or Distribution Account, as the case may be,
as an Eligible Account and the Note Paying Agent shall transfer any cash and/or
any investments to such new Collection Account or Reserve Account, as the case
may be, or the Certificate Paying Agent shall transfer any cash and/or
investments to such new Distribution Account.
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(c) All amounts held in the Collection Account and the Reserve Account
shall be invested to the extent permitted by applicable laws, rules and
regulations, by the Collateral Agent at the written direction of the
Administrator in Eligible Investments that are payable on demand or mature not
later than one Business Day prior to the Payment Date to which such amounts
relate. Amounts held in the Distribution Account shall remain uninvested. In the
absence of directions by the Administrator, the Collateral Agent shall invest
all such amounts in Eligible Investments as defined in clause (ii) of the
definition thereof. Investments in Eligible Investments must be made in the name
of the Collateral Agent for the benefit of the Noteholders and the Note Insurer,
and, unless payable on demand at par, such investments may not be sold or
disposed of prior to their maturity. Any investment of funds must be made in
Eligible Investments held by a financial institution with respect to which (a)
such institution has noted the Collateral Agent's interest therein by book entry
or otherwise and (b) a confirmation of the Collateral Agent's interest has been
sent to the Collateral Agent by such institution, provided that such Eligible
Investments are (i) specific certificated securities, and (ii) either (A) in the
possession of such institution or (B) in the possession of a clearing
corporation in New York or Delaware, registered in the name of such clearing
corporation, not endorsed for collection or surrender or any other purpose not
involving transfer, not containing any evidence of a right or interest
inconsistent with the Collateral Agent's interest therein, and held by such
clearing corporation in an account of such institution. Subject to the other
provisions hereof, the Collateral Agent shall have sole control over each such
investment and the income thereon, and any certificate or other instrument
evidencing any such investment, if any, shall be delivered directly to the
Collateral Agent or its agent, together with each document of transfer, if any,
necessary to transfer title to such investment to the Collateral Agent in a
manner which complies with this Section 4.1. All interest, dividends, gains upon
sale and other income from, or earnings on investment of funds in the Collection
Account and the Reserve Account shall constitute part of the Amount Available
and shall be applied on the next Payment Date pursuant to Section 4.2(a) or
4.2(c), as the case may be. All investments of amounts on deposit in the
Collection Account also shall comply with the terms of the Security Agreement.
Neither the Trustee, the Administrator nor the Collateral Agent shall have any
liability for any losses on investments made in accordance with this Section
4.1.
Section 4.2. Use of Funds in Collection Account, Distribution Account
and Reserve Account.
(a) On each Payment Date, the Note Paying Agent, based solely upon the
information contained in the Payment Date Report delivered pursuant to Section
4.7, shall apply the sum of (i) the Amount Available, (ii) amounts transferred
from the first sub-account of the Reserve Account pursuant to Section 4.1(a),
and (iii) any Surety Bond Payments and Insured Payments received pursuant to
Section 4.9 in the following order of priority (provided, however, that (A)
Optional Advances may only be used for priorities (i), (ii), (iii), (iv) and (v)
below, (B) Principal Subsidy Payments may only be used for priority (vii) below
and (C) Surety Bond Payments and, prior to the Maturity Date of the Notes,
Insured Payments may only be used for priority (v) below):
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(i) first, to the Trustee, an amount equal to the accrued and
unpaid Trustee Fee for such period pursuant to Section 6.1;
(ii) second, to the Collateral Agent, an amount equal to the
accrued and unpaid Collateral Agent Fee for such Payment Date;
(iii) third, to the Note Insurer, an amount equal to the accrued
and unpaid Note Insurer Premiums for such Payment Date;
(iv) fourth, to the Administrator, an amount equal to the
accrued and unpaid Administration Fees for such Payment Date;
(v) fifth, to the Noteholders, the Interest Amount; provided,
however, if the portion of the amount remaining in the Collection Account after
application of clauses (i), (ii), (iii) and (iv) above is less than the Interest
Amount, such remaining amount shall be paid to the Noteholders on a pro rata
basis according to the Principal Amount of the respective Notes held by such
Noteholders;
(vi) sixth, to the Note Insurer, in respect of amounts owed on
account of any Surety Bond Payments previously made, together with interest
accrued thereon at the rate set forth in the Financial Guaranty Agreement;
(vii) seventh, to the Noteholders, on a pro rata basis according
to the Principal Amount of the respective Notes held by such Noteholders, an
amount equal to the Principal Payment Amount;
(viii) eighth, to the Noteholders, on a pro rata basis according
to the Principal Amount of the respective Notes held by such Noteholder, an
amount equal to the Special Principal Payment, if any, for such Payment Date;
(ix) ninth, to reimburse the Administrator for any unreimbursed
Optional Advances made pursuant to Section 4.8(a);
(x) tenth, to the Note Insurer, in respect of amounts owed on
account of any Insured Payments previously made, together with interest accrued
thereon at the rate set forth in the Insurance Agreement;
(xi) eleventh, to the Trustee, any unpaid indemnification
payments required to be made pursuant to Section 5.8;
(xii) twelfth, to the first sub-account of the Reserve Account
until the amount on deposit therein equals the Specified Reserve Account
Requirement for such Payment Date;
(xiii) thirteenth, to the Note Insurer, any unpaid Reimbursement
Amounts; and
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(xiv) fourteenth, any remainder to Certificate Paying Agent for
deposit in the Distribution Account.
On each Payment Date, the Certificate Paying Agent shall remit all
amounts it receives pursuant to clause (xiv) above to the Subordinated
Certificateholders according to their respective Percentage Interests.
(b) If any withholding tax is imposed on the payments or distributions
by the Trust (or allocations of income) to a Noteholder or Subordinated
Certificateholder, such tax shall reduce the amount otherwise distributable to
the Noteholder or Subordinated Certificateholder in accordance with this Section
4.2. The Note Paying Agent or the Certificate Paying Agent, as the case may be,
is hereby authorized to retain from amounts otherwise distributable to the
Noteholders or Subordinated Certificateholders sufficient funds for the payment
of any tax that is legally owed by the Trust. The amount of any withholding tax
so imposed shall be treated as cash paid to such Noteholder or distributed to
such Subordinated Certificateholder at the time it is withheld by the Trust and
remitted to the appropriate taxing authority. If there is a possibility that
withholding tax is payable, the Note Paying Agent or the Certificate Paying
Agent, as the case may be, may in its sole discretion withhold such amounts in
accordance with this Section 4.2(b). If a Noteholder or Subordinated
Certificateholder wishes to apply for a refund of any such withholding tax, the
Note Paying Agent or the Certificate Paying Agent, as the case may be, shall
reasonably cooperate with such Noteholder or Subordinated Certificateholder in
making such claim so long as such Noteholder or Subordinated Certificateholder
agrees to reimburse the Note Paying Agent or the Certificate Paying Agent, as
the case may be, for any out-of-pocket expenses incurred.
(c) If on the Business Day prior to any Payment Date, the amount in the
Collection Account is less than the amount to be paid on such Payment Date
pursuant to Section 4.2(a)(i), (ii), (iii), (iv) and (v) (such shortfall, the
"Collection Account Shortfall"), the Note Paying Agent shall be entitled to
withdraw from the Reserve Account and deposit in the Collection Account the
lesser of (x) the Debt Service Available Amount and (y) the Collection Account
Shortfall. Such withdrawal from the Reserve Account shall be accomplished by the
Note Paying Agent drawing on the Debt Service Reserve Surety Bond in the manner
provided in Section 4.9 of this Agreement.
Section 4.3. Method of Payment or Distribution.
Payments required to be made to Noteholders and distributions required
to be made to Subordinated Certificateholders on any Payment Date shall be made
to each Holder of record on the preceding Record Date either by wire transfer,
in immediately available funds, to the account of each such Holder at a bank or
other entity having appropriate facilities therefor, if such Holder shall have
provided to the Note Paying Agent or the Certificate Paying Agent, as
applicable, appropriate written instructions at least five Business Days prior
to such Payment Date (which may be represented by a single continuing request)
or, if not, by check mailed to such Holder at the address of such Holder
appearing in the Note Register or Certificate Register.
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Section 4.4. No Segregation of Moneys; No Interest.
Moneys hereunder need not be segregated in any manner except to the
extent required by law or by Sections 4.1 or 4.2 and may be deposited under such
general conditions as may be prescribed by law, and neither the Trustee nor the
Paying Agent shall be liable for any interest thereon.
Section 4.5. Accounting; Reports; Tax Returns.
(a) The Holder of the Special Interest shall (i) maintain (or cause to
be maintained) the books of the Trust on a calendar-year basis on the accrual
method of accounting, (ii) deliver (or cause to be delivered) to each Noteholder
and Subordinated Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required, including
Form 1099 with respect to each Noteholder or Schedule K-l with respect to each
Subordinated Certificateholder, to enable each Holder to prepare its federal and
state income tax returns, (iii) file or cause to be filed such tax returns
relating to the Trust (including a partnership information return, Form 1065),
and make such elections as may from time to time be required or appropriate
under any applicable state or federal statute or rule or regulation thereunder
so as to maintain the Trust's characterization as a partnership for federal
income tax purposes and (iv) collect or cause to be collected any withholding
tax as described in and in accordance with Section 4.2(b) with respect to income
or distributions to Noteholders or Subordinated Certificateholders.
(b) The Trustee shall sign on behalf of the Trust the tax returns of the
Trust furnished to it in execution form by the Holder of the Special Interest,
unless applicable law requires a Subordinated Certificateholder to sign such
documents, in which case such documents shall be signed by the Holder of the
Special Interest. The Holder of the Special Interest shall be the "tax matters
partner" of the Trust pursuant to the Code and shall sign on behalf of the Trust
the tax returns of the Trust.
Section 4.6. Optional Redemption of Notes.
(a) On any day following the Payment Date on which the outstanding
Principal Amount of the Notes equals 10% or less of the original Principal
Amount of the Notes, the Administrator shall have the option to purchase all of
the Underlying Residual Rights and the Maintenance and Operating Expenses. To
exercise such option the Administrator shall deposit into the Collection Account
an amount equal to the sum of (i) the Principal Amount of the Notes, plus any
unpaid interest thereon through the date of redemption, and (ii) any
unreimbursed Surety Bond Payments and Insured Payments, any amounts due and
owing to the Note Insurer under the Insurance Agreement and the Financial
Guaranty Agreement and all other accrued and unpaid expenses of the Trust.
(b) The Note Paying Agent shall mail written notice to the Noteholders
(with a copy to each Rating Agency and the Note Insurer) specifying (i) the date
upon which the final payment with respect to the Notes shall be made upon
presentation and surrender of the Notes at the office of the Note Paying Agent
therein specified, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Payment Date is not applicable, payment
being made only upon presentation and surrender of the Notes at the office of
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the Note Paying Agent therein specified. Upon the giving of such notice and the
Administrator's making provision for payment of the Notes, the Notes shall be
deemed to be paid and any amounts in the Collection Account and Reserve Account
not required for the payment of the Notes shall be distributable (i) first to
the Note Insurer for any unreimbursed Surety Bond Payments and Insured Payments,
(ii) second, to the Administrator, to the extent of any unreimbursed Optional
Advances, and then (iii) third, to the Certificate Paying Agent for distribution
to the Subordinated Certificateholders according to their respective Percentage
Interests. The Note Paying Agent shall cause to be paid to Noteholders the final
payment with respect to the Notes only upon presentation and surrender of the
Notes.
(c) If all the Noteholders shall not surrender their Notes for
cancellation within six months after the date specified in the above-mentioned
written notice, the Note Paying Agent shall give a second written notice to the
remaining Noteholders (with a copy to each Rating Agency and the Note Insurer)
to surrender their Notes for cancellation and receive the final payment with
respect thereto. If within one year after the second notice all the Notes shall
not have been surrendered for cancellation, the Note Paying Agent may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Noteholders concerning surrender of their Notes, and the cost
thereof shall be paid out of the funds and other assets that remain subject to
this Agreement. Subject to applicable escheat laws, any funds remaining in the
Trust which are payable to Noteholders after the Note Paying Agent shall have
taken such measures shall be distributed by the Note Paying Agent to the
Certificate Paying Agent for distribution to the Subordinated Certificateholders
(but only upon termination of this Agreement) and the Noteholders, by acceptance
of their Notes, hereby waive any rights with respect to such funds against the
Trust, the Trustee, the Collateral Agent, the Note Paying Agent, the Note
Insurer or the Certificate Paying Agent and shall look only to the Subordinated
Certificateholders.
Section 4.7. Reports.
(a) No later than each Payment Date, the Note Paying Agent, based solely
from the information provided by the Administrator, shall prepare a "Payment
Date Report" substantially in the form of Exhibit D attached hereto and shall
provide such Payment Date Report (together with copies of each report or notice,
if any, furnished to the Note Paying Agent by the Trustee and received by the
Trustee from the trustees of each of the Indentures since the last Payment Date)
to each Noteholder and the Note Insurer on each such Payment Date.
(b) Within 45 days after the end of each calendar year, the Note Paying
Agent shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Note and the Note Insurer a
statement containing the information with respect to payments of interest on and
principal of such Holder's Note made during such calendar year. Such obligation
of the Note Paying Agent shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Note Paying
Agent pursuant to any requirements of the Code as from time to time in force.
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(c) Copies of all reports provided by the Note Paying Agent to the
Noteholders shall also be provided to the Rating Agency, the Note Insurer and to
the Certificate Paying Agent for distribution to the Subordinated
Certificateholders.
(d) The Administrator shall cooperate with the Note Paying Agent in
preparing the reports required to be provided pursuant to this Section 4.7 and,
in such regard, shall provide the Note Paying Agent and the Trustee with all
information necessary to prepare the Payment Date Reports no later than noon New
York City time 3 Business Days prior to the related Payment Date.
Section 4.8. Optional Advances and Principal Subsidy Payments.
(a) If for any Payment Date the Interest Amount would exceed the sum of
the aggregate amount in the Collection Account (less the amount to be paid on
such Payment Date pursuant to Section 4.2(a)(i), (ii), (iii) and (iv) above),
the Administrator, in its sole option, may elect to deposit, or have an
affiliate deposit, in the Collection Account (no later than the Business Day
immediately preceding such Payment Date) an amount up to the amount of such
deficiency (such deposit is referred to as an "Optional Advance"). Optional
Advances, if any, shall be recoverable, without interest, by the Administrator
pursuant to Sections 4.2(a)(ix) and 7.3(vii) hereof.
(b) If for any Payment Date, the amount that will be remaining in the
Collection Account after application of Section 4.2(a)(i), (ii), (iii), (iv),
(v) and (vi) is less than the amount needed to reduce the Recalculated Targeted
Amount of the Notes to the Targeted Balance for such Payment Date, the Trust, in
the Administrator's sole option, may elect to deposit in the Collection Account
(no later than the Business Day immediately preceding such Payment Date) an
amount up to the amount of such deficiency (such deposit is referred to as a
"Principal Subsidy Payment"). Principal Subsidy Payments shall not be
recoverable by the Trust.
(c) If for any Payment Date an Optional Advance or Principal Subsidy
Payment will be made, the Administrator shall provide written notice thereof to
each Rating Agency.
Section 4.9. The Policies.
(a) As soon as possible, and in no event later than 10:00 A.M., New York
time, on the Business Day immediately preceding each Payment Date, the Note
Paying Agent shall furnish the Note Insurer and the Administrator with a
completed notice in the form set forth as Exhibit I hereto (the "Notice") in the
case of a draw under the Note Insurance Policy and a completed demand for
payment in the form set forth as Exhibit J hereto (the "Demand for Payment"), in
the case of a draw under the Debt Service Reserve Surety Bond, which will be
based upon the information set forth in the Administrator's report provided
pursuant to Section 4.7(d), that an Insured Payment or a Surety Bond Payment
will be required with respect to such Payment Date. The Notice or the Demand for
Payment shall specify the total amount of the Insured Payment or Surety Bond
Payment, as the case may be, to be paid on the applicable Payment Date, and
shall constitute a claim for a Surety Bond Payment or an Insured Payment, as the
54
case may be, pursuant to the Debt Service Reserve Surety Bond or the Note
Insurance Policy, respectively. The Note Insurer shall remit or cause to be
remitted to the Insurance Paying Agent the amount of the Surety Bond Payment or
Insured Payment, as the case may be. Upon receipt of such Surety Bond Payment or
Insured Payment by the Insurance Paying Agent on behalf of the Noteholders, it
shall remit such amounts to the Collateral Agent, who shall deposit such Surety
Bond Payment or Insured Payment, as the case may be, in the Collection Account.
The Note Paying Agent shall serve as Insurance Paying Agent hereunder
for so long as the Debt Service Reserve Surety Bond or the Note Insurance Policy
shall remain in effect; provided, however, that the Insurance Paying Agent may
be located in another jurisdiction with the written consent of the Note Insurer.
The Insurance Paying Agent shall act as the agent of the Note Paying Agent and
shall (i) pay Surety Bond Payments and Insured Payments received from the Note
Insurer as the Note Paying Agent shall direct and (ii) take such other actions
with respect to the Note Insurer and the Policies as the Note Paying Agent shall
direct. The Note Paying Agent shall act initially as the Insurance Paying Agent.
The Note Paying Agent shall receive through the Insurance Paying Agent,
as attorney-in-fact of each Holder of Notes, any Surety Bond Payments and
Insured Payments from the Note Insurer and disburse the same to each Holder of
Notes in accordance with the provisions of this Article IV. Surety Bond Payments
and Insured Payments disbursed by the Note Paying Agent from proceeds of the
Policies shall not be considered payment by the Trust nor shall such payments
discharge the obligation of the Trust with respect to such Notes, and the Note
Insurer shall become the owner of the right to receive such unpaid amounts due
from the Trust in respect of the Notes. The Note Paying Agent hereby agrees on
behalf of each Holder of Notes for the benefit of the Note Insurer that it
recognizes that to the extent the Note Insurer makes Surety Bond Payments or
Insured Payments, either directly or indirectly (as by paying through the
Insurance Paying Agent), to the Noteholders, the Note Insurer will be subrogated
to the rights of the Noteholders with respect to such Surety Bond Payment or
Insured Payment, as the case may be, shall be deemed to the extent of the
payments so made to be a registered Noteholder and shall receive available funds
in accordance with Section 4.2 until all such Surety Bond Payments and Insured
Payments by the Note Insurer have been fully reimbursed. To evidence such
subrogation, the Note Paying Agent shall, or shall cause the Note Registrar to,
note the Note Insurer's rights as subrogee on the registration books maintained
by the Note Registrar upon receipt from the Note Insurer of proof of payment of
any Surety Bond Payment or Insured Payment.
ARTICLE V
THE TRUSTEE, THE COLLATERAL AGENT, THE NOTE PAYING AGENT, THE CERTIFICATE
PAYING AGENT, THE NOTE REGISTRAR AND THE CERTIFICATE REGISTRAR
Section 5.1. General Authority and Duties.
(a) The Trustee shall have power and authority and hereby is authorized
and empowered in the name and on behalf of the Trust to execute and deliver the
Related Documents to which the Trust is to be a party and each certificate or
55
other document attached as an exhibit to or contemplated by this Agreement or
the Related Documents to which the Trust is to be a party. In addition to the
foregoing, the Trustee shall have power and authority and hereby is authorized
and empowered in the name on behalf of the Trust, but shall not be obligated, to
take all actions required of the Trust or the Trustee pursuant to this Agreement
or any of the Related Documents.
(b) None of the Trustee, the Collateral Agent, the Note Paying Agent,
the Certificate Paying Agent, the Note Registrar and the Certificate Registrar
may manage, control, use, sell, dispose of or otherwise deal with any part of
the Trust Property except (i) in accordance with the powers granted to and the
authority conferred pursuant to this Agreement, (ii) in accordance with the
Related Documents and (iii) in accordance with any document or instruction
delivered to the Trustee, the Collateral Agent, the Note Paying Agent or the
Note Registrar pursuant to Section 5.2.
(c) Each of the Trustee, the Collateral Agent, the Note Paying Agent,
the Certificate Paying Agent, the Note Registrar and the Certificate Registrar
accepts the trusts hereby created, and agrees to perform its duties hereunder
but only such duties as are specifically set forth in this Agreement. None of
the Trustee, the Collateral Agent, the Note Paying Agent, the Certificate Paying
Agent, the Note Registrar and the Certificate Registrar shall be answerable or
accountable or personally liable hereunder or under any Related Document under
any circumstances, except to the Trust, the Note Insurer and the Subordinated
Certificateholders (i) for its own gross negligence or bad faith, (ii) in the
case of the inaccuracy of any representation or warranty made by it and
contained in Section 5.4, (iii) if it is the obligor (other than in its
fiduciary capacity) on an Eligible Investment or (iv) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by it in connection with any of the transactions contemplated by this
Agreement or any Related Document. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence), none of the
Trustee, the Collateral Agent, the Note Paying Agent, the Certificate Paying
Agent, the Note Registrar and the Certificate Registrar shall:
(i) be liable for: (1) any error of judgment made in good faith;
(2) any action taken or omitted to be taken by it in good faith in
accordance with the instructions of the Subordinated Certificateholders
or the Administrator or instructions otherwise pursuant to this
Agreement or the Related Documents; (3) indebtedness evidenced by or
arising under any of the Related Documents; or (4) the default or
misconduct of the Depositors or the Administrator under this Agreement
or any of the Related Documents or otherwise;
(ii) be responsible for or in respect of the validity or
sufficiency of this Agreement or for the due execution hereof by the
Depositors or the Administrator or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Property or for or in
respect of the validity or sufficiency of the Related Documents, other
than the certificate of authentication on the Notes and the Subordinated
Certificates, and shall not assume or incur any liability, duty, or
obligation to the Depositors, the Administrator or any Noteholder or
Subordinated Certificateholder, other than as expressly provided for
herein and in the Related Documents; or
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(iii) be obligated to exercise any of the rights or powers vested
in it by this Agreement or any Related Document, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Related Document, at the request,
order or direction of the Noteholders or the Subordinated
Certificateholders, unless the Noteholders or the Subordinated
Certificateholders have offered to it security or indemnity satisfactory
to it against the costs, expenses and liabilities that may be incurred
by it therein or thereby.
(d) The right of the Trustee, the Collateral Agent, the Note Registrar,
the Certificate Registrar, the Note Paying Agent, or the Certificate Paying
Agent to perform any discretionary act enumerated in this Agreement or in any
Related Document shall not be construed as a duty.
(e) Without limiting the generality of the foregoing, the Trustee, the
Collateral Agent, the Note Paying Agent, the Certificate Paying Agent, the Note
Registrar and the Certificate Registrar:
(i) may rely on and shall be protected in acting in good faith
upon the written instructions of the Note Insurer, or the Subordinated
Certificateholders and such employees and representatives of the Note Insurer,
or the Subordinated Certificateholders may hereinafter designate in writing; and
(ii) shall not be liable for any error of judgment, or for any
act done or step taken or omitted by it, in good faith, or for any mistake of
fact or law, or for anything that it may do or refrain from doing in connection
therewith, except in the case of gross negligent performance or omission or bad
faith.
Section 5.2. Action Upon Instruction.
(a) Except as otherwise set forth herein, the Note Insurer or, with the
consent of the Note Insurer, the Subordinated Certificateholders shall have the
exclusive right to direct the actions of the Trustee in the management of the
Trust (including all rights exercisable by the Trust with respect to the Trust
Property) and the actions of the Collateral Agent, the Note Paying Agent, the
Certificate Paying Agent, the Note Registrar and the Certificate Registrar in
the performance of their duties hereunder, in each case, so long as such
directions are not inconsistent with the express terms set forth herein or in
any Related Document.
(b) None of the Trustee, the Collateral Agent, the Note Paying Agent,
the Certificate Paying Agent, the Note Registrar or the Certificate Registrar
shall be required to take any action hereunder or under any Related Document if
it shall have reasonably determined, or shall have been advised by counsel, that
such action is contrary to the terms hereof or of any Related Document or is
otherwise contrary to law or may result in liability on the part of the Trustee,
the Collateral Agent, the Note Paying Agent, the Certificate Paying Agent, the
Note Registrar or the Certificate Xxxxxxxxx
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(c) None of the Trustee, the Collateral Agent, the Note Paying Agent,
the Certificate Paying Agent, the Note Registrar and the Certificate Registrar
may take any action (a) that is inconsistent with the purposes of the Trust set
forth in Section 2.3 or (b) that, to the actual knowledge of a Responsible
Officer, would result in the Trust's becoming taxable as a corporation for
federal income tax purposes. The Note Insurer and the Subordinated
Certificateholders may not direct taking action that would violate the
provisions of this Section. Subject to the foregoing:
(i) Whenever the Trustee receives a request for the Trustee's
consent to any amendment, modification or waiver with respect to the
Indentures or any document relating thereto, or receives any other
solicitation for any action with respect to the Indentures or Underlying
Residual Rights, the Trustee shall promptly give notice to the
Noteholders, the Subordinated Certificateholders and the Note Insurer
requesting instructions as to the course of action to be adopted and, to
the extent it acts in good faith in accordance with any written
instructions received from the Holders of a majority of the Principal
Amount of the Notes, the Holders of a majority of the Percentage
Interests of the Subordinated Certificates and the Note Insurer, it
shall not be liable on account of such action to any Person; provided,
however, that the Trustee shall not vote in favor of or consent to any
matter (i) which would alter the timing or amount of any payment on the
Underlying Residual Rights or (ii) which would result in the exchange or
substitution of any Underlying Residual Rights pursuant to a plan for
the refunding or refinancing of such Underlying Residual Rights, except
in each case with the unanimous consent of the Noteholders.
(ii) Whenever the Trustee, the Collateral Agent, the Note Paying
Agent, the Certificate Paying Agent, the Note Registrar or the
Certificate Registrar, is unable to decide between alternative courses
of action permitted or required by the terms of this Agreement or any
Related Document, it shall promptly give notice to the Note Insurer and
the Subordinated Certificateholders requesting instruction as to the
course of action to be adopted, and to the extent it acts in good faith
in accordance with any written instruction received from the Holders of
a majority of Percentage Interests of the Subordinated Certificates and
the Note Insurer, it shall not be liable on account of such action to
any Person.
(iii) If the Trustee, the Collateral Agent, the Note Paying
Agent, the Certificate Paying Agent, the Note Registrar or the
Certificate Registrar is unsure as to the application of any provision
of this Agreement or any Related Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict
with any other applicable provision, or if this Agreement permits any
determination by it or is silent or is incomplete as to the course of
action that it is required to take with respect to a particular set of
facts, it may give notice to the Note Insurer and the Subordinated
Certificateholders requesting instruction and, to the extent that it
acts or refrains from acting in good faith in accordance with any
instruction received from the Holders of a majority of Percentage
Interests of the Subordinated Certificates and the Note Insurer, it
shall not be liable, on account of such action or inaction, to any
Person.
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(iv) If the Trustee, the Collateral Agent, the Note Paying Agent,
the Certificate Paying Agent, the Note Registrar or the Certificate
Registrar shall not have received appropriate instruction within 10 days
of any notice given pursuant to the foregoing clauses (i), (ii) or (iii)
(or within such shorter period of time as reasonably may be specified in
any such notice or may be necessary under the circumstances), it may,
but shall be under no duty to, take or refrain from taking such action,
not inconsistent with this Agreement or the Related Documents, as it
shall deem to be in the best interests of the Noteholders, the Note
Insurer and, after the Notes have been paid in full, the Subordinated
Certificateholders and shall have no liability to any Person for such
action or inaction.
Section 5.3. No Duties Except as Specified in This Agreement or in
Instructions; Not Acting in Individual Capacity.
(a) None of the Trustee, the Collateral Agent, the Note Paying Agent,
the Certificate Paying Agent, the Note Registrar or the Certificate Registrar
shall have any duty or obligation to manage, make any payment with respect to,
register, record, sell, dispose of, or otherwise deal with the Trust Property,
or to otherwise take or refrain from taking any action under, or in connection
with this Agreement, any Related Document, or any document contemplated hereby
or thereby, except as expressly provided by the terms of this Agreement or any
Related Document or in any written instruction received pursuant to Section 5.2;
and no implied duties or obligations shall be read into this Agreement or any
Related Document against the Trustee, the Collateral Agent, the Note Paying
Agent, the Certificate Paying Agent, the Note Registrar or the Certificate
Registrar. None of the Trustee, the Collateral Agent, the Note Paying Agent, the
Certificate Paying Agent, the Note Registrar or the Certificate Registrar shall
have any responsibility to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Related
Document.
(b) Except as otherwise expressly provided in this Article V (and
particularly Section 5.1), in accepting the trusts hereby created Wilmington
Trust Company acts solely as Trustee hereunder and not in an individual
capacity, and all Persons having any claim against the Trustee by reason of the
transactions contemplated by this Agreement or any Related Document shall look
only to the Trust Property for payment or satisfaction thereof.
(c) Notwithstanding anything in this agreement to the contrary in the
event of gross negligence, lack of good faith or willful misconduct (as
determined by a court of competent jurisdiction) of the Collateral Agent, the
Note Registrar or the Note Paying Agent or any of its directors, officers,
agents or employees, the Collateral Agent, the Note Registrar and the Note
Paying Agent and any of its directors, officers, agents and employees shall be
liable to the Note Insurer for the amount of any Insured Payment or Surety Bond
Payment and any charges, fees, costs and expenses the Note Insurer may pay or
incur, including but not limited to attorneys' fees, in connection with the
payment of a claim under the Policies due to the gross negligence, lack of good
faith or willful misconduct of the Collateral Agent, the Note Registrar or the
Note Paying Agent or any of its directors, officers, agents or employees;
provided, however, in no event shall the Trustee, the Collateral Agent, the Note
Paying Agent, the Certificate Paying Agent, the Note Registrar and the
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Certificate Registrar be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Trustee, the Collateral Agent, the Note Paying Agent, the Certificate
Paying Agent, the Note Registrar and the Certificate Registrar have been advised
of the likelihood of such loss or damage and regardless of the form of action.
Section 5.4. Representations and Warranties.
(a) The Trustee hereby represents and warrants to the Depositors, the
Administrator, the Noteholders and the Subordinated Certificateholders that:
(i) It is a banking corporation and trust company duly organized
and validly existing in good standing under the laws of Delaware and has
its principal office within the State of Delaware.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement and each Related Document
to which the Trust is a party.
(iii) It is eligible to act as Trustee pursuant to Section
9.1(a).
(iv) Neither the execution nor the delivery by it of this
Agreement, nor the performance by it of its obligations contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or Delaware state law, governmental rule or
regulation governing the banking or trust powers of the Trustee or any
judgment or order binding on it, or constitute any default under its
charter documents or by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
(b) Each of the Note Registrar and the Note Paying Agent hereby
represents and warrants to the Note Insurer, the Depositors, the Administrator,
the Noteholders and the Subordinated Certificateholders that:
(i) It is a banking corporation and trust company duly organized
and validly existing in good standing under the laws of the State of New
York.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement and each Related Document
to which it is a party.
(iii) Neither the execution nor the delivery by it of this
Agreement, nor the performance by it of its obligations contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or New York State law, governmental rule or
regulation governing the banking or trust powers of the Note Registrar
or Note Paying Agent or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a
party or by which any of its properties may be bound.
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Section 5.5. Reliance; Advice of Counsel.
(a) Each of the Trustee, the Collateral Agent, the Note Paying Agent,
the Certificate Paying Agent, the Note Registrar and the Certificate Registrar
may conclusively rely on and shall be fully protected in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. A certified copy of
a resolution of the board of directors or other governing body of any corporate
party or other entity shall be conclusive evidence that such resolution has been
duly adopted by such body and that the same is in full force and effect and as
to any fact or matter the method of the determination of which is not
specifically prescribed herein, a certificate, signed by the president or any
vice president or by the treasurer or secretary or other authorized officer of
the relevant party, as to such fact or matter, shall constitute full protection
for any action taken or omitted to be taken by the Trustee, the Collateral
Agent, the Note Paying Agent, the Certificate Paying Agent, the Note Registrar
and the Certificate Registrar in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Related
Documents, each of the Trustee, the Collateral Agent, the Note Paying Agent, the
Certificate Paying Agent, the Note Registrar and the Certificate Registrar (i)
may, at the expense of the Holder of the Special Interest, act directly or
through its agents or attorneys pursuant to agreements entered into with any of
them, and shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by it with
reasonable care and (ii) may, at the expense of the Holder of the Special
Interest, consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. None of the Trustee, the
Collateral Agent, the Note Paying Agent, the Certificate Paying Agent, the Note
Registrar and the Certificate Registrar shall be liable for anything done,
suffered or omitted in good faith by it in accordance with the written opinion
or advice of any such counsel, accountants or other such persons.
Section 5.6. May Own Notes.
Each of the Trustee, the Collateral Agent, the Note Paying Agent, the
Certificate Paying Agent, the Note Registrar and the Certificate Registrar in
its individual or any other capacity may become the owner or pledgee of Notes
and may deal with the Depositors and the Administrator in banking or other
transactions with the same rights as it would have if it were not acting in such
capacity.
Section 5.7. Doing Business in Other Jurisdictions.
Notwithstanding anything contained herein to the contrary, the Trustee,
the Collateral Agent, the Note Registrar and the Note Paying Agent shall not be
required to take any action in any jurisdiction other than in the State of
Delaware if the taking of such action will: (i) require the consent or approval
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or authorization or order of or the giving of notice to, or the registration
with or the taking of any other action in respect of, any state or other
governmental authority or agency of any jurisdiction other than the State of
Delaware; (ii) result in any fee, tax or other governmental charge under the
laws of any jurisdiction or any political subdivisions thereof in existence on
the date hereof other than the State of Delaware becoming payable by the
Trustee, the Collateral Agent, the Note Registrar or the Note Paying Agent in
its individual capacity; or (iii) subject the Trustee, the Collateral Agent, the
Note Registrar or the Note Paying Agent in its individual capacity to personal
jurisdiction in any jurisdiction other than the State of Delaware for causes of
action arising from acts unrelated to the consummation of the transactions by
the Trustee, the Collateral Agent, the Note Registrar or the Note Paying Agent
as the case may be, contemplated hereby.
Section 5.8. Indemnification.
The Holder of the Special Interest shall indemnify, defend and hold
harmless the Trustee (in its individual and trust capacities), the Collateral
Agent, the Note Registrar and the Note Paying Agent and their successors,
assigns, directors, officers, employees, agents and servants (collectively, the
"Indemnified Parties") from and against, any and all liabilities, obligations,
losses, damages, taxes (other than income taxes related to the Trustee Fees),
claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever (collectively, "Expenses") which may at any time be imposed
on, incurred by, or asserted against the Trustee or any Indemnified Party in any
way relating to or arising out of this Agreement, the Related Documents, the
Trust Property, the administration of the Trust or the Trust Property or the
action or inaction of the Trustee, the Certificate Paying Agent, the Collateral
Agent, the Note Registrar, the Note Paying Agent or the Certificate Registrar
hereunder, except only that the Holder of the Special Interest shall not be
liable for or required to indemnify the Trustee from and against Expenses
arising or resulting from any of the matters described in Section 5.9 (i) or
(ii). The indemnities contained in this Section shall survive the resignation or
termination of the Trustee, the Collateral Agent, the Note Registrar or the Note
Paying Agent or the termination of this Agreement. In any event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Trustee's choice of legal counsel shall be subject to the approval
of the Holder of the Special Interest, which approval shall not be unreasonably
withheld.
Section 5.9. Acceptance of Trusts and Duties.
The Trustee accepts the trusts hereby created and agrees to perform its
duties hereunder with respect to such trusts but only upon the terms of this
Agreement. The Trustee also agrees to disburse all moneys actually received by
it constituting part of the Trust Estate upon the terms of the Related Documents
and this Agreement. The Trust Company shall not be answerable or accountable
hereunder or under any Related Document under any circumstances, except to the
Trust, the Note Insurer and the Subordinated Certificateholders (i) for its own
willful misconduct, bad faith or gross negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 5.4 expressly
made by the Trust Company. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):
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(a) the Trust Company shall not be liable for any error of judgment;
(b) the Trust Company shall not be liable with respect to any action
taken or omitted to be taken by the Trustee, the Certificate Paying Agent, or
the Certificate Registrar in accordance with the instructions of the Trustee,
the Administrator, the Holder of the Special Interest, or any Subordinated
Certificateholder, instructions otherwise in accordance with this Agreement or
any Related Document, or in reliance on any provision of this Agreement;
(c) no provision of this Agreement or any Related Document shall require
the Trust Company to expend or risk funds or otherwise incur any financial
liability in the performance of any rights or powers hereunder or under any
Related Document if the Trust Company shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Trust Company be liable for the
Subordinated Certificates or any amount due and owing thereon, any other
interest in or indebtedness of the Trust, or indebtedness evidenced by or
arising under any of the Related Documents, including the principal of and
interest on the Notes;
(e) the Trust Company shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by any
other party hereto, or for the form, character, genuineness, sufficiency, value
or validity of any of the Trust Property or for or in respect of the validity or
sufficiency of the Related Documents, other than the certificate of
authentication on the Subordinated Certificates, and the Trust Company shall in
no event assume or incur any liability, duty or obligation to any Noteholder or
to any Subordinated Certificateholder or other Person, other than as expressly
provided for herein;
(f) the Trust Company shall not be liable for the default or misconduct
of the Trustee or Holder of the Special Interest or the Depositors or the
Administrator or the Holders or the Registrar (if not the Trustee) or the Paying
Agent (if not the Trustee) under any of the Related Documents or otherwise and
the Trust Company shall have no obligation or liability to monitor or insure
compliance by the Trustee or the Holder of the Special Interest or the
Depositors or the Administrator or the Holders or the Registrar (if not the
Trustee) or the Paying Agent (if not the Trustee) with any agreement to which it
is a party or to perform the obligations of the Trust under this Agreement or
the Related Documents that are not expressly required to be performed by the
Trustee under this Agreement; and
(g) the Trustee, Certificate Paying Agent, Collateral Agent, Note
Registrar, Note Paying Agent and Certificate Registrar shall be under no
obligation to exercise any of the rights or powers vested in it by this
Agreement or any Related Document, or to institute, conduct or defend any
litigation under this Agreement or otherwise or in relation to this Agreement or
any Related Document, at the request, order or direction of any of the
Administrator, the Subordinated Certificateholders or Noteholders or otherwise,
unless such Administrator, Subordinated Certificateholders or Noteholders have
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offered to the Trustee, Collateral Agent, Note Registrar or Note Paying Agent
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Trustee therein or thereby. The right of
the Trustee, the Certificate Paying Agent, Collateral Agent, Note Registrar,
Note Paying Agent or the Certificate Registrar to perform any discretionary act
enumerated in this Agreement or in any Related Document shall not be construed
as a duty, and, except as otherwise provided in Section 5.9 (i) and (ii), the
Trust Company shall not be answerable in the performance of any such act.
Section 5.10. Trustee, Collateral Agent, Note Registrar and Note Paying
Agent Not Liable for Subordinated Certificates or Underlying Residual Rights.
The recitals contained herein and in the Subordinated Certificates and
the Notes (other than the signature and authentication of the Trustee on the
Subordinated Certificates) shall be taken as the statements of the Administrator
and the Trustee, Collateral Agent, Note Paying Agent and Note Registrar assume
no responsibility for the correctness thereof. The Trustee, Collateral Agent,
Note Paying Agent and Note Registrar make no representations or warranties as to
the validity or sufficiency of this Agreement, of any Related Document or of the
Subordinated Certificates (other than the signature and authentication of the
Trustee on the Subordinated Certificates) or the Notes, or of any Underlying
Residual Rights or related documents. The Trustee, Collateral Agent, Note Paying
Agent and Note Registrar shall at no time have any responsibility or liability
for or with respect to the legality, validity and enforceability of any Note, or
for or with respect to the sufficiency of the Trust Property or its ability to
generate the payments to be distributed to Subordinated Certificateholders or
the Noteholders.
Section 5.11. Payments from Trust Property.
All payments to be made by the Trustee, the Collateral Agent, the Note
Paying Agent or the Certificate Paying Agent under this Agreement or any of the
Related Documents to which the Trust or the Trustee, the Collateral Agent, the
Note Paying Agent or the Certificate Paying Agent is a party shall be made only
from the income and proceeds of the Trust Property and only to the extent that
the Trustee, the Collateral Agent, the Note Paying Agent or the Certificate
Paying Agent shall have received income or proceeds from the Trust Property to
make such payments in accordance with the terms hereof. None of the Trustee, the
Collateral Agent, the Note Paying Agent or the Certificate Paying Agent or any
successor thereto, in its individual capacity, shall be liable for any amounts
payable under this Agreement or any of the Related Documents to which the Trust,
the Trustee, the Collateral Agent, the Note Paying Agent or the Certificate
Paying Agent is a party.
Section 5.12. Consent of the Note Insurer With Respect to Certain
Matters.
With respect to the following matters, neither the Trustee nor the
Collateral Agent shall take action, and the Subordinated Certificateholders
shall not direct the Trustee or the Collateral Agent to take any action without
the prior written consent of the Note Insurer:
(a) the initiation of any claim or lawsuit by the Trust and the
compromise of any action, claim or lawsuit brought by or against the Trust;
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(b) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment or other change to this Agreement or any Related
Document in circumstances where the consent of any Noteholder or the Note
Insurer is required;
(d) the amendment or other change to this Agreement or any Related
Document in circumstances where the consent of any Noteholder or the Note
Insurer is not required and such amendment materially adversely affects the
interests of the Subordinated Certificateholders;
(e) the appointment pursuant to this Agreement of a successor Note
Registrar, Certificate Registrar, Note Paying Agent or Certificate Paying Agent
or the consent to the assignment by the Note Registrar, Certificate Registrar,
Certificate Paying Agent or Certificate Paying Agent of its obligations under
this Agreement;
(f) the consent to the calling or waiving of any default under any
Related Document;
(g) the consent to the assignment by the Trustee or the Collateral Agent
of its respective obligations under any Related Document;
(h) except as provided in Article VIII, dissolve, terminate or liquidate
the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity, or
convey or transfer all or substantially all of the Trust's assets to any other
entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness other
than as set forth in this Agreement;
(k) do any act that conflicts with any other Related Document;
(l) do any act which would make it impossible to carry on the ordinary
business of the Trust as described in Section 2.3 hereof;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to property, for
other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purposes and powers from those set forth in this
Agreement.
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The Trustee shall not have the power, except upon the direction of the
Subordinated Certificateholders with the consent of the Note Insurer, and to the
extent consistent with the Related Documents, to (i) institute proceedings to
have the Trust declared or adjudicated a bankrupt or insolvent, (ii) consent to
the institution of bankruptcy or insolvency proceedings against the Trust, (iii)
file a petition or consent to a petition seeking reorganization or relief on
behalf of the Trust under any applicable federal or state law relating to
bankruptcy, (iv) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or any similar official) of the Trust or a substantial
portion of the property of the Trust, (v) make any assignment for the benefit of
the Trust's creditors, (vi) cause the Trust to admit in writing its inability to
pay its debts as they generally become due or (vii) take any action, or cause
the Trust to take any action, in furtherance of any of the foregoing (any of the
above, a "Bankruptcy Action"). So long as the Insurance Agreement remains in
effect and the Note Insurer is not in default of its payment obligations under
either of the Policies, no Subordinated Certificateholder shall have the power
to take, and shall not take, any Bankruptcy Action with respect to the Trust or
direct the Depositors or the Trustee to take any Bankruptcy Action with respect
to the Trust or the Depositors.
Section 5.13. Actions by Subordinated Certificateholders with Respect to
Bankruptcy.
The Trustee shall not have the power to commence a bankruptcy action
relating to the Trust without the consent and approval of the Note Insurer, the
unanimous approval of all the Subordinated Certificateholders and the delivery
to the Trustee by each Subordinated Certificateholder of a certificate
certifying that such Subordinated Certificateholder reasonably believes the
Trust to be insolvent.
Section 5.14. Restrictions on the Subordinated Certificateholders'
Powers.
The Subordinated Certificateholders shall not direct the Trustee to take
or refrain from taking any action if such action or inaction would be contrary
to any obligation of the Trust or the Trustee under this Agreement or any of the
Related Documents or would be contrary to Section 2.3 of this Agreement nor
shall the Trustee be obligated to follow any such direction, if given.
Section 5.15. Fiduciary Duties of the Trustee.
(a) Notwithstanding anything contained herein or in the Related
Documents to the contrary, the duties and responsibilities of the Trustee shall
be limited to those expressly provided for in this Agreement, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or the Related Documents against the Trustee.
Without limiting the generality of the foregoing, the Trustee does not have, and
shall not be deemed to have, any fiduciary relationship with the Collateral
Agent, the Noteholders or the Note Insurer. Rather, this Agreement creates only
an administrative relationship between independent contracting parties to
facilitate the lending and borrowing of funds and the issuance of the Notes.
With respect to the Collateral Agent, the Noteholders and the Note Insurer, the
Trustee undertakes to perform or observe only such of the covenants and
obligations of the Trustee as are expressly set forth in this Agreement, and no
implied covenants or obligations with respect to the Collateral Agent, the
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Noteholders or the Note Insurer shall be read into this Agreement or the other
Related Documents against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the Collateral Agent, the Noteholders or the Note Insurer,
and shall not be liable to any such person for the failure of the Trust to
perform its obligations to such persons other than as result of the gross
negligence or willful misconduct of the Trustee in the performance of its
express obligations under this Agreement.
(b) Whenever in connection with its performance under this Agreement the
Trustee receives inconsistent notices or advice from the Subordinated
Certificateholders, the Noteholders and the Note Insurer, the Trustee need not
take any action in respect with such notices or advice unless and until Trustee
receives (a) indemnification in respect of the matters noted in such notices or
advice to its satisfaction or (b) written direction signed by the Subordinated
Certificateholders, the Note Insurer and the Noteholders in respect thereof.
(c) In its capacity as Trustee, Wilmington Trust Company owes fiduciary
and other duties (the "Duties") to the Subordinated Certificateholders under the
this Agreement. The Subordinated Certificateholders, the Noteholders and the
Note Insurer acknowledge and agree that the Trustee has only the duties
expressly set forth herein and waive any potential or actual conflict of
interest that may arise as a result thereof. In addition, the Subordinated
Certificateholders acknowledge and agree that their rights under this Agreement
are subordinate to the rights of the Note Insurer and the Noteholders to enforce
the Trustee's duties to the Note Insurer and the Noteholders expressly set forth
herein to the extent inconsistent with the Trustee's Duties to the Subordinated
Certificateholders expressly set forth herein, and agree that in no event shall
the Trustee be liable to the Subordinated Certificateholders as a result of the
foregoing.
ARTICLE VI
COMPENSATION OF TRUSTEE AND OTHERS
Section 6.1. Fees and Expenses.
For performing its services hereunder, the Trustee shall be entitled to
receive pursuant to Section 4.2(a)(i), the Trustee Fee. The Trustee shall be
entitled to receive from the Holder of the Special Interest reimbursement for
expenses and disbursements of such agents, representatives, experts and counsel
as the Trustee may employ in connection with the exercise and performance of its
rights and duties hereunder. The Trustee shall be responsible for paying any
separate compensation owing to the Certificate Paying Agent and the Certificate
Registrar, which compensation shall be included in any Trustee Fee. For
performing its services hereunder, the Administrator shall be entitled to
receive, pursuant to Section 4.2(a)(iv), the Administration Fee. For performing
its services hereunder and under the Security Agreement, the Collateral Agent
shall be entitled to receive, pursuant to Section 4.2(a)(ii), the Collateral
Agent Fee. The Collateral Agent shall be responsible for paying any separate
compensation owing to the Note Paying Agent and the Note Registrar.
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ARTICLE VII
DEFAULT
Section 7.1. Events of Default.
"Event of Default," whenever used herein, means any one of the
following:
(a) default in the payment of the Interest Amount on the Notes for a
period of five Business Days after the related Payment Date; or
(b) default in payment of the entire unpaid Principal Amount of the
Notes on or before the Maturity Date.
Section 7.2. Rights Upon an Event of Default.
(a) If an Event of Default shall have occurred and be continuing, with
the consent of the Note Insurer the Trustee may, or with the consent of the Note
Insurer the Holders of at least 25% in aggregate outstanding Principal Amount of
the Notes (subject to rescission as described below) may, or the Note Insurer
may, declare by written notice to the Subordinated Certificateholders (and the
Trustee, if declared by the Noteholders or the Note Insurer), the entire
Principal Amount of the Notes immediately due, together with accrued interest
thereon. The Subordinated Certificateholders shall have no right to declare an
Event of Default or to make a declaration of acceleration.
At any time after such a declaration of acceleration with respect to the
Notes has been made and before a judgment or decree for payment of the money due
has been obtained by the Trustee, if there has been deposited in the Collection
Account, either pursuant to collections on the Trust Property or from amounts
deposited with the Collateral Agent by the Subordinated Certificateholders, an
amount sufficient to pay: (i) all sums paid or advanced by the Trustee, the
Collateral Agent, the Note Insurer and the Note Paying Agent hereunder and the
reasonable compensation, expenses and disbursements of the Trustee, the
Collateral Agent, the Note Paying Agent, the Certificate Paying Agent, the Note
Registrar, the Certificate Registrar, the Administrator, the Note Insurer and
their agents and (ii) the Interest Amount with respect to the next Payment Date,
such declaration and its consequences shall be rescinded and annulled.
(b) If the Notes have been declared due following an Event of Default,
subject to the Security Agreement, the Trustee shall maintain possession of the
Trust Property (or any portion thereof) and continue to apply collections from
the Trust Property as if there had been no declaration of acceleration unless
the Trustee shall be directed by the Note Insurer or, with the consent of the
Note Insurer, the Holders of not less 66 2/3% of the Principal Amount of the
Notes to liquidate the Trust Property, in which case the Trustee shall liquidate
the Trust Property by selling all the assets of the Trust at one or more public
or private sales in any manner permitted by law; provided, however, that neither
the Depositors nor any of their affiliates shall be permitted to purchase any or
all of the assets of the Trust.
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Section 7.3. Distributions.
Any money collected pursuant to this Article VII, shall be distributed
in the following order:
(i) first, to the Trustee, amounts due and owing and required to
be distributed to the Trustee, the Certificate Paying Agent and the
Certificate Registrar pursuant to this Agreement;
(ii) second, to the Collateral Agent, the amounts due and owing
and required to be distributed to the Collateral Agent, the Note Paying
Agent and the Note Registrar pursuant to this Agreement;
(iii) third, to the Noteholders, the Interest Amount; provided,
however, if the remaining money is less than the Interest Amount, the
remaining money collected shall be distributed on a pro rata basis
according to the Principal Amount of the respective Notes held by such
Noteholders;
(iv) fourth, to the Noteholders, an amount equal to the
outstanding Principal Amount of the Notes, provided, however, if the
remaining money is less than the outstanding Principal Amount of the
Notes, the remaining money shall be distributed on a pro rata basis
according to the Principal Amount of the respective Notes held by such
Noteholders;
(v) fifth, to the Note Insurer, amounts due and owing and
required to be distributed to the Note Insurer pursuant to this
Agreement, the Insurance Agreement and the Financial Guaranty Agreement;
(vi) sixth, to the Administrator, amounts due and owing and
required to be distributed to the Administrator pursuant to this
Agreement;
(vii) seventh, to the Administrator, an amount equal to any
unreimbursed Optional Advances; and
(viii) eighth, to the Trustee for distribution to the
Subordinated Certificateholders, any remaining money according to their
respective Percentage Interests.
Section 7.4. Restrictions on Noteholders' Power.
No Noteholder will have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any Related
Document, unless (a) a Noteholder previously has given to the Trustee a written
notice of default and of the continuance thereof, as provided in this Agreement,
and has obtained the consent of the Note Insurer, and (b) Noteholders
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beneficially owning not less than 66 2/3% of the aggregate Principal Amount of
the Notes have made written request upon the Trustee to institute such action,
suit or proceeding in its own name as Trustee under this Agreement, have
obtained the consent of the Note Insurer and have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request, and offer of indemnity, has neglected
or refused to institute any such action, suit, or proceeding and during such
30-day period, no request or waiver inconsistent with such written request has
been given to the Trustee pursuant to and in compliance with this Section or
Section 5.2; it being understood and intended, and being expressly covenanted by
each Noteholder with every other Noteholder and the Trustee, that no one or more
Noteholders shall have any right in any manner whatever by virtue or by availing
itself or themselves of any provisions of this Agreement to affect, disturb, or
prejudice the rights of any other Noteholder, or to obtain or seek to obtain
priority over or preference to any other Noteholder, or to enforce any right
under this Agreement, except in the manner provided in this Agreement and for
the equal, ratable, and common benefit of all Noteholders. For the protection
and enforcement of the provisions of this Section 7.4, each and every other
Noteholder and the Trustee will be entitled to such relief as can be given
either at law or in equity.
ARTICLE VIII
DISSOLUTION OF THE TRUST
Section 8.1. Dissolution of the Trust.
(a) The Trust shall dissolve, and this Agreement will terminate, upon
the later of (i) the Payment Date immediately following the retirement or other
liquidation of the last item of Trust Property or (ii) following the payment in
full of the Principal Amount of and accrued interest on the Notes, by vote of
all the Subordinated Certificateholders, with the consent of the Note Insurer.
The bankruptcy, liquidation, dissolution, termination, resignation, expulsion,
withdrawal, death or incapacity of any Subordinated Certificateholder shall not
(x) operate to terminate this Agreement or the Trust, or (y) entitle such
Subordinated Certificateholder to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Trust Property or (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) Except as provided in Section 8.1(a), none of the Depositors, the
Administrator or any Subordinated Certificateholder shall be entitled to revoke
or terminate the Trust.
(c) Upon the completion of winding up and termination of the Trust, the
Trustee shall cause the Certificate of Trust to be canceled by executing and
filing a certificate of cancellation with the Secretary of State in accordance
with the provisions of Section 3810 of the Business Trust Statute. Thereupon,
this Agreement and the Trust shall terminate.
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ARTICLE IX
SUCCESSOR TRUSTEES, PAYING AGENTS AND REGISTRARS AND ADDITIONAL TRUSTEES
Section 9.1. Eligibility Requirements for Trustee.
(a) The Trustee shall at all times be a corporation or association (i)
satisfying the provisions of Section 3807(a) of the Business Trust Statute; (ii)
authorized to exercise corporate trust powers; (iii) having a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination by
Federal or State authorities; provided that with respect to the initial Trustee
(but not any successor) the combined capital and surplus of the parent
organization of such banking association shall be included in the determination
of the combined capital and surplus of such banking association and (iv)
reasonably acceptable to the Note Insurer. In case at any time any such
corporation or association shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect specified in Section 9.2. In addition, at all times the Trustee or a
co-trustee shall be a Person that satisfies the requirement of Section 3807(a)
of the Business Trust Statute and Section 26(a)(1) of the Investment Company Act
of 1940, as amended.
(b) If the Trustee shall publish reports of condition at least annually,
pursuant to law or to the requirements of a supervising or examining authority,
then for the purpose of this Section, the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. A copy
of each such report shall be provided by the Trustee to the Note Insurer.
Section 9.2. Resignation or Removal of Trustee and Others.
(a) The Trustee, Note Paying Agent, Certificate Paying Agent, Note
Registrar or Certificate Registrar may at any time resign and be discharged from
the trusts and obligation hereby created by giving written notice thereof to the
Administrator (with a copy to each Rating Agency and the Note Insurer) at least
30 days before the date specified in such notice. Upon receiving such notice of
resignation, the Administrator shall promptly appoint a successor meeting (in
the case of a successor Trustee) the applicable qualifications set forth in
Section 9.1 and in the case of the Note Paying Agent and the Note Registrar,
acceptable to the Note Insurer, by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Trustee, Note Paying Agent,
Certificate Paying Agent, Note Registrar or Certificate Registrar, and one copy
to the successor Trustee, Note Paying Agent, Certificate Paying Agent, Note
Registrar or Certificate Registrar. If no successor Trustee, Note Paying Agent,
Certificate Paying Agent, Note Registrar or Certificate Registrar shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Trustee, Note Paying Agent,
Certificate Paying Agent, Note Registrar or Certificate Registrar may petition
any court of competent jurisdiction for the appointment of a successor Trustee,
Note Paying Agent, Certificate Paying Agent, Note Registrar or Certificate
Registrar.
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(b) The Administrator (or the Note Insurer in the case of the Note
Paying Agent and the Note Registrar) may at any time remove the Trustee, the
Note Paying Agent, the Certificate Paying Agent, the Note Registrar or the
Certificate Registrar by giving written notice thereof to the Trustee (with a
copy to each Rating Agency and the Note Insurer) at least 30 days before the
date specified in such notice. Further, if at any time the Trustee shall cease
to be eligible in accordance with the provisions of Section 9.1 and shall fail
to resign after written request therefor by the Administrator or if at any time
the Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Administrator or the Note Insurer may remove the Trustee.
If the Administrator shall remove the Trustee, the Note Paying Agent, the
Certificate Paying Agent, the Note Registrar or the Certificate Registrar under
the authority of Section 9.2(b), the Administrator, with the consent of the Note
Insurer in the case of the Trustee, Note Paying Agent or Note Registrar, shall
promptly appoint a successor Trustee, Note Paying Agent, Certificate Paying
Agent, Note Registrar or Certificate Registrar meeting (in the case of a
successor Trustee) the qualification requirements of Section 9.1 by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Trustee, Note Paying Agent, Certificate Paying Agent, Note Registrar or
Certificate Registrar so removed, and one copy to the successor Trustee (with a
copy to each Rating Agency and the Note Insurer) and upon any such removal, the
Administrator promptly shall pay all fees and other amounts owed to the outgoing
Trustee, Note Paying Agent, Certificate Paying Agent, Note Registrar or
Certificate Registrar.
Any resignation or removal of the Trustee, Note Paying Agent,
Certificate Paying Agent, Note Registrar or Certificate Registrar and
appointment of a successor Trustee, Note Paying Agent, Certificate Paying Agent,
Note Registrar or Certificate Registrar (consented to by the Note Insurer in the
case of the Trustee, Note Paying Agent or Note Registrar) pursuant to any of the
provisions of this Section shall not become effective until acceptance of
appointment by the successor Trustee, Note Paying Agent, Certificate Paying
Agent, Note Registrar or Certificate Registrar pursuant to Section 9.3 and (in
the case of removal only) payment of all fees and expenses owed to the outgoing
party.
Section 9.3. Successor Trustee.
Any successor Trustee appointed pursuant to Section 9.2 shall execute,
acknowledge and deliver to the Administrator and to its predecessor Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of its predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor Trustee under this Agreement, with like effect as if originally
named. The predecessor shall deliver to the successor Trustee all documents and
statements and moneys held by it under this Agreement promptly upon such
predecessor's receipt of all fees and other amounts owing to it; and the
Administrator and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties, and obligations.
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No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 9.1.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 9.3, the Administrator shall mail notice thereof to all Noteholders,
Subordinated Certificateholders, the Note Insurer and the Rating Agencies. If
the Administrator shall fail to mail such notice within 10 days after acceptance
of appointment by a successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Administrator.
Upon the appointment and acceptance of a successor Trustee pursuant to
this Section 9.3, such successor Trustee shall file an amendment to the
Certificate of Trust with the Delaware Secretary of State pursuant to Section
3810 of the Business Trust Statute reflecting the name and principal place of
business of such successor Trustee in the State of Delaware.
Section 9.4. Merger or Consolidation.
Any corporation or association into which the Trustee, Note Paying
Agent, Certificate Paying Agent, Note Registrar or Certificate Registrar may be
merged or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which it
shall be a party, or any corporation or association succeeding to all or
substantially all its corporate trust business, shall be the successor
hereunder; provided such corporation or association shall be eligible pursuant
to Section 9.1 (in the case of the Trustee) and acceptable to the Note Insurer
(in the case of the Note Paying Agent and the Note Registrar), without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Trustee shall mail notice of any merger or consolidation or
conversion affecting it to the Rating Agencies and the Note Insurer at least 30
days prior to the effective date of such merger, consolidation or conversion.
Section 9.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provision of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Property may at the time be located, the Trustee shall have
the power and authority and is hereby authorized and empowered to execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
and the Administrator to act as co-trustee, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Property,
and to vest in such Person, in such capacity, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 9.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 9.1, except that notice of such
appointment shall be given to the Rating Agencies and the Note Insurer.
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Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties, and obligations (including the holding of
title to the Trust Property or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Each
such instrument shall be filed with the Trustee and a copy thereof given to the
Administrator.
Any separate trustee or co-trustee may at any time appoint the Trustee,
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
dissolve, become incapable of acting, resign or be removed, all its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
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ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. Amendment.
(a) This Agreement may be amended by the Depositors, the Trustee and the
Collateral Agent, with prior written notice to the Rating Agencies and the
consent of the Note Insurer, without the consent of any of the Noteholders or
the Subordinated Certificateholders (i) to cure any ambiguity or defect, (ii) to
correct, supplement or modify any provisions in this Agreement or (iii) for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions in this Agreement or of modifying in any manner the rights of
the Noteholders or the Subordinated Certificateholders; provided, however, in
each case, that such action shall not, as evidenced by an opinion of counsel,
adversely affect in any material respect the interests of any Noteholder or
Subordinated Certificateholder.
(b) This Agreement may also be amended from time to time by the
Depositors, the Trustee and the Collateral Agent, with the consent of the Note
Insurer and the Holders of a majority of the aggregate outstanding Principal
Amount of the Notes (which consent of any Holder of a Note given pursuant to
this Section or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and on all future Holders of such Note and
of any Note issued upon the transfer thereof or in exchange therefore or in lieu
thereof whether or not notation of such consent is made upon the Note) and to
the extent that the Subordinated Certificates are affected thereby, the consent
of the Holders of a majority of Percentage Interests of the Subordinated
Certificates, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Holders of Notes or the Holders of the
Subordinated Certificates; provided, however, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, payments that shall be required to be made on any Note or the
Interest Rate or (b) change the Event of Default relating to nonpayment of
interest or (c) reduce the aforesaid percentage required to consent to any such
amendment or any waiver hereunder, without the consent of the Holders of all the
Notes then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Subordinated Certificateholders shall furnish written notification of the
substance of such amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to the Note Registrar for distribution to each Noteholder unless such
parties have previously received such notification.
(e) It shall not be necessary for the consent pursuant to Section
10.1(b) to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents (and any other consents provided for in this
Agreement) and of evidencing the authorization of the execution thereof shall be
subject to such reasonable requirements as the Trustee may prescribe, including
the establishment of record dates.
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(f) Prior to the execution of any amendment to this Agreement, the
Trustee, Note Registrar, Collateral Agent and Note Paying Agent shall be
entitled to receive and rely upon an opinion of counsel, not at its own expense,
stating that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent to the execution and delivery of
such amendment have been satisfied. The Trustee, Note Registrar, Collateral
Agent and Note Paying Agent may, but shall not be obligated to, enter into any
such amendment which affects their own rights, duties or immunities under this
Agreement or otherwise.
Section 10.2. No Recourse.
Each Noteholder by accepting a Note acknowledges that its Notes
represent obligations of the Trust only and do not represent interests in or
obligations of the Depositors, the Administrator, the Trustee, the Collateral
Agent, the Note Paying Agent, the Certificate Paying Agent, the Note Registrar,
the Certificate Registrar, the Subordinated Certificateholders, the Holder of
the Special Interest, the Note Insurer or any affiliate of any of the foregoing.
No recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement, the Notes or the Related
Documents.
Section 10.3. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.4. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Notes or the Subordinated Certificates or the rights of the
Holders thereof.
Section 10.5. Third-Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, the Noteholders, the Note Insurer and the Subordinated
Certificateholders and their respective successors and permitted assigns. The
Noteholders, the Note Insurer, and Indemnified Parties are third party
beneficiaries under this Agreement. The Trustee shall have only the duties
expressly set forth herein with respect to the Noteholders and the Noteholders
shall have the right to enforce the obligations of the Trustee to the same
extent as if they were beneficial owners of the Trust. Except as otherwise
provided in this Agreement, no other Person shall have any right or obligation
hereunder. Nothing contained herein shall be construed to create any fiduciary
obligation of the Trustee to the Note Insurer.
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The Subordinated Certificateholders, Noteholders, and Beneficial Owners
acknowledge and agree that the Trustee has only the duties expressly set forth
herein to the Noteholders under this Agreement and waive any potential or actual
conflict of interest that may arise as a result thereof. In addition, the
Subordinated Certificateholders acknowledge and agree that their rights under
this Agreement are subordinate to the rights of the Noteholders to enforce the
Trustee's duties to the Noteholders expressly set forth herein to the extent
inconsistent with the Trustee's duties to the Subordinated Certificateholders
expressly set forth herein, and agree that in no event shall the Trustee be
liable to the Subordinated Certificateholders as a result of the foregoing.
Section 10.6. Counterparts.
For the purpose of facilitating its execution and for other purposes,
this Agreement may be executed simultaneously in any number of counterparts,
each of which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
Section 10.7. Notices.
All demands, notices and communications under this Agreement shall be in
writing, delivered by telecopy (with hard copy to follow by recognized overnight
courier), or by recognized overnight courier or mailed by certified mail-return
receipt requested, and shall be deemed to have been duly given upon receipt (a)
in the case of the Administrator, at the following address: NELnet, Inc., 000
Xxxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X.
Xxxxxx, telecopy: (000) 000-0000, (b) in the case of the NELNET Depositor, at
the following address: 000 Xxxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
00000, Attention: Xxxxx X. Xxxxxx, telecopy: (000) 000-0000, (c) in the case of
the MELMAC Depositor, at the following address: Xxx Xxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxx, Xxxxx 00000, Attention: Xxx Xxxx, telecopy: (000) 000-0000, with a
copy to: 000 Xxxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000, Attention: Xxx
Xxxx, (d) in the case of the Trustee or the Collateral Agent, at its respective
Corporate Trust Office, Trustee telecopy: (000) 000-0000, Collateral Agent
telecopy: (000) 000-0000, (e) in the case of Standard & Poor's Rating Service, a
division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Asset Backed Surveillance, telecopy: (212)
438-2664, (f) in the case of Fitch, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Asset Backed Securities Surveillance, telecopy: (212)
480-4438, and (g) in the case of the Note Insurer, 000 Xxxx Xxxxxx, Xxxxxx, Xxx
Xxxx 00000, Attention: IPM-PF ($57,500,000 THE NELNET GROUP TRUST I Student Loan
Interest Margin Securities) or at such other address as shall be designated by
any such party in a written notice to the other parties. Notwithstanding the
foregoing, any notice required or permitted to be mailed to a Holder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Note Register or Certificate Register, as the case may be, and any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice.
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Section 10.8. Successors and Assigns.
All covenants and agreements contained herein shall be binding upon, and
inure to the benefit of, the Administrator, the Depositors, the Holder of the
Special Interest, the Trustee, the Collateral Agent, the Note Paying Agent, the
Certificate Paying Agent, the Note Registrar, the Certificate Registrar, and
their respective successors, each Subordinated Certificateholder and its
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by a Noteholder or a
Subordinated Certificateholder shall bind the successors and assigns of such
Noteholder or Subordinated Certificateholder.
Section 10.9. No Petition.
The Trustee (in its individual capacity and as Trustee), by entering
into this Agreement, each Subordinated Certificateholder, by accepting a Trust
Certificate, and each Noteholder by accepting the benefits of this Agreement,
hereby covenants and agrees that they will not at any time institute against the
Depositors or the Trust, or join in any institution against the Depositors or
the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Subordinated Certificates, the Notes, this Agreement or any of the Related
Documents.
Section 10.10.Headings.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
Section 10.11.Administrator.
In carrying out its duties hereunder, the Administrator is acting on
behalf of the Trust. The Administrator is authorized and empowered to execute,
prepare, file and/or deliver in the name and on behalf of the Trust all such
documents, reports, filings, tax returns, instruments, certificates and opinions
as it shall be the duty of the Trust to prepare, file or deliver pursuant to the
Related Documents. Upon written request of the Administrator, the Trustee on
behalf of the Trust shall execute and deliver to the Administrator a power of
attorney appointing the Administrator the Trust's agent and attorney-in-fact to
execute, prepare, file and deliver all such documents, reports, filings, tax
returns, instruments, certificates and opinions.
Section 10.12.Furnishing Information.
For so long as any of the Notes or Subordinated Certificates are
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act"), (1) the
Administrator will provide or cause to be provided to any Holder of such Notes
or Subordinated Certificates and any prospective purchaser thereof designated by
such a Holder, upon the request of such Holder or prospective purchaser, the
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information required to be provided to such Holder or prospective purchaser by
Rule 144A(d)(4) under the Securities Act; and (2) the Administrator shall update
such information from time to time in order to prevent such information from
becoming false and misleading and will take such other actions as are necessary
to ensure that the safe harbor exemption from the registration requirements of
the Securities Act under Rule 144A is and will be available for resales of such
Notes or Subordinated Certificates conducted in accordance with Rule 144A.
Section 10.13.Amendments to Underlying Agreements; Underlying Trusts
Not to Issue Additional Securities.
For so long as any of the Notes are outstanding, the Administrator shall
provide the Rating Agencies, the Note Insurer, the Trustee and the Collateral
Agent with prior written notice (A) of any proposed amendment to or supplement
of (i) an Indenture, (ii) any other Underlying Agreement, or (iii) any other
contract or agreement to which a Depositor is a party or which was assigned to a
Depositor relating to the servicing of student loans included in the Underlying
Trusts or (B) if the Administrator, on behalf of the Trust, wishes to exercise
an optional redemption for some or all of the bonds issued under the MELMAC
Indenture (the "Underlying MELMAC Bonds"), or the notes issued under the NELNET
Indenture (the "Underlying NELNET Bonds"). Neither Depositor (or, with respect
to the Indentures and the other Underlying Agreements, the Administrator, on
behalf of the Trust) shall consent to any such amendment or supplement, or
exercise an optional redemption for some or all of the Underlying Bonds, unless
the Note Insurer provides its written consent (and, in the case of an optional
redemption of the Underlying Bonds, the holders of all the Subordinated
Certificates, other than the Holder of the Special Interest, provide their
written consent) and S&P indicates that such amendment, supplement or redemption
would not cause it to lower or withdraw the rating then assigned by it to the
Notes (without giving effect to the Note Insurance Policy). Further, neither
Depositor may enter into or consent to any amendment of or supplement to the
Indentures on the other Underlying Agreements without the consent of the Trust
(which consent may be given by the Administrator on behalf of the Trust). Prior
to entering into such amendment or supplement, or prior to optionally redeeming
the Underlying Bonds, the Administrator shall provide the Trustee and the Note
Insurer with a certificate, signed by its president or a vice president,
attesting that such action has occurred. In no event, however, shall a Depositor
(or, with respect to the Indentures and the other Underlying Agreements, the
Administrator on behalf of the Trust) consent to any such amendment or
supplement that would result in additional servicing or other compensation being
paid, or student loans being acquired for premiums greater than permitted, under
the agreements listed in (i) through (iv) above as in effect on the date hereof
if, as of the Payment Date immediately prior to the effective date of such
amendment or supplement, the Recalculated Targeted Amount of the Notes exceeds
the Targeted Balance for such Payment Date. Notwithstanding the foregoing, the
provisions of this Section 10.13 shall not apply to (i) any mandatory redemption
of Underlying Bonds or (ii) any redemption of Underlying Bonds resulting from an
Underlying Trust's inability to acquire Eligible Loans (as defined in the
Indentures) during the applicable acquisition and recycling periods.
79
Until the Principal Amount of the Notes has been reduced to zero and the
Noteholders have received all amounts to which they are entitled under this
Trust Agreement, neither Depositor will permit the respective Underlying Trust
to issue any additional notes, bonds or other securities or change the mode used
to calculate interest on the Underlying Bonds (I.E., from an auction rate to a
fixed rate or a variable rate).
Section 10.14.The Note Insurer.
Any right conferred to the Note Insurer hereunder shall be suspended
during any period in which the Note Insurer is in default in its payment
obligations under the Debt Service Reserve Surety Bond or the Note Insurance
Policy. At such time as the Notes are no longer outstanding hereunder, and no
amounts owed to the Note Insurer hereunder, under the Insurance Agreement and
under the Financial Guaranty Agreement remain unpaid, the Note Insurer's rights
hereunder shall terminate.
Section 00.00.Xxxxxxxx Agreement.
Each Noteholder by becoming an owner of a Note (and each Beneficial
Owner) and each Subordinated Certificateholder acknowledges that the Trust has
pledged to the Note Insurer a security interest in the Underlying Residual
Rights and the other Trust Property and that, unless the Note Insurer is in
default in its payment obligations under the Debt Service Reserve Surety Bond or
the Note Insurance Policy, upon the occurrence of a Pledgor Default (as defined
in the Security Agreement) the Note Insurer may exercise certain rights with
respect to the Underlying Residual Rights and the other Trust Property.
80
IN WITNESS WHEREOF, the Depositors, the Administrator, the Trustee,
Certificate Registrar and Certificate Paying Agent and the Collateral Agent,
Note Registrar and Note Paying Agent have caused this Trust Agreement to be duly
executed by their respective officers as of the day and year first above
written.
NELNET STUDENT LOAN CORPORATION-1, as Depositor
By:
-------------------------------------------
Name: Xxxxxx X. Page
Title: Vice President
MELMAC LLC, as Depositor
By:
-------------------------------------------
Name: Xxx Xxxx
Title: President
NELNET, INC., as Administrator and Holder of the
Special Interest
By:
-------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
WILMINGTON TRUST COMPANY, as Trustee, Certificate
Registrar and Certificate Paying Agent
By:
-------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral Agent,
Note Registrar and Note Paying Agent
By:
-------------------------------------------
Name:
Title:
81
SCHEDULE I
TARGETED BALANCE SCHEDULE
TARGETED PRINCIPAL TARGETED PRINCIPAL
PAYMENT DATE PAYMENT* BALANCE
------------ --------- -------
January 2002 $3,394,000 $54,106,000
July 2002 2,030,000 52,076,000
January 2003 1,332,000 50,744,000
July 2003 2,919,000 47,825,000
January 2004 3,306,000 44,519,000
July 2004 444,000 44,075,000
January 2005 3,300,000 40,775,000
July 2005 821,000 39,954,000
January 2006 4,061,000 35,893,000
July 2006 1,560,000 34,333,000
January 2007 5,046,000 29,287,000
July 2007 732,000 28,555,000
January 2008 1,675,000 26,880,000
July 2008 1,800,000 25,080,000
January 2009 3,565,000 21,515,000
July 2009 2,470,000 19,045,000
January 2010 3,398,000 15,647,000
July 2010 2,068,000 13,579,000
January 2011 1,726,000 11,853,000
July 2011 1,389,000 10,464,000
January 2012 1,318,000 9,146,000
July 2012 1,095,000 8,051,000
January 2013 1,231,000 6,820,000
July 2013 748,000 6,072,000
January 2014 1,022,000 5,050,000
July 2014 782,000 4,268,000
January 2015 672,000 3,596,000
July 2015 572,000 3,024,000
January 2016 397,000 2,627,000
July 2016 687,000 1,940,000
January 2017 515,000 1,425,000
July 2017 505,000 920,000
January 2018 495,000 425,000
July 2018 425,000 0
-----------------------
*If for any Payment Date the Targeted Principal Payment exceeds the actual
Principal Payment Amount, the amount of such excess will be added to the
Targeted Principal Payment for the next Payment Date.
I-1
SCHEDULE II
LIST OF UNDERLYING AGREEMENTS
UNDERLYING MELMAC TRUST
Amended and Restated Indenture of Trust dated as of January 1, 1999 by and
between MELMAC LLC (as assignee of Maine Educational Loan Marketing Corporation)
and Peoples Heritage Bank, as Trustee.
First Supplemental Indenture dated as of November 1, 1999 between MELMAC LLC (as
assignee of Maine Educational Loan Marketing Corporation) and Peoples Heritage
Bank, as Trustee.
Second Supplemental Indenture dated as of December 16, 1999 between MELMAC LLC
(as assignee of Maine Educational Loan Marketing Corporation) and Peoples
Heritage Bank, as Trustee.
Third Supplemental Indenture dated as of June 30, 2000 between MELMAC LLC (as
assignee of Maine Educational Loan Marketing Corporation) and Peoples Heritage
Bank, N.A., as Trustee.
Form of Fourth Supplemental Indenture to be dated as of April 1, 2001 between
MELMAC LLC and Peoples Heritage Bank, N.A., as Trustee.
UNDERLYING NELNET TRUST
Second Amended and Restated Indenture of Trust dated as of November 1, 1996 by
and between NELNET Student Loan Corporation-1 (formerly known as Union Financial
Services-1, Inc.) and Zions First National Bank, as successor Trustee.
Series 1996C Supplemental Indenture of Trust.
First Supplement to Second Amended and Restated Indenture of Trust.
Series 1997A Supplemental Indenture of Trust.
Second Supplement to Second Amended and Restated Indenture of Trust.
Third Supplement to Second Amended and Restated Indenture of Trust.
Series 1998 Supplemental Indenture of Trust.
Series 1999 Supplemental Indenture of Trust.
II-1
EXHIBIT A
[FORM OF CERTIFICATE OF TRUST]
CERTIFICATE OF TRUST OF
THE NELNET GROUP TRUST I
This Certificate of Trust of The NELnet Group Trust I (the "Trust")
dated as of April 3, 2001, is being duly executed and filed by Wilmington Trust
Company, a Delaware trust company headquartered in Wilmington, Delaware, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
Code, ss. 3801 et seq.) (the "Act").
1. Name. The name of the business trust formed hereby is The NELnet
Group Trust I.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Xxxxxx Square North,
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate
Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above written
in accordance with Section 3811(a) of the Act.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Trustee of the Trust.
By:
---------------------------------------
Name:
Title:
A-1
EXHIBIT B
[FORM OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUST 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.
NEITHER THIS NOTE NOR THE UNDERLYING RESIDUAL RIGHTS ARE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS. THEREFORE, THE
ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE MAY, ON ANY DATE SUBSEQUENT TO
THE FIRST PAYMENT DATE, BE LESS THAN ITS INITIAL PRINCIPAL AMOUNT.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR 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 (1)
PURSUANT TO RULE 144A 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, (2) IN CERTIFICATED FORM TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(WITHIN THE MEANING OF RULE 501(a)(1)-(3) OR (7) UNDER THE SECURITIES ACT)
PURCHASING FOR INVESTMENT AND NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE NOTE REGISTRAR OF A LETTER
SUBSTANTIALLY IN THE FORM PROVIDED IN THE TRUST AGREEMENT AND (B) THE RECEIPT BY
THE NOTE REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE NOTE REGISTRAR THAT
SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
B-1
ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF ANY
STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION, (3) PURSUANT
TO ANOTHER EXEMPTION AVAILABLE UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS, OR (4) PURSUANT TO A VALID REGISTRATION
STATEMENT.
THIS NOTE MAY NOT BE ACQUIRED, DIRECTLY OR INDIRECTLY, FOR OR ON BEHALF OF A
PERSON WHO IS NOT A UNITED STATES PERSON (AS DEFINED IN SECTION 7701 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED).
B-2
THE NELNET GROUP TRUST I
STUDENT LOAN INTEREST MARGIN SECURITY
(This Note does not represent an obligation of NELnet, Inc.
or any of its affiliates)
CUSIP No. _____________ [144A]
CUSIP No. _____________ [Accredited Investors]
Interest Accrual Date: ___________, 2001
Registered Holder: [Cede & Co.] [Accredited Investor]
Initial Principal Amount of this Note: [$ ____________]
Aggregate Principal Amount of Notes: $___________
Interest Rate: ___%
First Payment Date: January 3, 2002
Maturity Date: July 2, 2020
B-3
CERTIFICATE OF AUTHENTICATION
This is one of the 6.34% Student Loan Interest Margin Securities
referred to in the within-mentioned Trust Agreement.
Date of Authentication: April 3, 2001
THE CHASE MANHATTAN BANK,
as Note Registrar
By:
-------------------------------
Authorized Officer
THE NELNET GROUP TRUST I (the "Trust") hereby promises to pay to the
Registered Holder named above, or registered assigns, from the Trust Property,
the Initial Principal Amount specified above and interest on the unpaid
Principal Amount of this Note at the Interest Rate specified above until this
Note shall have been paid in full.
The Trust was created pursuant to a Trust Agreement dated as of April 1,
2001 (the "Trust Agreement"), among MELMAC LLC, as a depositor, NELNET Student
Loan Corporation-1, as a depositor (the "NELNET Depositor" and together with
MELMAC LLC, the "Depositors"), NELnet, Inc., as administrator (the
"Administrator"), Wilmington Trust Company, as Trustee (the "Trustee"), and the
Chase Manhattan Bank, as Collateral Agent, Note Registrar and Paying Agent, a
summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Trust Agreement.
This Note is one of the duly authorized notes issued pursuant to the
Trust Agreement and designated as 6.34% Student Loan Interest Margin Securities
(the "Notes"). The Trust is also issuing Subordinated Certificates (the
"Subordinated Certificates"). This Note is issued under and is subject to the
terms, provisions and conditions of the Trust Agreement which is incorporated
herein by reference and to which the holder of this Note by virtue of the
acceptance hereof assents and by which such holder is bound. Payments with
respect to the Notes are made solely from the assets of the Trust, which include
(as more fully described in the Trust Agreement): (i) the right to receive the
residual cash-flow (the "Underlying Residual Rights") from two master trust
estates established under two underlying Indentures, (ii) the NELNET Depositor's
right to receive certain maintenance and operating expenses and (iii) the
Collection Account, Reserve Account and Distribution Account established under
the Trust Agreement (collectively, the "Trust Property"). The Notes also are
entitled to the benefits of a Debt Service Reserve Surety Bond and Note
Insurance Policy issued by MBIA Insurance Corporation (the "Note Insurer").
Under the Trust Agreement, there will be paid semi-annually, on the
second Business Day of each January and July, commencing January, 2002 (the
"Payment Date"), to the person in whose name this Note is registered at the
close of business on the second day immediately preceding such Payment Date (the
B-4
"Record Date"), interest on this Note at the Interest Rate set forth above
(calculated on the basis of a 360-day year of twelve 30-day months) and the
Principal Payment Amount and the Special Principal Payment, if any, to the
extent of the funds available therefor.
As described above, the entire unpaid Principal Amount of this Note
shall be due and payable on or before the Maturity Date specified above.
Notwithstanding the foregoing, the entire unpaid Principal Amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Trustee or the Holders owning at least 25% in
aggregate Principal Amount of the Notes with the consent of the Note Insurer, or
the Note Insurer, have declared the Notes to be immediately due in the manner
provided in the Trust Agreement; provided the Trustee shall maintain possession
of the Trust Property and continue to apply collections therefrom as if there
had been no declaration of acceleration unless the Trustee shall be directed by
the Holders of not less than 66% of the Principal Amount of the Notes with the
consent of the Note Insurer, or the Note Insurer, to liquidate the Trust
Property. All payments with respect to the principal of the Notes shall be made
pro rata to the Holders of the Notes.
It is the intent and agreement of the Subordinated Certificateholders
and the Noteholders that, for purposes of federal income, state and local income
and franchise and any other income taxes, the Notes will be treated as debt of
the Trust. Each Noteholder, by acceptance of a Note, covenants and agrees to
treat, and to take no action inconsistent with the treatment of, the Notes as
debt for such tax purposes.
Payments on this Note will be made by the Note Paying Agent by check or
money order mailed to the Noteholder of record in the Note Register without the
presentation or surrender of this Note or the making of any notation hereon, or
by wire transfer, in immediately available funds, to the account of the
Noteholder at a bank or other entity having appropriate facilities therefor, if
the Noteholder shall have provided to the Note Paying Agent appropriate written
instructions at least five Business Days prior to a Payment Date.
Notwithstanding the above, the final payment on this Note will be made after due
notice by the Note Paying Agent of the pendency of such payment and only upon
presentation and surrender of this Note at the office or agency maintained for
that purpose by the Note Paying Agent.
The Notes do not represent an obligation of, or an interest in, the
Depositors, the Administrator, the Trustee, the Collateral Agent, the Note
Paying Agent, the Note Registrar, the Subordinated Certificateholders, the Note
Insurer or any affiliate of any of them. The Notes are limited in right of
payment to certain collections and recoveries respecting the Trust Property, all
as more specifically set forth in the Trust Agreement. None of the Trustee, the
Collateral Agent, the Note Paying Agent, the Note Registrar, the Depositors, the
Administrator, the Note Insurer or the Subordinated Certificateholders or any
affiliate of any of them shall incur any personal liability in connection
herewith except as provided in the Trust Agreement. A copy of the Trust
Agreement may, upon request, be examined by any Noteholder during normal
business hours at the principal office of the Trustee and of the Note Paying
Agent and at such other places, if any, designated by the Depositors. The Trust
Agreement permits, with certain exceptions therein provided, the amendment
B-5
thereof and the modification of the rights and obligations of the parties
thereto under the Trust Agreement at any time by the Depositors, the Trustee and
the Collateral Agent), with the consent of the Note Insurer, but without the
consent of the Noteholders. In certain limited circumstances, the Trust
Agreement may only be amended by the Depositors, the Trustee and the Collateral
Agent, with the consent of the Note Insurer and the Holders of not less than a
majority of the aggregate outstanding Principal Amount of the Notes and, in
certain circumstances, all the Notes. Any such consent by the holder of this
Note shall be conclusive and binding on such Holder and on all future holders of
this Note and of any Note issued upon the transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent is made upon this
Notes.
As provided in the Trust Agreement and subject to certain limitations
set forth therein, the transfer of this Note is registrable in the Note Register
upon surrender of this Note for registration of transfer at the office or agency
of the Note Registrar, accompanied by a written instrument of transfer in form
satisfactory to the Note Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Notes of authorized denominations shall be issued to the designated transferee.
Transfers of this Note are subject to the restrictions set forth in
Article III of the Trust Agreement. The Holder of this Note shall indemnify the
Trustee, the Collateral Agent, the Note Paying Agent and the Note Registrar in
their individual and fiduciary capacities, the Note Insurer and the Depositors
against any liability that may result if the transfer is not exempt from
registration under the Securities Act of 1933. The holder of this Note shall be
deemed by its acceptance and holding of its Note to agree that none of the
Depositors, the Administrator, the Subordinated Certificateholders, the Trustee,
the Collateral Agent, the Note Insurer, the Note Paying Agent or the Note
Registrar is under an obligation to register this Note under the Securities Act
of 1933 or any other securities law.
The Notes are issuable only as registered Notes in denominations of
$100,000 original Principal Amount and integral multiples of $1,000 in excess
thereof. As provided in the Trust Agreement and subject to certain limitations
therein set forth, Notes are exchangeable for new Notes of authorized
denominations, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Note Registrar may require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
The obligations and responsibilities created by the Trust Agreement for
the benefit of the Noteholders shall terminate upon the payment in full of all
amounts required to be paid with respect to the Notes pursuant to the Trust
Agreement. The Trust may redeem the Notes as provided in the Trust Agreement on
a Payment Date as of which the outstanding Principal Amount of the Notes is less
than 10% of the original Principal Amount of the Notes.
The recitals contained herein shall be taken as the statements of the
Depositors, and the Trustee, the Collateral Agent, the Note Insurer, the Note
Paying Agent and the Note Registrar assume no responsibility for the correctness
thereof and make no representations as to the validity or sufficiency of this
Note or of the assignment of the Trust Property or any related document.
B-6
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Note Registrar, by manual or facsimile
signature, this Note shall not entitle the holder hereof to any benefit under
the Trust Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Note to be duly executed.
Dated: April 3, 2001 THE NELNET GROUP TRUST I
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
-------------------------------------------
Authorized Officer
B-7
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
-------------------------------------------------------------------------------
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
-------------------------------------------------------------------------------
Attorney to transfer said Note on the books of the Note Registrar, with full
power of substitution in the premises.
Dated: ------------------------*
Signature Guaranteed:
------------------------
* NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Note in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by either (a) a member or participants in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchanges Medallion Program or (b) a Securities depository
registered as a clearing agency with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
B-8
EXHIBIT C
[FORM OF SUBORDINATED CERTIFICATE]
NEITHER THIS CERTIFICATE NOR THE UNDERLYING RESIDUAL RIGHTS ARE INSURED
OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. TRANSFER OF THIS CERTIFICATE MAY ONLY BE MADE TO QUALIFIED
INSTITUTIONAL BUYERS AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933
WHICH ARE NOT EMPLOYEE PENSION PLANS AS DEFINED IN THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974 OR PLANS SUBJECT TO SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED. A TRANSFEREE IS REQUIRED TO SUBMIT A
REPRESENTATION LETTER AND AFFIDAVIT IN THE FORM OF EXHIBIT E TO THE TRUST
AGREEMENT REFERRED TO BELOW IN ORDER TO EFFECT A TRANSFER.
THIS CERTIFICATE MAY NOT BE ACQUIRED, DIRECTLY OR INDIRECTLY, FOR OR ON
BEHALF OF A PERSON WHO IS NOT A UNITED STATES PERSON (WITHIN THE MEANING OF
SECTION 7701 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED).
[TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THIS CERTIFICATE IS NOT
TRANSFERABLE]1
THE NELNET GROUP TRUST I
SUBORDINATED STUDENT LOAN INTEREST MARGIN CERTIFICATE
(This Certificate does not represent an obligation of, or an interest in,
NELnet, INC. or any of its affiliates).
Certificate No. _ Percentage Interest: ___%
CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Certificates referred to in the
within-mentioned Trust Agreement.
Date of Authentication: WILMINGTON TRUST COMPANY, as Certificate Registrar
April 3, 2001 By:
------------------------------------------------
Authorized Officer
------------------------
1 To be inserted in the Certificate to be held by the Holder of the
Special Interest.
C-1
THIS CERTIFIES THAT ___________, is the registered owner of the above
specified Percentage Interest in THE NELNET GROUP TRUST I (the "Trust").
The Trust was created pursuant to a Trust Agreement dated as of April 1,
2001 (the "Trust Agreement"), among MELMAC LLC, as a depositor, NELNET Student
Loan Corporation-1, as a depositor (the "NELNET Depositor and together with
MELMAC LLC, the "Depositors"), NELnet, Inc., as administrator (the
"Administrator"), Wilmington Trust Company, as trustee (the "Trustee"), and the
Chase Manhattan Bank as Collateral Agent, Note Registrar and Note Paying Agent,
a summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Trust Agreement.
This certificate is one of the duly authorized certificates designated
in the Trust Agreement as Subordinated Certificates (the "Subordinated
Certificates"). The Trust is also issuing 6.34% Student Loan Interest Margin
Securities (the "Notes"). This Subordinated Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement which is
incorporated herein by reference and to which the holder of this Subordinated
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. Distributions with respect to the Subordinated Certificates will be
made, but only after payment in full of the Notes, solely from the assets of the
Trust, which include (as more fully described in the Trust Agreement): (i) the
right to receive the residual cash-flow (the "Underlying Residual Rights") from
two master trust estates established under two underlying Indentures, (ii) the
NELNET Depositor's right to receive certain maintenance and operating expenses,
and (iii) the Collection Account, Reserve Account and Distribution Account
established under the Trust Agreement (collectively, the "Trust Property").
Distributions will be made with respect to the Subordinated Certificates
only to the extent set forth in the Trust Agreement, semi-annually, on the
second Business Day of each January and July, commencing January, 2002 (the
"Payment Date") to the person in whose name this Subordinated Certificate is
registered at the close of business on the second day immediately preceding such
Payment Date (the "Record Date").
It is the intent and agreement of the Depositors, the Subordinated
Certificateholders and the Noteholders that, for purposes of federal income,
state and local income and franchise and any other income taxes, the Trust will
be treated as a grantor trust or, if not, as a partnership with the Subordinated
Certificateholders being treated as partners in that partnership, and the Notes
will be treated as debt of the Trust. The Holder of this Subordinated
Certificate, by virtue of the acceptance hereof, agrees to treat, and to take no
action inconsistent with the treatment of, the Subordinated Certificates for
such tax purposes as partnership interests in the Trust.
Distributions on this Subordinated Certificate will be made by the
Certificate Paying Agent by check or money order mailed to the Subordinated
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Subordinated Certificate or the making of any notation
hereon or by wire transfer, in immediately available funds, to the account of
the Subordinated Certificateholder if the Subordinated Certificateholder shall
have provided to the Certificate Paying Agent appropriate written instructions
C-2
at least five Business Days prior to a Distribution Date. Notwithstanding the
above, the final distribution on this Subordinated Certificate will be made
after due notice by the Certificate Paying Agent of the pendency of such
distribution and only upon presentation and surrender of this Subordinated
Certificate at the office or agency maintained for that purpose by the
Certificate Paying Agent.
The Subordinated Certificates do not represent an obligation of, or an
interest in, the Depositors, the Administrator, the Trustee, the Collateral
Agent, the Certificate Paying Agent, the Certificate Registrar or any affiliate
of any of them. The Subordinated Certificates are limited in right of
distributions to certain collections and recoveries respecting the Trust
Property, but only after payment of all amounts the Notes are entitled to
receive on a Payment Date, all as more specifically set forth in the Trust
Agreement. None of the Trustee, the Collateral Agent, the Certificate Paying
Agent, the Certificate Registrar, the Depositors, the Administrator or the
Subordinated Certificateholders shall incur any personal liability in connection
herewith except as provided in the Trust Agreement. A copy of the Trust
Agreement may, upon request, be examined by any Subordinated Certificateholder
during normal business hours at the principal office of the Trustee and at such
other places, if any, designated by the Depositors.
As provided in the Trust Agreement and subject to certain limitations
set forth therein, the transfer of this Subordinated Certificate is registrable
in the Certificate Register upon surrender of this Subordinated Certificate for
registration of transfer at the office or agency of the Certificate Registrar,
accompanied by a written instrument of transfer in form satisfactory to the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Subordinated
Certificates of authorized denominations shall be issued to the designated
transferee.
No transfer of this Subordinated Certificate shall be made unless the
Certificate Registrar shall have received a Representation Letter and Affidavit
from the transferee in the form of Exhibit E to the Trust Agreement. The Holder
of this Subordinated Certificate shall indemnify the Trustee, Certificate Paying
Agent the Certificate Registrar in their individual and fiduciary capacities,
the Note Insurer and the Depositors against any liability that may result if the
transfer is not so exempt. The holder of this Subordinated Certificate shall be
deemed by its acceptance and holding of its Subordinated Certificate to agree
that none of the Depositors, the Administrator, the Trustee, the Collateral
Agent, the Certificate Paying Agent, the Note Insurer or the Certificate
Registrar is under an obligation to register this Subordinated Certificates
under the Securities Act of 1933 or any other securities law.
The recitals contained herein shall be taken as the statements of the
Depositors or the Subordinated Certificateholders, as the case may be, and the
Trustee assumes no responsibility for the correctness thereof. The Trustee makes
no representations as to the validity or sufficiency of this Subordinated
Certificate or of the assignment of the Trust Property or any related document.
C-3
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Certificate Registrar, by manual or facsimile
signature, this Subordinated Certificate shall not entitle the holder hereof to
any benefit under the Trust Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Subordinated Certificate to be duly
executed.
Dated: April 3, 2001 THE NELNET GROUP TRUST I
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By:
-----------------------------------------
Authorized Officer
C-4
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
--------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated: ---------------------------*
Signature Guaranteed:
----------------------------
* NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by either (a) a member or participants in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchanges Medallion Program or (b) a Securities depository
registered as a clearing agency with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
C-5
EXHIBIT D
[FORM OF NOTE PAYING AGENT'S PAYMENT DATE REPORT]
THE NELNET GROUP TRUST I
6.34% STUDENT LOAN INTEREST MARGIN SECURITIES
Payment Date: ___________________
1. Amount Available for such Payment Date (Stated separately by (i)
Underlying MELMAC Residual Right, (ii) Underlying NELNET Residual Right
and (iii) Maintenance and Operating Expenses and in the aggregate, and
listing date of each deposit into the Collection Account)
$____________________
2. Trustee Fee, Collateral Agent Fee, Note Insurer Premiums and
Administration Fee $____________________
3. Calculation of Interest Amount
(a) Interest on outstanding stated amount of Notes due on Payment Date
($--------------------)
(b) Interest Shortfall, if any, on Prior Payment Date
($--------------------)
(c) Interest on Interest Shortfall due on Payment Date
($--------------------)
(d) Total-Interest Amount
$-----------------------
4. Excess, if any, of Amount Available (line 1) over the sum of (i) line 2
and (ii) the Interest Amount (line 3(d)):
$---------------------
5. Surety Bond Payments and Insured Payments, if any, for such Payment Date
(stated separately)
$---------------------
6. Amount, if any, owed to Note Insurer on account of Surety Bond Payments
previously made:
$----------------------
D-1
7. Amount, if any, owed to Note Insurer as Reimburseable Amounts:
$------------------------
8. Outstanding Principal Amount of Notes immediately prior to such Payment
Date:
$---------------------
9. Recalculated Targeted Amount of Notes immediately prior to such Payment
Date:
$----------------------
10. Targeted Balance for such Payment Date:
$---------------------
11. Principal Payment Amount for such Payment Date:
$---------------------
12. Special Principal Payment, if any, for such Payment Date:
$---------------------
13. Specified Reserve Account Requirement for such Payment Date:
$---------------------
14. Amount on deposit in the first sub-account of the Reserve Account after
giving effect to all payments made on such Payment Date:
$----------------------
The Chase Manhattan Bank,
not in its individual capacity but solely as
Note Paying Agent
By:
-------------------------------------------
Enclosures
D-2
EXHIBIT E
[FORM OF TRANSFEREE'S REPRESENTATION LETTER AND AFFIDAVIT]
State of )
) ss:
County of )
THE NELNET GROUP TRUST I
[Student Loan Interest Margin Securities]
[Subordinated Student Loan Interest Margin Certificates]
Wilmington Trust Company, as Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Corporate Trust Administration
Dear Sirs:
1. In connection with our proposed purchase of the above referenced
[Notes][Subordinated Certificates] (the "[Notes][Subordinated
Certificates]") issued pursuant to the Trust Agreement dated as
of April 1, 2001 (the "Trust Agreement"), among MELMAC LLC, as a
depositor, NELNET Student Loan Corporation-1, as a depositor
(together with MELMAC LLC, the "Depositors"), as administrator
(the "Administrator"), Wilmington Trust Company, as Trustee, and
the Chase Manhattan Bank as Collateral Agent, Note Registrar and
Note Paying Agent, the undersigned represents as
follows:[He][She] is a [Title] of [Name of Transferee] (the
"Investor").
2. The Investor understands that the [Notes][Subordinated
Certificates] have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), and may not be sold
except as permitted in the following sentence and agrees, on its
own behalf and on behalf of any accounts for which it is acting
as hereinafter stated, that the [Notes][Subordinated
Certificates] may be resold, pledged or transferred only so long
as the [Notes][Subordinated Certificates] are eligible for
resale pursuant to Rule 144A under the Securities Act ("Rule
144A"), to a person whom it reasonably believes is a "qualified
institutional buyer" as defined in Rule 144A (a "QIB") that
purchases for its own account, or a QIB purchasing for the
account of a QIB, to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A or an
institutional "accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (an
"Institutional Accredited Investor") that represents that it is
buying the [Notes][Subordinated Certificates] for investment and
not with a view to the distribution thereof.
E-1
3. The Investor is (check appropriate box)
|_| a QIB; or
|_| an Accredited Investor that is buying without a view to
distribution of the [Notes][Subordinated Certificates].
4. In the normal course of its business, the Investor invests in or
purchases securities similar to the [Notes][Subordinated
Certificates], and the Investor has such knowledge and
experience in financial and business matters that it is capable
of evaluating the merits and risks of which purchasing the
[Notes][Subordinated Certificates]. The Investor is aware that
it (or any investor account on behalf of which the
[Notes][Subordinated Certificates] may be purchased) may be
required to bear the economic risk of an investment in the
[Notes][Subordinated Certificates] for an indefinite period of
time, and it is (or such account is) able to bear such risk for
an indefinite period.
5. The Investor is not acquiring such [Note] [Subordinated
Certificates] directly or indirectly for, or on behalf of, a
"benefit plan investor" as defined in, or subject to, the plan
asset regulations set forth at 29 C.F.R. Section 2510.3-101 with
respect to a Plan which is subject to Title I of ERISA or
Section 4975 of the Code. [* In lieu of making the foregoing
statement, the Investor may furnish to the Registrar a
certification satisfactory in form and substance to the
Registrar to the effect that the purchase or holding of such
Note directly or indirectly for, or on behalf of, the Transferee
qualifies for prohibited transaction exemptive relief under XXXX
00-00, XXXX 00-00, XXXX 00-00, XXXX 00-0, XXXX 84-14 or some
other applicable exemption.]
---------------------
* Available only in connection with a trasfer of the Notes; the Subordinated
Certificates may not be transferred to a "benefit plan investor."
E-2
6. The Investor: (a) acknowledges receipt of the Trust Agreement,
the Confidential Private Placement Memorandum (the "Placement
Memorandum") dated March 29, 2001, relating to the Notes and the
Underlying Agreements listed on Schedule II thereto; the
Investor acknowledges that the all payments will be based solely
on amounts to be received on the Underlying Residual Rights and
the Maintenance and Operating Expenses. The Investor understands
that it is not expected that the Confidential Private Placement
Memorandum will be updated to reflect the performance of the
Underlying Residual Rights and the Maintenance and Operating
Expenses or for any other purpose; and confirms that it has been
given the opportunity to conduct such investigation of the Trust
Agreement and the Underlying Residual Rights and the Maintenance
and Operating Expenses and ask such questions of officers of the
Depositors as it has considered necessary for purposes of its
investment decision.
7. The Investor is not acquiring such [Note] [Subordinated
Certificates], directly or indirectly, for or on behalf of a
person who is not a United States person (as defined in Section
7701 of the Code).
Very truly yours,
[INVESTOR]
By:
--------------------------
Name:
Title:
E-3
EXHIBIT F
DEBT SERVICE RESERVE SURETY BOND
F-1
EXHIBIT G
NOTE INSURANCE POLICY
G-1
EXHIBIT H
FORM OF CASH FLOW CERTIFICATE
H-1
EXHIBIT I
FORM OF NOTICE
I-1
EXHIBIT J
FORM OF DEMAND FOR PAYMENT
J-1
