Exhibit 2.15
SENIOR STOCK PURCHASE (CALL) OPTION AGREEMENT
By and Between
NELNET, INC.
and
MAINE EDUCATIONAL LOAN MARKETING CORPORATION
Dated June 30, 2000
NEITHER THIS SECURITY NOR ANY OF THE SENIOR STOCK TO WHICH IT RELATES HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE "BLUE SKY" OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED OR OFFERED FOR SALE, UNLESS IT HAS BEEN REGISTERED
UNDER THE SECURITIES ACT AND ANY APPLICABLE "BLUE SKY" OR SECURITIES LAWS OR
UNLESS THE TRANSACTION IS EXEMPT FROM SUCH REGISTRATION UNDER APPLICABLE LAW.
MOREOVER, NONE OF THE SENIOR STOCK TO WHICH THIS SECURITY RELATES MAY BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IF THE SALE, PLEDGE OR TRANSFER (INCLUDING
SUBDIVISION) WOULD RESULT IN THE LOSS OF ANY APPLICABLE EXEMPTION FROM THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
SENIOR STOCK PURCHASE (CALL) OPTION AGREEMENT
This Senior Stock Purchase (Call) Option Agreement (the "Agreement") is
made and entered into as of the 30th day of June, 2000, by and between Maine
Educational Loan Marketing Corporation, a Maine non-profit corporation (the
"Foundation") and NELnet, Inc., a Nevada corporation ("NELnet").
WHEREAS, the Foundation is a non-profit corporation and previously was
the designated secondary market in the State of Maine engaged in a program of
acquiring interests in Student Loans (as defined herein) in accordance with the
Higher Education Act (as defined herein), which are financed by Qualified
Scholarship Funding Bonds (as described herein);
WHEREAS, the Foundation has heretofore elected to terminate its prior
status as a qualified scholarship funding corporation and has effected a
Conversion (as defined herein) of its Student Loan financing business pursuant
to Section 150(d)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"), by means of a transfer of certain assets and liabilities to its wholly
owned subsidiary MELMAC, Inc., a Nevada for-profit corporation ("NEWCO"), and
further transfers to MELMAC LLC, a Delaware limited liability company ("LLC") as
described more particularly in the Agreement and Plan of Conversion, dated as of
June 22, 2000, by and between the Foundation, NEWCO and LLC (the "Conversion
Agreement"), in order to further advance the interests of education in the State
of Maine;
WHEREAS, NELnet desires to acquire an option to purchase all of the
issued and outstanding Senior Stock of NEWCO and the Foundation is willing to
sell such an option to NELnet.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants, promises and agreements contained herein, the parties hereto
agree as follows:
I.
DEFINITIONS AND USE OF PHRASES
As used in this Agreement, the following capitalized terms, unless the
context used clearly indicates another or different meaning or intent, shall
have the following meanings. Certain other capitalized terms, if not defined
herein, shall have the meanings given to such terms in the Articles of
Incorporation of NEWCO as filed for record as of June 30, 2000, and attached
hereto as Exhibit "A."
"Authorized Signatory" shall mean any duly authorized officer of the
party in question, if it is a corporation, or general partner of the party in
question, if it is a partnership.
"Bona Fide Third Party Offer" shall mean an unsolicited offer received
prior to the termination of this Agreement to purchase the Senior Stock for cash
for a price in excess of the greater of $30 million or the then fair market
value of the Senior Stock for purposes of Section 150(d)(3) of the Code from a
third party unrelated to the Foundation, which party the
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Foundation determines has the financial resources to purchase the Senior Stock,
and which offer the Foundation reasonably determines is a better offer than the
terms of this Agreement, giving effect to all terms of this Agreement, including
without limitation Section 7.7 hereof and the interest of promoting education in
the State of Maine.
"Business Day" shall mean any day on which banks located in New York,
New York, Portland, Maine, or Lincoln, Nebraska are not authorized or required
to close.
"Closing" shall mean the events that are to take place on the Exercise
Date, including payment of the Exercise Price and delivery of the Senior Stock
and the certificates, opinions and other items specified in this Agreement.
"Conversion" shall mean the termination by the Foundation of its prior
status as a qualified scholarship funding corporation under Section 150(d)(2) of
the Code and consummation of the transactions described in Section 150(d)(3) of
the Code as further set forth in the Conversion Agreement.
"Conversion Agreement" shall mean the Agreement and Plan of Conversion
dated as of June 22, 2000, by and among the Foundation NEWCO and LLC.
"Conversion Date" shall mean the date on which the Conversion took
place.
"Deposit" shall mean the deposit in the amount of $1 million paid by
NELnet to the Foundation as of the date of this Agreement pursuant to the terms
of the Senior Stock Sale (Put) Option Agreement.
"Election" shall mean the Foundation's duly authorized election under
Section 150(d)(3) of the Code to effect the Conversion.
"Exercise Date" shall mean the date identified in the Exercise Notice
as the date on which NELnet is to purchase from the Foundation the Senior Stock
that is authorized hereunder to be the Exercise Date.
"Exercise Notice" shall mean written notice from NELnet to the
Foundation signed by any Authorized Signatory stating that NELnet elects to
exercise the Option and therefore to require that the Foundation sell to NELnet
all of the Senior Stock, subject to and upon the terms and conditions of the
Option, on a permitted Exercise Date specified in the notice.
"Exercise Price" shall mean, for all of the Senior Stock, $30 million,
or such greater amount as shall be agreed to by MELMAC and NELnet as set forth
in Section 6.1(i) hereof, plus all undistributed earnings, if any, which
constitute Legally Available Funds.
"FFELP Loans" shall mean loans guaranteed and or subsidized under and
pursuant to the Federal Family Education Loan Program authorized by the Higher
Education Act.
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"Financial Statements" shall mean the audited financial statements of
the Foundation for the year ended December 31, 1999, the most recent unaudited
financial statements of the Foundation available prior to the Conversion Date,
and an accurate and complete pro forma unaudited balance sheet of NEWCO as of
the Conversion Date, all prepared in accordance with generally accepted
accounting principles.
"Higher Education Act" shall mean the Higher Education Act of 1965, as
amended or supplemented from time to time, or any successor federal act and all
regulations, public directives, public bulletins and public guidelines
promulgated from time to time thereunder.
"Limited Recourse Promissory Note" shall mean the Limited Recourse
Promissory Note dated June 30, 2000, in the principal amount of $3,318,914.39
from the Foundation to MES-Maine Education Services.
"Option" shall mean the right which NELnet acquires under this
Agreement to require that the Foundation sell to NELnet all of the Senior Stock,
subject to and in accordance with the terms and conditions of this Agreement.
"Option Price" shall mean, collectively, the following consideration:
(a) a cash payment in the amount of $10,000, and (b) NELnet entering into the
Senior Stock Sale (Put) Option Agreement.
"Person" shall mean any corporation, limited liability company, natural
person, firm, joint venture, partnership, trust, unincorporated organization,
enterprise, government or any department or agency of any government.
"Senior Stock" shall mean all of the issued and outstanding Senior
Stock of NEWCO as described in the Articles of Incorporation of NEWCO and which
satisfies the criteria for such stock as set forth in Section 150(d)(3)(D) of
the Code.
"Senior Stock Sale (Put) Option Agreement" shall mean the agreement of
that name in the form attached hereto as Exhibit B.
II.
GRANT OF THE OPTION
2.1 Grant. In return for payment of the Option Price, the Foundation
hereby conveys and grants the Option to NELnet.
2.2 Option Price. NELnet hereby remits to the Foundation, and the
Foundation hereby acknowledges receipt of, the Option Price.
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III.
THE OPTION
3.1 Rights and Privileges. NELnet, as holder of the Option, is hereby
granted the right and privilege, subject to and in accordance with the terms and
conditions of this Agreement, to require that the Foundation sell all of the
Senior Stock that is owned by the Foundation to NELnet on the Exercise Date at a
purchase price equal to the Exercise Price.
3.2 Exercise Date. The Exercise Date may be any Business Day from and
including the 271st day (or the next Business Day if not a Business Day) to and
including the 330th day (or the next Business Day if not a Business Day)
following the Conversion Date that is identified in an Exercise Notice properly
completed and delivered to the Foundation in accordance with this Agreement.
3.3 Exercise of the Option. In order to exercise the Option, NELnet
must deliver to the Foundation not less than two (2) Business Days and not more
than thirty (30) days before the designated Exercise Date (but in no event
earlier than the 241st day following the Conversion Date) an Exercise Notice
fully completed and executed by NELnet.
3.4 Payment of Exercise Price. On the Exercise Date NELnet shall pay to
the Foundation the Exercise Price, less the amount of the Deposit, in
immediately available funds by wire transfer to the account and bank of which
the Foundation shall give NELnet at least one (1) day's prior written notice.
The Foundation shall cause the Senior Stock Redemption Price to be
determined in a manner that is substantially in accordance with the Articles of
Incorporation of NEWCO. The expenses arising from such determination shall be
paid by the Foundation. For this purpose the Foundation and NEWCO shall be the
parties charged with the duty to attempt to reach agreement if the evaluations
of Senior Stock Fair Market Value differ and to make other determinations with
respect to NEWCO. During the time that the parties are attempting to determine
the Senior Stock Redemption Price, the Exercise Date shall be delayed and, if it
is delayed beyond the latest date specified in Section 3.2 hereof, it shall
nevertheless be an authorized Exercise Date hereunder. If so delayed, the
Exercise Date shall be the third Business Day following the day of which the
Senior Stock Redemption Price is determined aforesaid.
3.5 Delivery of Senior Stock. On the Exercise Date, and upon receipt of
the Exercise Price as aforesaid, or evidence satisfactory to the Foundation that
the Exercise Price has been paid as required hereunder, the Foundation shall
deliver to or upon the order of NELnet one or more stock certificates
representing all of the issued and outstanding Senior Stock of NEWCO together
with one stock power for each such stock certificate, in each case signed by an
Authorized Signatory of the Foundation and listing NELnet as the transferee.
Said delivery shall take place on the Exercise Date as part of the Closing at
the offices of Xxxxx Xxxx LLP in Denver, Colorado, or such other place as the
parties shall mutually agree.
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IV.
REPRESENTATIONS AND WARRANTIES
4.1 The Foundation's Representations and Warranties. The Foundation
hereby represents and warrants, on and as of the date hereof and on and as of
the Exercise Date, as follows:
(a) Ownership of Senior Stock. The Foundation is the lawful
record and beneficial owner of all issued and outstanding Senior Stock,
free and clear of all liens, claims, security interests, pledges,
encumbrances and restrictions of every kind or nature whatsoever. NEWCO
has no outstanding equity securities of any class or series other than
the Senior Stock, and NEWCO will issue no additional capital stock or
equity interest. Other than this Agreement and the Senior Stock Sale
(Put) Option Agreement, there are no authorized or outstanding
subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or arrangements
of any character or nature whatsoever, under which NEWCO or the
Foundation are or may become obligated to issue, assign or transfer any
shares of the capital stock of NEWCO. Upon the delivery to NELnet at
the Closing of the certificates representing the Senior Stock, NELnet
will be the lawful owner of 100% of the Senior Stock of NEWCO, free and
clear of all liens, claims, security interests, pledges, encumbrances
or restrictions of any kind or nature whatsoever (other than liens,
claims, security interests, pledges, encumbrances or restrictions of
any kind or nature whatsoever created by NELnet). NEWCO is the owner of
100% of the stock and equity interest in MELMAC Enterprises, Inc.
("Enterprises"), and NEWCO and Enterprises are the sole members of LLC,
with NEWCO holding a 99% interest and Enterprises a 1% interest in the
LLC.
(b) Power and Authority; No Conflict or Consent. The
Foundation has the necessary power and authority to enter into this
Agreement and to perform the obligations to be performed by the
Foundation hereunder, and this Agreement is valid and binding upon the
Foundation and enforceable in accordance with its terms, subject to all
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally, and subject, as to enforceability, to general
principles of equity, whether applied in a proceeding in equity or in
law. The execution and delivery of this Agreement by the Foundation do
not, and the consummation of the transactions contemplated hereby and
the performance by the Foundation of the terms of this Agreement will
not, (i) violate provisions of the Foundation's Articles of
Incorporation or Bylaws, any material indenture, loan agreement,
contract or other instrument to which the Foundation is a party or by
which it is bound or any order, writ, injunction, any agreement,
instrument, order, judgment or decree to which the Foundation is bound
or (ii) require the consent of any lender or other third party not
obtained.
(c) Good Standing of NEWCO, Enterprises and LLC. (i) NEWCO is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has all material licenses and
qualifications necessary for it to conduct its
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business as it is now being conducted; (ii) Enterprises is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Nevada and has all material licenses and
qualifications necessary for it to conduct its business as it is now
being conducted; and (iii) LLC is a limited liability company validly
existing and in good standing under the laws of the State of Delaware
and has all material licenses and qualifications necessary for it to
conduct its business as it is now being conducted.
(d) Organizational Documents of NEWCO, Enterprises and LLC.
True and complete copies of NEWCO's and Enterprises' Articles of
Incorporation and Bylaws, and any amendments thereto, and true and
complete copies of LLC's Limited Liability Company Agreement, and any
amendments thereto, presently in effect, have been delivered to NELnet.
(e) Capitalization of NEWCO. NEWCO's authorized capital stock
consists of one hundred (100) shares of Common Stock, $0.01 par value
per share, of which zero (0) shares are issued and outstanding, and one
hundred (100) shares of Senior Stock, $0.01 par value per share, of
which one (1) share is issued and outstanding and owned by the
Foundation. Such sole share of Senior Stock is duly authorized, validly
issued, fully paid and nonassessable.
(f) No Liens. Except for liens or other encumbrances arising
from the Indentures (as defined in the Conversion Agreement) governing
the indebtedness assumed by LLC thereunder and subject to the fact that
the Limited Recourse Promissory Note (assumed by NEWCO) is payable from
Legally Available Funds derived from the Indentures as provided in the
Limited Recourse Promissory Note, and subject to legal title to any
FFELP Loans being held by eligible lender trustees, to the best of the
Foundation's knowledge, each of NEWCO, Enterprises and LLC is the sole
and unconditional owner of its assets and properties, free and clear of
any mortgages, liens, pledges, privileges, security interests, charges
or encumbrances of any kind or nature whatsoever.
(g) Leases. None of NEWCO, Enterprises or LLC is a party to
any leases of real property or personal property.
(h) Material Contracts. True and correct copies of all
contracts, agreements and commitments (other than leases) which are
binding upon NEWCO, Enterprises and LLC and under which the liability
of any such company is, or could be, in excess of $50,000 in the
aggregate have been delivered or made available to NELnet. To the
Foundation's knowledge, no person or entity has claimed that any of the
documents referred to in this clause (h) are invalid or unenforceable,
nor is there any existing default thereunder by any party thereto. Each
of NEWCO, Enterprises and LLC, as applicable, shall continue to be
entitled to the benefits as a party to all of the agreements referred
to in this clause (h). The execution and performance of this Agreement
and the consummation of the transactions contemplated hereby and
related thereto will not result in a breach of, nor constitute a
default under any of, or require consent of any person pursuant to, any
of the agreements as set forth in this clause (h).
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(i) Brokers and Finders. Neither the Foundation nor any of its
respective officers, directors or employees, subsidiaries or affiliates
has employed any broker or finder or incurred any material liability
for any financial advisory fees, brokerage fees, commissions or
finder's fees in connection with this Agreement that has not been or
cannot be satisfied by the Foundation.
(j) No Subsidiaries. NEWCO has no subsidiaries except MELMAC
Enterprises, Inc., a Nevada corporation ("Enterprise") and LLC.
(k) No Litigation. To the Foundation's knowledge, there are no
actions, claims, proceedings, litigation or investigations pending or
threatened against NEWCO, Enterprises and LLC with respect to its
business, in law or equity, before any federal, state, municipal or
other governmental court, tribunal, arbitration panel, department,
commission, board, bureau, agency or instrumentality, domestic or
foreign. To the Foundation's knowledge, none of NEWCO, Enterprises or
LLC is (a) subject to any outstanding order of any foreign, federal,
state or local agency of which NEWCO, Enterprises or LLC as applicable,
has actual knowledge or (b) a party to any action, suit or proceeding
in which any claim or demand is asserted with respect to its business
or properties. To the Foundation's knowledge, none of NEWCO,
Enterprises or LLC is in default with respect to any order, writ,
injunction or decree of any court or federal, state or municipal or
other governmental court, tribunal, arbitration panel, department,
commission, board, bureau, agency or instrumentality, domestic or
foreign.
(l) Compensation of Employees. NEWCO, Enterprises and LLC have
no employees.
(m) Tax Returns. All material federal, state and local tax
returns and tax reports required to be filed by NEWCO, Enterprises and
LLC on or before the Closing Date have been or will be timely filed
with the appropriate governmental agencies and taxing authorities in
all jurisdictions in which such returns and reports are required to be
filed, and all tax liabilities (including interest and penalties
thereon) due from NEWCO, Enterprises or LLC have been fully paid by
NEWCO, Enterprises or LLC, as applicable, or adequate provisions
therefor shall have been made on the Financial Statements in accordance
with GAAP for the payment of all taxes due and payable with respect to
such tax returns.
(n) No Employee Benefit Plans. None of NEWCO, Enterprises or
LLC has "employee benefit plans" as that term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that currently are maintained by, sponsored in whole or in
part by, or contributed to by, or on behalf of, NEWCO, Enterprises or
LLC, as applicable, for the benefit of its employees, retirees,
dependents, spouses, directors, independent contractors or other
beneficiaries.
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(o) Insurance. A true and complete list of all insurance
policy types presently in effect which insure the assets and the other
properties or risks of NEWCO, Enterprises or LLC has been delivered to
NELnet.
(p) Financial Statements. True and correct copies of the
Financial Statements are attached hereto as Exhibit B, and the
Financial Statements (i) present fairly, accurately and completely the
financial position of the Foundation or NEWCO, Enterprises or LLC, as
the case may be, as of the date indicated and the results of the
operations of the Foundation or NEWCO, Enterprises or LLC, as the case
may be, for the periods specified, and (ii) the Financial Statements
have been prepared in conformity with generally accepted accounting
principles consistently applied in all material respects for the
periods involved, except as otherwise stated in the notes thereto; and
prior to the Closing the Foundation shall deliver or cause to be
delivered to NELnet an accurate and complete unaudited balance sheet of
NEWCO, Enterprises and LLC, prepared in accordance with generally
accepted accounting principles consistently applied in all material
respects as of the end of the month immediately prior to the Exercise
Date.
(q) Conversion Agreement. The Foundation has delivered to
NELnet a true and correct copy of a fully executed Conversion
Agreement.
(r) Management and Servicing Agreement. The Foundation has
delivered to NELnet a true and correct copy of each initial Approved
Servicing Contract and Approved Management Contract.
(s) Debt Securities and Trust Estates. The Conversion
Agreement sets forth the indebtedness assumed by NEWCO and LLC on June
30, 2000, which (except for amounts required to be reconciled pursuant
to Section 5.01 of the Conversion Agreement) includes with respect to
LLC, only the indebtedness outstanding under the Indentures as set
forth in Exhibit B to the Conversion Agreement and with respect to
NEWCO, the Limited Recourse Promissory Note.
(t) Higher Education Act. LLC has entered into trust
arrangements with eligible lenders in accordance with the Higher
Education Act under which title to all FFELP Loans pledged to secure
the Qualified Scholarship Funding Bonds (as defined in the Conversion
Agreement) or assumed by LLC is or will be held by such eligible
lenders.
(u) Compliance With Laws. To the best of the Foundation's
knowledge, each of NEWCO, Enterprises and LLC has complied in all
material respects and is complying in all material respects with all
federal, state, county and local laws, orders, ordinances, rules and
regulations relating to its properties, business and operation and
conduct thereof. To the best of the Foundation's knowledge, none of
NEWCO, Enterprises or LLC has received notice of violation of any
applicable regulation or order or other law, ordinance, regulation or
requirement relating to the operation of its business or properties.
The transactions contemplated by this Agreement will not result in
breach of or constitute a default under any statute, law, ordinance,
decree, order, rule or regulation or of any decree, order, rule of any
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court, governmental authority or arbitrator which is binding on NEWCO,
the Foundation, Enterprises or LLC or relating to the business or
assets of NEWCO, Enterprises or LLC, except for such defaults that do
not and are not reasonably likely to have, individually or in the
aggregate, a material adverse effect on the business, financial
condition or results of operation of NEWCO, Enterprises and LLC.
(v) Absence of Certain Events. Since the Conversion Date there
has not been (unless approved in writing by NELnet):
(i) any sale of assets or properties of NEWCO,
Enterprises or LLC other than in the ordinary course of
business;
(ii) any damage or destruction affecting the assets
or properties of NEWCO, Enterprises or LLC in excess of
$50,000.00 in the aggregate;
(iii) any capital expenditure or commitments or
addition to equity of NEWCO, Enterprises and LLC in excess of
$50,000.00 in the aggregate.
(iv) any declaration, setting aside or payment of any
dividend or any distribution in respect of the capital stock
of NEWCO, Enterprises or LLC or any redemption, purchase or
other acquisition by the Foundation of such capital stock, or
any payments to shareholders as such; or
(v) any material adverse change in the business of
NEWCO, Enterprises or LLC.
(w) Compliance with Laws. The Foundation has complied in all
material respects and is complying in all material respects with all
federal, state, county and local laws, orders, ordinances, rules and
regulations relating to its properties, business and operation and
conduct thereof.
(x) Compliance with Section 150(d). The Foundation, in
accomplishing the Conversion, shall have complied with all the
requirements of Section 150(d) of the Code and any other applicable
provisions of law or regulation in all respects and shall not have
adversely affected the exemption of interest on its tax-exempt
obligations from gross income for federal income tax purposes.
4.2 NELnet's Representations and Warranties to the Foundation. NELnet
hereby represents and warrants to the Foundation, on and as of the date hereof
as of the Exercise Date, as follows:
(a) Organization and Standing of NELnet. NELnet is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Nevada, its state of incorporation.
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(b) Power and Authority; No Conflict or Consent. NELnet has
the necessary corporate power and authority to enter into this
Agreement and perform the obligations to be performed hereunder. This
Agreement is valid and legally binding upon NELnet, enforceable in
accordance with its terms, subject to all applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally, and
subject, as to enforceability, to general principles of equity, whether
applied in a proceeding in equity or in law. The execution and delivery
of this Agreement and the performance by NELnet of the various terms
and provisions hereof will not (1) violate the Articles of
Incorporation or Bylaws of NELnet, any material indenture, loan
agreement, contract or other instrument to which NELnet is a party or
by which it is bound or any order, writ, injunction, judgment or decree
to which NELnet is subject or by which NELnet is bound or (2) require
the consent of any lender or other third party not obtained.
(c) Brokers and Finders. Neither NELnet nor any of its
respective officers, directors or employees, subsidiaries or affiliates
has employed any broker or finder or incurred any material liability
for any financial advisory fees, brokerage fees, commissions or
finder's fees in connection with this Agreement that has not been or
will not be satisfied by NELnet.
(d) Investor Status.
(i) NELnet is not acquiring the Option, and will not
exercise the Option, with a view to making a distribution of
the Senior Stock, but is acquiring the Option, and if it
elects to exercise the Option will acquire the Senior Stock,
for purposes of investment.
(ii) NELnet understands that the Option and the
Senior Stock have not been registered under the Securities
Act, or the securities laws of any state; and that absent
registration or exemption the Option and the Senior Stock may
be transferred only in a transaction which does not require
registration or qualification of the Option or the Senior
Stock under, the which otherwise complies with, the Securities
Act and all applicable state securities laws.
(iii) NELnet has such knowledge and experience in
financial or business matters that it is capable of evaluating
the merits of risk of an investment such as the Option and the
Senior Stock. NELnet was not formed solely to acquire the
Option or the Senior Stock and is not an investment company
(or other entity) relying on Section 3(c)(1) of the Investment
Company Act for an exemption from registration thereunder.
(iv) Neither NELnet nor anyone acting on its behalf
has offered or sold or will offer or sell any of the Option or
the Senior Stock by means of
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any form of general solicitation or general advertising or
have taken or will take any action that would constitute a
distribution of the Option or any Senior Stock under the
Securities Act, would render the disposition of the Option or
any Senior Stock a violation of Section 5 of the Securities
Act or any state or other securities law or would require
registration or qualification pursuant thereto.
(v) NELnet understands and agrees that no transfer of
any Senior Stock may be made to any transferee that does not
qualify as a holder of any Senior Stock under and in
conformity with Rule 3a-7.
(vi) NELnet has received and reviewed the Conversion
Agreement, the documents and agreements identified in the
Conversion Agreement and the Articles of Incorporation of
NEWCO and Enterprises and the Limited Liability Company
Agreement of LLC, and has received and reviewed all further
information, if any, regarding the Option, the Senior Stock
and the operations of NEWCO, Enterprises and LLC necessary to
make an informed decision to invest in the Option and the
Senior Stock, including information requested to verify other
information received, and has received all the information
that it has requested from the Foundation, NEWCO, Enterprises
and LLC, and has been afforded a reasonable time to ask
questions about the Option, the Senior Stock and the
operations of NEWCO, Enterprises and LLC and the terms and
conditions of the offering of the Option and the Senior Stock
and has received complete and satisfactory answers to all such
questions.
(vii) NELnet recognizes that upon original issuance
thereof, and until such time as the same and the limitations
therein described are no longer required under the applicable
requirements of the Securities Act, and Investment Company Act
and applicable state securities laws, the Option and the
Senior Stock (and all securities issued in exchange therefor
or substitution thereof) shall bear a legend substantially to
the following effect:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE "BLUE SKY" OR SECURITIES LAW OF ANY STATE AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR OFFERED FOR SALE,
UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT AND ANY
APPLICABLE "BLUE SKY" OR SECURITIES LAWS OR UNLESS THE
TRANSACTION IS EXEMPT FROM SUCH REGISTRATION UNDER APPLICABLE
LAW."
In addition, for such period of time the Senior Stock
will also bear the following additional legend:
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MOREOVER, THIS SECURITY MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IF THE SALE, PLEDGE OR TRANSFER
(INCLUDING SUBDIVISION) WOULD RESULT IN THE LOSS TO THE ISSUER
OF ANY APPLICABLE EXEMPTION FROM THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED."
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V.
OTHER COVENANTS AND AGREEMENTS
5.1 Covenants by the Foundation. From and after the execution and
delivery of this Agreement to and including the earlier of the Closing or the
last day that could be the Exercise Date, but subject to the actions permitted
by Section 5.4 hereof, and subject to the terms of the Senior Stock Sale (Put)
Option Agreement the Foundation agrees and covenants that as Senior Stockholder
it will not approve, and if called upon it will vote against, any of the
following:
(a) Modification of the Articles of Incorporation of NEWCO or
Enterprises or of the Limited Liability Company Agreement of LLC as in
effect on the date of the execution and delivery of this Agreement
without the prior consent of NELnet;
(b) Change in the capital structure of NEWCO, Enterprises or
LLC from that which is in place on the date of the execution and
delivery of this Agreement, except insofar as any change therein may
result from normal operations under any of the Indentures governing the
Debt Securities assumed by NEWCO as part of the Conversion pursuant to
the Conversion Agreement without the prior consent of NELnet;
(c) Any action by NEWCO, Enterprises or LLC, as the case may
be, by which such entity will not meet its duties and obligations under
and pursuant to its Articles of Incorporation or the Operating
Agreement of LLC, the Limited Liability Company Agreement, any material
license under which such entity operates all or a portion of its
business and each material agreement to which it is a party, if not
meeting such duties and obligations could be materially adverse to
NEWCO, Enterprises or LLC, as the case may be;
(d) Any action by NEWCO, Enterprises or LLC, as the case may
be, that will cause any such entity to issue any additional equity
securities and NEWCO will not issue, transfer or encumber any of the
Senior Stock to any person other than NELnet or grant any options in
respect of the Senior Stock to any person other than NELnet;
(e) Any action by NEWCO, Enterprises or LLC, as the case may
be, that will cause NEWCO to, without the prior written consent of
NELnet, issue or assume any indebtedness or Debt Securities (other than
the Transferred Securities assumed by LLC) or enter commitments to
issue any indebtedness or other Debt Securities, pledge or encumber any
assets of NEWCO, Enterprises or LLC (except as collateral for the
Transferred Securities and except to the extent the Limited Recourse
Promissory Note is payable from Legally Available Funds derived from
the Indenture) or amend the trust indentures under which any
outstanding Debt Securities of LLC were issued and are governed;
(f) Any action by NEWCO, Enterprises or LLC, as the case may
be, that will cause any such entity to conduct its business other than
in the ordinary course;
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(g) Any action by NEWCO, Enterprises or LLC, as the case may
be, that will cause any such entity to grant any general increase in
the compensation of its employees (including, without limitation, any
such increase pursuant to any bonus, pension, profit sharing or other
plan or commitment) or any increase in the compensation payable or to
become payable to any employee;
(h) Any action by NEWCO, Enterprises or LLC, as the case may
be, that will cause any such entity to enter into any material or
unusual contracts without the prior written consent of NELnet;
(i) Any action by NEWCO, Enterprises or LLC, as the case may
be, that will cause any such entity to enter into any contract,
agreement or arrangement with any company or person, or amend any
existing contract or agreement, other than contracts and agreements
entered into (a) in the ordinary course of business for the normal sale
of services or (b) for the normal purchase of goods, merchandise,
materials, services and supplies not exceeding the aggregate of $10,000
and not extending for more than three (3) months;
(j) Any action by NEWCO, Enterprises or LLC, as the case may
be, that will cause any such entity to fail to use its best efforts to
preserve its business organization intact, to retain the services of
its employees, and to conduct business with suppliers, customers and
other having business relationships with any such entity;
(k) Any action by NEWCO, Enterprises or LLC, as the case may
be, that will cause any such entity to do any act or omit to do any
act, or permit any act or omission to act which will cause a breach of
any of the agreements or contracts to which any such entity is a party;
(l) Any action by NEWCO, Enterprises or LLC, as the case may
be, that will cause any such entity to sell, lease or otherwise dispose
of any of its material properties or assets, or mortgage or otherwise
encumber or subject to any lien any of its material properties or
assets, other than in the ordinary course of business; and
(m) Any action by NEWCO that will cause NEWCO to take any
action pursuant to Article V, Section 5.04 of the Articles of
Incorporation of NEWCO.
5.2 No Solicitation of Other Proposals for Sale of Senior Stock. During
the term of this Agreement and without the written consent of NELnet, the
Foundation shall not, and shall not authorize or permit any officer, director,
employee, agent, partner, representative or advisor of the Foundation or NEWCO
to, directly or indirectly, solicit, initiate or encourage any proposals for the
purchase of the Senior Stock; provided, however, that this Section 5.2 shall not
affect the Foundation's right to respond to a Bona Fide Third Party Offer in
accordance with Section 5.4 hereof.
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5.3 Deposit. If NELnet exercises the Option, the entire amount of the
Deposit shall be credited against the Exercise Price. If NELnet does not
exercise the Option, the amount of the Deposit shall be returned to NELnet
immediately after the last date which could be an Exercise Date. If NELnet
exercises the Option but defaults on payment of the Exercise Price, then the
Senior Stock shall not be transferred to NELnet and all of the remaining amount
of the Deposit shall be retained by the Foundation as liquidated damages, and
this Agreement shall terminate without further liability upon either party. If
NELnet exercises the Option but the conditions precedent to NELnet's purchase of
the Senior Stock contained in Section 6.1 hereof are not satisfied, the Deposit
shall be immediately returned to NELnet.
5.4 Right of First Refusal. If between the date of this Agreement and
the exercise by NELnet of its Option hereunder, the Foundation shall have
received a Bona Fide Third Party Offer to purchase the Senior Stock, then NELnet
shall have a right of first refusal to purchase the Senior Stock on or before
the proposed purchase date at the price contained in the Bona Fide Third Party
Offer and on the same terms and conditions, subject to the following:
(a) the Foundation shall give NELnet written notice of the
terms of such Bona Fide Third Party Offer within 5 business days of
receiving the same;
(b) if NELnet intends to match such offer, NELnet shall give
the Foundation written notice thereof within ten business days of the
date of such notice from the Foundation; and
(c) NELnet and the Foundation shall enter into an amendment of
this Agreement to reflect such revised Exercise Price within ten
business days of the date of such notice from the Foundation (and the
Deposit shall continue to constitute a credit against the Exercise
Price as provided in Section 5.3 hereof) and NELnet shall receive an
additional one million dollar ($1,000,000.00) credit against the
Exercise Price.
If NELnet fails to exercise said right of first refusal in accordance
with this Section, then the Foundation may sell the Senior Stock to such party
making a Bona Fide Third Party Offer, in which case upon such sale (i) the
Foundation shall return the original amount of the Deposit to NELnet, and (ii)
the Foundation shall pay to NELnet an amount equal to one million dollars
($1,000,000.00) as liquidated damages. After receipt of a Bona Fide Third Party
Offer and upon satisfaction of (i) and (ii) above, this Agreement shall
terminate without further liability upon either party. During the term of this
Agreement, the Foundation shall not consider any offer for the Senior Stock or
any merger or other consolidation with respect to NEWCO unless such offer is a
Bona Fide Third Party Offer.
5.5 Noncompete Covenant. Neither the Foundation nor any entity or
corporation affiliated therewith or controlled or managed thereby, shall engage,
directly or indirectly, in any of the following activities for a period of nine
years following the date of this Agreement: (i) acquisition, solicitation or
origination of title or beneficial ownership interest in Student Loans; (ii)
consulting,
15
advising or assisting other persons or entities in activities
described in clause (i) above; and/or (iii) financing or funding for its own
Student Loan program or operations or providing financing or funding for Student
Loans for other persons or entities.
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VI.
CONDITIONS PRECEDENT
6.1 Conditions to the Obligation of NELnet. If NELnet exercises the
Option in accordance with this Agreement, the obligation of NELnet to purchase
the Senior Stock and pay the Exercise Price shall be subject to the satisfaction
or waiver or the following conditions:
(a) Representations of Warranties. The representations and
warranties of the Foundation set forth in Article IV hereof shall be
true and correct in all material respects on the date of Closing as if
made on and as of such date, and NELnet shall have received a
certificate to such effect, executed by the Foundation and dated as of
the date of Closing; provided, however, that if NELnet shall have
actual knowledge that any of the Foundation's representations which are
conditioned as to the "knowledge" or as to the "best knowledge" of the
Foundation are not true or correct ("NELnet Actual Knowledge of
Inaccuracy"), then this condition precedent shall not be deemed to have
been satisfied if NELnet shall have notified the Foundation thereof at
least five Business Days before the Exercise Date and the Foundation
shall not have satisfied NELnet of the actual truth or accuracy thereof
(provided, however, that NELnet reserves the right to inform the
Foundation of any NELnet Actual Knowledge of Inaccuracy of which NELnet
becomes aware between the fifth Business Day before the Exercise Date
and the Exercise Date (and shall do so as soon as possible), in which
case this condition precedent shall not be deemed to have been
satisfied unless the Foundation shall have satisfied NELnet of the
actual truth or accuracy thereof).
(b) Performance of Covenants. The Foundation shall have
performed all of its obligations contained in this Agreement to be
performed on or prior to the Closing and NELnet shall have received a
certificate to such effect, executed by the Foundation and dated as of
the Closing Date.
(c) Conversion. The Conversion shall have taken place
substantially in accordance with the Conversion Agreement.
(d) Legal Opinions. NELnet shall have received letters from
legal counsel rendering tax, bankruptcy and contract enforceability
opinions (or shall be an addressee thereof) on the Conversion Date to
the effect that NELnet may rely upon such opinions as if they had been
addressed to NELnet on the Conversion Date, without, however, any need
or obligation to update or bring current any such opinion from its date
of issuance to the Closing (and such letters may state that no such
update has been done).
(e) Directors' Resignation. The Foundation shall deliver to
NELnet at Closing the resignation of each director of NEWCO and
Enterprises and the Manager of each member of the Management Committee
of LLC, provided that at least two Special Directors shall remain on
the Management Committee Board of Directors of LLC at all times, and
shall
17
take, or cause to be taken, such action as NELnet may request with
respect to changes in directors and officers other than the Special
Directors on the date of Closing.
(f) Absence of Events. None of the events set forth in Section
5.1(a) through (m) inclusive hereof shall have occurred.
(g) No Material Adverse Change. On the date of Closing, there
shall have been no material adverse change in the business of NEWCO,
Enterprises or LLC since the Conversion Date or in the business of
NEWCO, Enterprises and LLC as compared to the business of Maine
Educational Loan Marketing Corporation as such business existed
immediately prior to the Conversion (other than the ability to use
tax-exempt basis in the future and receive related benefits).
(h) Xxxx-Xxxxx-Xxxxxx. Any required filing under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act shall have been made, and
the waiting period with respect thereto shall have expired without
objection by the United States.
(i) Exercise Price. The Exercise Price shall not be less than
the Senior Stock Redemption Price (and this provision shall not be
waived by either party hereto). If the Senior Stock Redemption Price,
determined as provided in the Articles of Incorporation of NEWCO, shall
be greater than $30 million, then NELnet shall not be obligated to
purchase the Senior Stock unless NELnet shall agree, by the Exercise
Date, to pay such amount.
(j) Purchase of Services Contract. The Purchase of Services
Contract entered into as of December 9, 1992, and effective as of
January 1, 1993, as supplemented and amended, including the Amendment
to Purchase of Services Contract dated as of June 30, 2000, all between
the Foundation and MES-Maine Education Services ("MES"), shall have
been terminated or may be terminated within five days from the Closing
without further approval of MES.
6.2 Conditions to the Obligations of the Foundation. The obligation of
the Foundation to sell the Senior Stock shall be subject to the
satisfaction or waiver or the following conditions:
(a) Representations and Warranties. The representations and
warranties of NELnet set forth in Article IV hereof shall be true and
correct in all material respects on the date of Closing as if made on
and as of such date, and the Foundation shall have received a
certificate to such effect, executed by NELnet and dated as of the date
of Closing.
(b) Performance of Covenants. NELnet shall have performed all
of its obligations contained in this Agreement to be performed on or
prior to the date of Closing, including payment of the Exercise Price
due at the Closing.
(c) Exercise Price. The Exercise Price shall not be less than
the Senior Stock Redemption Price (and this provision shall not be
waived by either party hereto). If the Senior Stock Redemption Price,
determined as provided in the Articles of Incorporation of
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NEWCO, shall be greater than $30 million, then NELnet shall not be
entitled to purchase the Senor Stock unless NELnet shall agree, by the
Exercise Date, to pay such amount.
VII.
MISCELLANEOUS
7.1 Law Governing. This Agreement shall be construed and interpreted
according to applicable federal laws and the laws of the State of Maine
applicable to contracts made and to be performed wholly within such state.
7.2 Binding Effect, Persons Benefitting, No Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties hereto. Nothing in
this Agreement is intended or shall be construed to confer upon any entity or
Person other than the parties hereto any right, remedy or claim under or by
reason of this Agreement or any part hereof. This Agreement may not be assigned
by either of the parties hereto. This Agreement shall inure to the benefit of
and be binding upon the successor to a party hereto only if the other party has
given its consent thereto.
7.3 Amendments. This Agreement may not be amended, altered or modified
except by a written instrument executed by the parties hereto.
7.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and each of which shall constitute one and
the same instrument.
7.5 Entire Agreement; Attachments. This Agreement, including the
attachments, certificates and lists referred to herein or attached hereto, and
any documents executed by the parties pursuant thereto, constitute the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and supersede all other prior agreements and understandings,
written or oral, between the parties with respect to such subject matter.
7.6 Confidentiality. Except with the consent of the other party, which
shall not be unreasonably withheld, each of the Foundation and NELnet hereby
agrees that it will not disclose the existence or terms of the transactions
contemplated by this Agreement or any information provided to it by the other
party which is clearly marked as being confidential to any other Person except
(i) to its affiliates, provided that any such recipient is made aware of the
highly confidential nature of such information, (ii) its auditors and attorneys,
employees or financial advisors and any nationally recognized rating agency
rating its debt, provided such auditors, attorneys, employees or financial
advisors or rating agencies are informed of the highly confidential nature of
such information, (iii) any regulatory agency, body or other official body
regulating or having jurisdiction over any such Person, provided, such agency,
body or other official body is informed of the highly confidential nature of
such information, (iv) as otherwise required by applicable law or order of a
court of competent jurisdiction, (v) in connection with any legal proceeding or
threatened legal proceeding to which such Person is a party, or (vi) which is
already in the public domain or so disclosed other than
19
as a result of the breach by the Foundation, NELnet or any such Person bound by
the terms and provisions of this Section 7.6.
7.7 No Recourse Following Closing. From and after the Closing, and
notwithstanding anything herein or in any certificate delivered by the
Foundation to the contrary, no recourse shall be had by or on behalf of NELnet
against the Foundation, NEWCO or any of its or their affiliates on account of
any business or other failure by NEWCO and no such recourse shall be had on
account of any representation and warranty of the Foundation made herein proving
to have been false or misleading in any respect as and when made unless the
false or misleading representation and warranty either (i) is made under Section
4.1(a) hereof, or (ii) was caused directly by, or was the direct result of,
fraud or willful misconduct on the part of the Foundation.
7.8 Limited Rights Conveyed to NELnet. This Agreement conveys to NELnet
only the Option and the right to enforce the Foundation's obligations hereunder,
including the Foundation's covenants in Article V of this Agreement. NELnet
shall not enjoy, by virtue of this Agreement or otherwise, any right to
participate in or control the management or operations of NEWCO; provided that
upon exercise of the Option and acquisition of Senior Stock NELnet shall have
all the rights allowed by law to a holder of the Senior Stock.
7.7 Notices. Except as otherwise expressly provided herein, all
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered by hand or by
overnight courier, two days after being sent by registered mail, return receipt
requested, or when sent by telecopier (with receipt confirmed), provided, in the
case of a telecopied notice, a copy is also sent by registered mail, return
receipt requested, or by courier, addressed as follows (or to such other address
as a party may designated by notice to the other):
(a) If to the Foundation:
Xxxxx Xxxx, President
Xxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxx 00000
Telephone: 207/ 000-0000
Facsimile: (000) 000-0000
(b) If to NELnet:
Xxx Xxxx, President
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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7.8 Xxxx-Xxxxx-Xxxxxx Compliance. The Parties agree to cooperate in
complying with any filing or notification requirements imposed by law on either
party in connection with, or as a condition to, exercising the Option or
acquiring the Senior Stock pursuant to exercise of the Option, including without
limitation any filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Maine Educational Loan Marketing Corporation
/s/ Xxxxx Xxxx
----------------------
Xxxxx Xxxx, President
NELnet, Inc.
/s/ Xxx Xxxx
----------------------
Xxx Xxxx, President
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