Amended And Restated Warehouse Loan & Security Agr

EXECUTION COPY


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AMENDED AND RESTATED
WAREHOUSE LOAN AND SECURITY AGREEMENT


among


NELNET EDUCATION LOAN FUNDING, INC.,


as Borrower,


WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,


as Eligible Lender Trustee


ZIONS FIRST NATIONAL BANK,


as Trustee


THUNDER BAY FUNDING INC.,


as Lender


and


ROYAL BANK OF CANADA,


as Facility Agent and Alternate Lender


U.S. $450,000,000


Dated as of April 28, 2003


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TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS..................................................................... 2
Section 1.01. Certain Defined Terms.................................................. 2
Section 1.02. Other Terms............................................................ 25
Section 1.03. Computation of Time Periods............................................ 25 ARTICLE IA SALE OF PLEDGED COLLATERAL; ASSIGNMENT AND ASSUMPTIONS.......................... 25
Section 1.01A. Sale of Pledged Collateral.............................................. 25
Section 1.02A Assignment and Assumption............................................... 26 ARTICLE II THE FACILITY.................................................................... 26
Section 2.01. Advances............................................................... 26
Section 2.02. The Initial Advance and Subsequent Advances............................. 27
Section 2.03. Termination or Reduction of the Maximum Facility Amount................. 28
Section 2.04. Collection Account...................................................... 28
Section 2.05. Transfers from Collection Account....................................... 29
Section 2.06. Cash Reserve Account.................................................... 31
Section 2.07. Transfers from the Cash Reserve Account................................. 31
Section 2.07A. Escrow Account.......................................................... 32
Section 2.07B. Transfers from the Escrow Account....................................... 32
Section 2.08. Management of Collection Account, Cash Reserve Account and Escrow
Account................................................................. 33
Section 2.09. Pledged Collateral Assignment of the Transaction Documents.............. 34
Section 2.10. Grant of a Security Interest............................................ 34
Section 2.11. Evidence of Debt........................................................ 35
Section 2.12. Special Provisions Governing Advances................................... 35
Section 2.13. Payments by the Borrower................................................ 36
Section 2.14. Payment of Stamp Taxes, Etc............................................. 36
Section 2.15. Yield Protection........................................................ 36
Section 2.16. Extension of Termination Date........................................... 38


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TABLE OF CONTENTS
(continued)
PAGE ARTICLE III CONDITIONS OF ADVANCES.......................................................... 38
Section 3.01. Conditions Precedent to Initial Advance................................. 38
Section 3.02. Conditions Precedent to All Advances.................................... 39
Section 3.03. Conditions Precedent to Effectiveness................................... 40 ARTICLE IV REPRESENTATIONS AND WARRANTIES.................................................. 40
Section 4.01. General Representations and Warranties of the Borrower.................. 40
Section 4.02. Representations of the Borrower Regarding the Trustee's Security
Interest................................................................ 42
Section 4.03. Representations of the Eligible Lender Trustee.......................... 43 ARTICLE V COVENANTS OF THE BORROWER....................................................... 43
Section 5.01. General Covenants....................................................... 43
Section 5.02. Acquisition, Financing, Collection and Assignment of Student Loans...... 48
Section 5.03. Enforcement of Financed Loans........................................... 48
Section 5.04. Enforcement of Servicing Agreements..................................... 49
Section 5.05. Enforcement of Student Loan Purchase Agreements......................... 49
Section 5.06. Enforcement of Indemnification Agreement................................ 50
Section 5.07. Financed Loans Serviced by Great Lake Servicing Corporation............. 50
Section 5.08. Administration and Collection of Financed Loans......................... 50
Section 5.09. Amendment of Form of Student Loan Purchase Agreement.................... 51
Section 5.10. Custodian............................................................... 51
Section 5.11. Prepayments and Refinancing............................................. 51
Section 5.12. Periodic Reporting...................................................... 52
Section 5.13. UCC Matters; Protection and Perfection of Pledged Collateral; Delivery
of Documents............................................................ 52
Section 5.14. Obligations of the Borrower With Respect to Pledged Collateral.......... 53
Section 5.15. Collateral Call......................................................... 53
Section 5.16. Guarantor Limitations................................................... 54


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TABLE OF CONTENTS
(continued)
PAGE
Section 5.17. Covenants of the Borrower Regarding the Trustee's Security Interest..... 54 ARTICLE VI EVENTS OF DEFAULT............................................................... 54 ARTICLE VII TRUSTEE AND ELIGIBLE LENDER TRUSTEE............................................. 57
Section 7.01. Acceptance of Trust..................................................... 57
Section 7.02. Trustee's Right to Reliance............................................. 58
Section 7.03. Compensation of Trustee................................................. 58
Section 7.04. Resignation of Trustee.................................................. 59
Section 7.05. Removal of Trustee...................................................... 59
Section 7.06. Successor Trustee....................................................... 59
Section 7.07. Manner of Vesting Title in Trustee...................................... 60
Section 7.08. [RESERVED].............................................................. 60
Section 7.09. Trustee Covenants with Respect to "Eligible Lender" Status.............. 60
Section 7.10. Trustee's Status as an "Eligible Lender"................................ 61
Section 7.11. Acceptance of Duties of Eligible Lender Trustee......................... 61
Section 7.12. Eligible Lender Trustee Covenants with Respect to "Eligible Lender"
Status.................................................................. 61
Section 7.13. Compensation of Eligible Lender Trustee................................. 61
Section 7.14. Resignation of Eligible Lender Trustee.................................. 62
Section 7.15. Removal of Eligible Lender Trustee...................................... 62
Section 7.16. Successor Eligible Lender Trustee....................................... 62
Section 7.17. Eligible Lender Trustee's Status as an "Eligible Lender"................ 63 ARTICLE VIII INDEMNIFICATION................................................................. 63 ARTICLE IX FACILITY AGENT.................................................................. 66
Section 9.01. Authorization and Action of Facility Agent.............................. 66
Section 9.02. Agency Termination...................................................... 66
Section 9.03. Facility Agent's Reliance, Etc.......................................... 66
Section 9.04. Facility Agent and Affiliates........................................... 67
Section 9.05. Advance Decision........................................................ 67


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TABLE OF CONTENTS
(continued)


PAGE
Section 9.06. Successor Facility Agent................................................ 67 ARTICLE X MISCELLANEOUS................................................................... 68
Section 10.01. Amendments and Waivers.................................................. 68
Section 10.02. Notices, Etc............................................................ 68
Section 10.03. No Waiver; Remedies..................................................... 68
Section 10.04. Binding Effect; Assignability; Confidentiality.......................... 68
Section 10.05. Survival................................................................ 69
Section 10.06. Governing Law; Severability............................................. 69
Section 10.07. Submission to Jurisdiction; Waiver of Jury and Bond..................... 70
Section 10.08. Costs, Expenses and Taxes............................................... 71
Section 10.09. Recourse Against Certain Parties........................................ 71
Section 10.10. Execution in Counterparts; Severability; Integration.................... 72
Section 10.11. Confidentiality......................................................... 72
Section 10.12. Section Titles.......................................................... 73
Section 10.13. Entire Agreement........................................................ 73
Section 10.14. No Petition............................................................. 73
Section 10.15. Limited Recourse; Subordination......................................... 74


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EXHIBIT A - FORM OF STUDENT LOAN PURCHASE AGREEMENT EXHIBIT B - FORM OF VALUATION AGENT AGREEMENT EXHIBIT C - REGULAR ADVANCE NOTICE EXHIBIT D - SPECIAL ADVANCE NOTICE EXHIBIT E - MONTHLY REPORT EXHIBIT F - FORMS OF ASSET COVERAGE REPORT AND CASH RELEASE
CERTIFICATE EXHIBIT G - COPIES OF CUSTODIAN AGREEMENTS EXHIBIT H - FORM OF PARTICIPATION AGREEMENT EXHIBIT I - CONDITIONS TO INITIAL ADVANCE EXHIBIT J - CONDITIONS TO EFFECTIVENESS DATE EXHIBIT K - FORM OF NOTICE OF RELEASE


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THIS AMENDED AND RESTATED WAREHOUSE LOAN AND SECURITY AGREEMENT (this "Agreement") is made as of April 28, 2003, among NELNET EDUCATION LOAN FUNDING, INC., f/k/a NEBHELP, INC., a corporation duly organized under the laws of the State of Nebraska, as the borrower hereunder (the "Borrower"); WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, as eligible lender trustee (the "Eligible Lender Trustee"); ZIONS FIRST NATIONAL BANK, a national banking association, as an eligible lender and trustee hereunder (the "Trustee"), THUNDER BAY FUNDING INC., a Delaware corporation, as the lender hereunder (the "Lender"); ROYAL BANK OF CANADA, a Canadian banking corporation, as the alternate lender hereunder (in such capacity, the "Alternate Lender") and as agent of the Lender, the Alternate Lender and the herein defined Liquidity Facility Providers and Credit Support Providers (in such capacity, the "Facility Agent"); and NELnet STUDENT LOAN WAREHOUSE CORPORATION-1, a corporation duly organized under the laws of the State of Nevada, as the original borrower and assignor (the "Original Borrower") (solely with respect to Article IA of this Agreement).


PRELIMINARY STATEMENTS


WHEREAS, the Original Borrower, the Trustee, the Lender, the Alternate Lender and the Facility Agent entered into that certain Warehouse Loan and Security Agreement dated as of February 1, 2002 (as previously amended, the "Original Agreement"); and


WHEREAS, the Original Borrower has purchased from time to time certain Eligible Loans (as hereinafter defined) in accordance with various Student Loan Purchase Agreements (as hereinafter defined) (such purchases constituting the "Transactions"); and


WHEREAS, the Borrower funded the Transactions through loans made by the Lender and the Alternate Lender under the Original Agreement on the terms and conditions set forth therein; and


WHEREAS, the Original Borrower desires to sell to the Borrower all of its rights, title and interest in and to the Pledged Collateral and to assign to the Borrower all of its rights and obligations under the Original Agreement and the Transaction Documents (as hereinafter defined); and


WHEREAS, the Lender, the Alternate Lender and the Facility Agent are willing to consent to such sale and assignment on the terms provided herein; and


WHEREAS, the Borrower is willing to purchase the Pledged Collateral and to accept and assume all of the Original Borrower's rights and obligations under the Original Agreement and the Transaction Documents; and


WHEREAS, on or after the sale, assignment and assumption provided for herein, the Borrower proposes to engage in Transactions; and


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WHEREAS, the Borrower desires to fund the Transactions, either at the time such Transactions are entered into or following the temporary financing thereof under a Covered Indenture (as hereinafter defined), through loans made by the Lender and the Alternate Lender on the terms and conditions set forth herein;


WHEREAS, to provide liquidity support to the Lender in connection with the loans made by it hereunder, the Lender and Royal Bank of Canada have entered into the Liquidity Agreement (as hereinafter defined), pursuant to which the Lender may, from time to time, assign all or a part of such loans to Royal Bank of Canada and/or to certain other Liquidity Facility Providers (as hereinafter defined) pursuant to the terms of the Liquidity Agreement, and as a result of such assignment, such financial institutions would become Secured Creditors hereunder; and


WHEREAS, to provide credit support to the Lender in connection with the loans being made by it hereunder, the Lender and Royal Bank of Canada have entered into a Credit Support Agreement (as hereinafter defined) pursuant to which Royal Bank of Canada or certain other Credit Support Providers (as hereinafter defined) have agreed to purchase undivided interests in loans not purchased by the Liquidity Facility Providers, and as a result of such assignment, such financial institutions would become Secured Creditors hereunder.


NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto agree as follows:


ARTICLE I


DEFINITIONS


Section 1.01. Certain Defined Terms. Certain capitalized terms used throughout this Agreement are defined above or in this Section.


As used in this Agreement and its exhibits, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).


"Advance" means any Regular Advance, any Special Advance, any Liquidity Advance, any Credit Support Advance and any Rollover Advance.


"Advance Date" means, with respect to any Advance, the date on which such Advance is funded.


"Advance Percentage Calculation Report" means the report prepared by the Valuation Agent and delivered to the Facility Agent and the Borrower not later than four Business Days prior to each Advance, other than a Special Advance or a Rollover Advance, setting forth the Maximum Advance Percentage for the Eligible Loans to be financed with such Advance, in the form attached as Exhibit A to the Valuation Agent Agreement. The Maximum Advance Percentage determined pursuant to any Advance Percentage Calculation Report with respect to any Financed Loans shall remain in effect


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with respect to such Financed Loans until the Advance Date immediately following the delivery of the next Valuation Report delivered pursuant to Section 5.12 hereof.


"Adverse Claim" means a lien, security interest, charge, encumbrance or other right or claim or restriction in favor of any Person (other than, with respect to the Pledged Collateral, any lien, security interest, charge, encumbrance or other right or claim or restriction in favor of the Trustee for the benefit of the Secured Creditors).


"Affected Party" means the Lender, the Alternate Lender, each Liquidity Facility Provider, each Credit Support Provider and any assignee or participant of the Lender, the Alternate Lender, any Liquidity Facility Provider or any Credit Support Provider.


"Affiliate" when used with respect to a Person means any other Person controlling, controlled by or under common control with such Person. A Person shall be deemed to control another person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests or otherwise.


"Aggregate Market Value" means, as of any date of determination, the sum of (a) with respect to assets in the Pledged Collateral which are Financed Loans as of such date, (i) the outstanding Principal Balance of such Financed Loans, as set forth in the most recently delivered Valuation Report, multiplied by the Loan Valuation Percentage, plus, without duplication, (ii) 100% of any accrued interest thereon, and all accrued and unpaid Special Allowance Payments and interest subsidies, if any, thereon (other than the portion thereof, if any, attributable to the Higher SAP Differentials) to such date; (b) with respect to assets in the Pledged Collateral which are Permitted Investments and other cash balances, if any, on deposit in the Collection Account and the Cash Reserve Account, the principal balance thereof together with all interest accrued thereon; and (c) payments on Financed Loans or other assets received by a Servicer or the Borrower and not yet transferred to the Trustee (other than the portion thereof, if any, attributable to the Higher SAP Differentials); provided, however, if subsequent to any repayment or refinancing pursuant to Section 5.11 hereof the Principal Balance of Defaulted Student Loans exceeds 10% of the Principal Balance of all Financed Loans in "repayment status", the Aggregate Market Value of all Defaulted Student Loans shall be valued separately as Defaulted Student Loans on the related Valuation Date with a Loan Valuation Percentage of 97% for the purposes of clause (a)(i) above.


"Agreement" means this Amended and Restated Warehouse Loan and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time hereafter.


"Alternate Advance Rate" means the interest rate to be paid on Regular Bank Advances, Liquidity Advances and Credit Support Advances. The Alternate Advance Rate is the annual interest rate equal to either: (a) the sum of the Base Rate and 2.0% if such Regular Bank Advance, Liquidity Advance or Credit Support Advance is


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the result of the occurrence of an Event of Default hereunder; (b) the sum of the applicable LIBOR and 1.00% if such Regular Bank Advance, Liquidity Advance or Credit Support Advance is not the result of the occurrence of an Event of Default hereunder; (c) the sum of the Base Rate and 1.00% if (i) such Regular Bank Advance, Liquidity Advance or Credit Support Advance is funded on less than two (2) Business Days notice, or (ii) LIBOR cannot be determined, or (iii) it shall be unlawful for the Liquidity Facility Provider or the Credit Support Provider to obtain funds in the London interbank market to fund Advances; or (d) the Base Rate, if the Facility Agent advised the Borrower that an Alternate Interest Amount or a Liquidity Interest Amount based on LIBOR will not fully reflect the cost to the Alternate Lender, the Liquidity Facility Provider or the Credit Facility Provider, as applicable, of funding Advances based on LIBOR. The Alternate Advance Rate shall be computed on the basis of the actual number days in such interest period assuming a 360 day year, or if determined using the Base Rate, on the basis of the actual number days in such interest period using a 365 or, when applicable, 366-day year.


"Alternate Interest Amount" means with respect to any Calculation Period, an amount calculated by multiplying the average outstanding Regular Bank Advances for such Calculation Period by the weighted average Alternate Advance Rate for all Regular Bank Advances during such Calculation Period.


"Alternate Lender" means Royal Bank of Canada, each Person who accepts an assignment of Royal Bank of Canada's rights and obligations hereunder pursuant to Section 10.04, and the successors and assigns of any of them. The Alternate Lender may include one or more Persons following an assignment pursuant to Section 10.04, and if more than one Person, each Person who is an Alternate Lender will have the rights and obligations with respect to Advances in the respective percentages specified in the agreement(s) governing such assignment(s).


"Alternate Lender Termination Date" means June 1, 2003 (unless such date is extended pursuant to Section 2.16(b) hereof).


"Asset Coverage Ratio" means, as of the date of any Valuation Report, the ratio of (a) the Aggregate Market Value of assets in the Pledged Collateral as of such date to (b) the Liabilities as of such date and rounding to the nearest second decimal place.


"Asset Coverage Report" means, means a report furnished by the Portfolio Administrator to the Valuation Agent, the Facility Agent and the Borrower pursuant to Section 5.12(b) hereof, the form of which is attached as Exhibit F hereto.


"Authorized Officer of the Borrower" means the Borrower's president, chief financial officer, any vice president or assistant vice president.


"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. Section 101 et seq.), as amended from time to time, and any successor statute.


"Base Rate" means the rate of interest most recently announced by the Facility Agent as its prime rate. The Base Rate is not necessarily intended to be the


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lowest per annum rate of interest determined by the Facility Agent in connection with extensions of credit. The Base Rate shall change from time to time as the Facility Agent's prime rate changes.


"Benefit Plan" means any employee benefit plan as defined in Section 3(3) of ERISA in respect of which the Borrower or any ERISA Affiliate of the Borrower is, or at any time during the immediately preceding six years was, an "employer" as defined in Section 3(5) of ERISA.


"Borrower" means Nelnet Education Loan Funding, Inc., f/k/a NEBHELP, INC., a Nebraska corporation, and its successors and assigns.


"Business Day" means a day of the year other than a Saturday or a Sunday on which banks are not authorized or required to close in New York City or the city where the principal office of the Trustee is located (presently Denver, Colorado); provided, however, if the term "Business Day" is used in connection with LIBOR, means any day of the year on which dealings in dollar deposits are carried on in the London interbank market.


"Calculation Date" means the fourth Business Day preceding each Settlement Date.


"Calculation Period" means the calendar month preceding each Settlement Date.


"Cash Reserve Account" means the special account created pursuant to Section 2.06 hereof.


"Cash Reserve Requirement" means, as of any date of determination, one-half of one percent (0.50%) of the Outstanding Facility Amount as of such date.


"Closing Date" means February 14, 2002.


"Code" means the Internal Revenue Code of 1986, as amended, or any successor statute and the regulations promulgated and rulings issued thereunder.


"Collection Account" means the special account created pursuant to Section 2.04 hereof.


"Collection Advance Subaccount" means a subaccount established within the Collection Account pursuant ...