Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of May 31, 2007 (the
"Agreement), is by and among Nelnet, Inc., a Nebraska corporation ("Parent"),
Nelnet Academic Services, LLC, a Nebraska limited liability company and a
wholly-owned subsidiary of Parent ("Subsidiary") and Packers Service Group,
Inc., a Nebraska corporation ("Company").
WHEREAS, the Boards of Directors of Parent, Subsidiary and Company have
approved the merger of Company with and into Subsidiary pursuant to this
Agreement (the "Merger") and the transactions contemplated hereby upon the terms
and subject to the conditions set forth herein;
WHEREAS, the parties wish to proceed with the Merger in the manner
represented to the Internal Revenue Service and as contemplated in Private
Letter Ruling 10615107 issued on April 18, 2007 (the "Private Letter Ruling");
and
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the
conditions of this Agreement, in accordance with Section 21-2647 of the Nebraska
Limited Liability Company Act, at the Effective Time (as defined in Section
1.2), Company shall be merged with and into Subsidiary and the separate
existence of Company shall thereupon cease. Subsidiary shall be the surviving
entity in the Merger (hereinafter sometimes referred to as the "Surviving
Company").
SECTION 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time (the "Effective Time") as Articles of Merger, in the form
set forth as Exhibit 1.2 hereto, are filed with the Secretary of State of the
State of Nebraska (the "Merger Filing"); such filing shall be made
simultaneously with or as soon as practicable after the Closing (as defined in
Section 3.3).
ARTICLE II
THE SURVIVING COMPANY
SECTION 2.1 EFFECTS OF THE MERGER. At the Effective Time, the
Surviving Company will continue to be governed by the laws of the State of
Nebraska, and the separate organizational existence of Surviving Company and all
of its rights, privileges, immunities and franchises, and all its duties and
liabilities as a corporation organized under the Nebraska Limited Liability
Company Act, shall continue unaffected by the Merger. At the Effective Time, (i)
the Articles of Organization of Subsidiary, as in effect immediately prior to
the Effective Time, shall be the Articles of Organization of Subsidiary as the
surviving company in the Merger until thereafter amended as provided by law and
such Articles of Incorporation, and (ii) the Operating Agreement of Subsidiary,
as in effect immediately prior to the Effective Time, shall be the Operating
Agreement of Subsidiary as the surviving company in the Merger, until thereafter
amended as provided by law, the Articles of Organization of the Surviving
Company and such Operating Agreement. Subject to the foregoing, the additional
effects of the Merger shall be as provided in the applicable provisions of the
Nebraska Limited Liability Company Act.
SECTION 2.2 DIRECTORS. Effective as of Effective Time, all
managers of Subsidiary shall remain managers of the Surviving Company until
resignation or appointment of successors, in accordance with Subsidiary's
Operating Agreement.
ARTICLE III
CONVERSION OF SHARES AND TRANSFERS OF ASSETS RESULTING FROM MERGER
SECTION 3.1 EFFECT OF THE MERGER ON CAPITAL STOCK. At the
Effective Time:
(a) Each then outstanding share of common stock of the Company (the
"Common Stock"), other than shares of Common Stock the holders of which
have perfected any dissenter's rights that they may have under the
Nebraska Business Corporation Act, and have not withdrawn or lost such
rights ("Dissenting Shares") shall be converted to the right to receive:
(i) a pro rata interest in Class A Common Voting Stock of
Nelnet, Inc. (the "Nelnet Stock"), the aggregate number
of shares of which shall be the quotient determined by
dividing (a) the sum of (1) $2.2 million, which is the
mutually agreed upon aggregate value of assets owned by
the Company, excluding Nelnet Stock owned by the Company
prior to the Effective Date, plus (2) the average market
price (as of two business days prior to the Effective
Date) of Nelnet Stock owned by the Company prior to the
Effective Date, less (3) the liabilities of the Company
by (b) the average market price per share of Nelnet
Stock as of two business days prior to the Effective
Date; and
(ii) cash in lieu of fractional shares in the amount per
share of the Common Stock equal to the prorated portion
of the average price per share as determined in clause
(i) above.
Upon receipt, the Company shall distribute to its shareholders proceeds
of dividends distributed by the Parent following the Effective Date.
(b) The Nelnet Stock transferred in exchange for the Company's Common
Stock shall be newly issued by the Parent. Each then outstanding share
of Common Stock of Company will be surrendered to Parent, canceled and
retired, and each share of Common Stock issued and held in Company's
treasury will be canceled and retired, without further action.
(c) The Company shall transfer and assign all of its assets to the
Subsidiary in exchange for the conversion described in Section 3.1(a)
above and for the Subsidiary's assumption of all of the Company's
liabilities as of the Effective Time.
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SECTION 3.2 EXCHANGE OF CERTIFICATES.
(a) As of the Effective Time, each holder of an outstanding certificate
which immediately prior to the Effective Time represented shares of
Common Stock and which was surrendered to Parent in accordance with
Section 3.2(b) hereof shall be entitled to receive in exchange therefor,
a certificate or certificates theretofore representing the number of
whole shares of Nelnet Stock, to which such holder is entitled pursuant
to Section 3.1(a).
(b) Within ten (10) days after approval of this Agreement and the Merger
by the requisite number of shareholders of Company in accordance with
the Nebraska Business Corporation Act ("Company Shareholders'
Approval"), Parent shall mail to each holder of record of a certificate
or certificates that as of the date of such approval, represented
outstanding shares of Common Stock (the "Company Certificates"): (i) a
form letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to Company Certificates shall pass,
only upon actual delivery of Company Certificates to Parent); and (ii)
instructions for use in effecting the surrender of Company Certificates
in exchange for certificates representing shares of Nelnet Stock. Such
instructions shall instruct such holder to deliver to Parent their
respective Company Certificates within twenty (20) days from the date
such holder receives the form letter of transmittal, together with a
duly executed and completed letter of transmittal and such other
documents as the Parent shall reasonably require. Thereafter, at and
after the Effective Time, each holder of shares of Common Stock, upon
delivery of their respective Company Certificates, together with a duly
executed letter of transmittal, shall be entitled to receive in exchange
therefor the consideration to which such holder is entitled pursuant to
Section 3.1, and Company Certificates so surrendered shall forthwith be
canceled. Notwithstanding the foregoing, no party hereto shall be liable
to a holder of shares of Common Stock for any shares of Nelnet Stock or
dividends or distributions thereon delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(c) Notwithstanding any provision of this Agreement to the contrary,
Dissenting Shares shall not be converted into or represent a right to
receive the consideration to which other shares of Common Stock other
than Dissenting Shares are entitled pursuant to this Article III, but
the holder of Dissenting Shares shall only be entitled to such rights as
are granted by the Nebraska Business Corporation Act. If a holder of
shares of Common Stock who pursues dissenters' rights with respect to
those shares under the Nebraska Business Corporation Act shall
effectively withdraw or lose (through failure to perfect or otherwise)
the right to dissent, then, as of the Effective Time or the occurrence
of such event, whichever last occurs, those shares of Common Stock shall
be converted into and represent only the right to receive the
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consideration as provided in Article III, without interest, upon the
surrender of the Company Certificate or Company Certificates
representing those shares of Common Stock. Company shall give Parent
prompt notice of any written demands made pursuant to dissenting
shareholders rights under the Nebraska Business Corporation Act with
respect to any shares of Common Stock, attempted withdrawals of such
demands and any other instruments served pursuant to the Nebraska
Business Corporation Act received by Company relating to a shareholder's
right to dissent. Company shall not, except with the prior written
consent of Parent, voluntarily make any payment with respect to any
demands made pursuant to such dissenters' rights with respect to any
shares of Common Stock, offer to settle or settle any such demands or
approve any withdrawal of any such demands. Parent shall contribute to
Company or the Surviving Company, as the case may be, sufficient funds
to enable Company or the Surviving Company to make, or shall itself
directly make, any payments required to be made to holders of Dissenting
Shares.
(d) Anything to the contrary notwithstanding in this Section 3.2, if
this Agreement is terminated pursuant to Article IX, any Company
Certificate or Company Certificates which have been surrendered to
Parent shall be promptly returned to the persons submitting the same.
(e) Until surrendered and exchanged in accordance with this Section 3.2,
each Company Certificate shall, after the Effective Time, represent
solely the right to receive the Nelnet Stock, to which the holder of
such Company Certificate is entitled to hereunder, and shall have no
other rights. At the Effective Time, the stock transfer books of Company
will be closed and no transfer of shares of Common Stock will thereafter
be made.
SECTION 3.3 CLOSING. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at a place mutually
agreed upon within five (5) business days immediately following the date on
which the last of the conditions set forth in Article VIII is fulfilled or
waived, or at such other time and place as Parent and Company shall agree (the
date on which the Closing occurs being the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to Company as
follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each Parent and
Subsidiary is an organization duly organized, validly existing and in good
standing under the laws of the state of its organization and has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted. Each of Parent and
Subsidiary is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
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nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing will not, when
taken together with all other such failures, have a material adverse effect on
the business, financial condition or results of operations of Parent and its
subsidiaries, taken as a whole (a "Parent Material Adverse Effect"). True,
accurate and complete copies of Parent's Articles of Incorporation and By-laws,
in each case as in effect on the date hereof, including all amendments thereto,
have heretofore been delivered to Company. True, accurate and complete copies of
Subsidiary's Articles of Organization and Operating Agreement, as in effect on
the date hereof, including all amendments thereto, have heretofore been
delivered to the Company.
SECTION 4.2 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of 600,000,000
shares of Class A Nelnet Stock, par value $.01 per share and 60,000,000
shares of Class B Nelnet Stock, par value $.01 per share. As of the date
of this Agreement, the number of issued and outstanding shares of Class
A Nelnet Stock was 38,036,590 and of Class B Parent Stock was
11,895,376. All of the issued and outstanding shares of Nelnet Stock are
validly issued and are fully paid, nonassessable and free of preemptive
rights. No subsidiary of Parent holds any shares of capital stock of
Parent. As of the time immediately prior to the Merger, the number of
issued and outstanding shares of Class B Nelnet Stock shall be the
number stated above plus the number of newly issued shares of Class A
Nelnet Stock determined in the manner as set forth in Section 3.1
hereof.
(b) The authorized membership units of the Subsidiary consists of 2,000
units of membership. As of the date of this Agreement, the number of
issued and outstanding membership units was 2,000.
SECTION 4.3 RESERVED.
SECTION 4.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Parent and Subsidiary each have full power and authority to enter
into this Agreement and, subject to the Parent Required Statutory
Approvals (as defined in Section 4.4(c)), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, and
the consummation by Parent and Subsidiary of the transactions
contemplated hereby, have been duly authorized by Subsidiary's managers,
and by Parent's Board of Directors, as Parent is the sole member of
Subsidiary, and no other proceedings on the part of Parent or Subsidiary
are necessary to authorize the execution and delivery of this Agreement
and the consummation by Parent and Subsidiary of the transactions
contemplated hereby, except for the obtaining of the Parent Required
Statutory Approvals. This Agreement has been duly and validly executed
and delivered by each of Parent and Subsidiary, and, assuming the due
authorization, execution and delivery hereof by Company, constitutes a
valid and binding agreement of each Parent and Subsidiary enforceable
against each of them in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally; and (ii) general
equitable principles.
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(b) The execution and delivery of this Agreement by each of Parent and
Subsidiary do not, and the consummation by Parent and Subsidiary of the
transactions contemplated hereby will not, violate, conflict with or
result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Parent or any of its subsidiaries under any of the terms, conditions or
provisions of (i) the respective organizational documents of Parent or
any of its subsidiaries; (ii) subject to obtaining the Parent Required
Statutory Approvals, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit, or license of any
court or governmental authority applicable to Parent or any of its
subsidiaries or any of their respective properties or assets; or (iii)
any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument, obligation or
agreement of any kind to which Parent or any of its subsidiaries is now
a party or by which Parent or any of its subsidiaries or any of their
respective properties or assets may be bound or affected, excluding from
the foregoing clauses (ii) and (iii) such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens,
security interests, charges or encumbrances that would not, in the
aggregate, have a Parent Material Adverse Effect.
(c) Except for (i) the filings by Parent, Subsidiary, First National
Insurance Company ("First National") and Company as may be required by
Nebraska law, and approvals as may be required from the State of
Nebraska Insurance Department (ii) the making of the Merger Filing with
the Secretary of State of the State of Nebraska in connection with the
Merger, and (iii) filings with the U.S. Securities and Exchange
Commission and the New York Stock Exchange by the Parent as may be
required by applicable law (the filings and approvals referred to in
clauses (i), (ii) and (iii) are collectively referred to as the "Parent
Required Statutory Approvals"), no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by Parent or Subsidiary or the
consummation by Parent or Subsidiary of the transactions contemplated
hereby, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as
the case may be, would not, in the aggregate, have a Parent Material
Adverse Effect.
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SECTION 4.5 REPORTS AND FINANCIAL STATEMENTS. The audited
consolidated financial statements and unaudited interim consolidated financial
statements of Parent (including all notes and schedules contained therein and
annexed thereto) (the "Parent Financial Statements") have been, and will be,
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, for the absence of footnote disclosure)
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly, and will fairly, present the financial position of
Parent and its Subsidiary as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
SECTION 4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as
disclosed in the Parent Financial Statements, or as expressly disclosed and
described in any of the schedules hereto, neither Parent nor any of its
subsidiaries has any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature (a) except liabilities, obligations or
contingencies (i) which are accrued or reserved against in the Parent Financial
Statements or reflected in the notes thereto; or (ii) which were incurred in the
ordinary course of business and consistent with past practices; and (b) except
for any liabilities, obligations or contingencies which would not, in the
aggregate, have a Parent Material Adverse Effect.
SECTION 4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in the Parent Financial Statements, since December 31, 2005, there has not
been any material adverse change in the business, operations, properties,
assets, liabilities, condition (financial or other), or results of operations of
Parent and its subsidiaries, taken as a whole.
SECTION 4.8 LITIGATION. All claims, suits, actions or proceedings
pending or, to the knowledge of Parent, threatened against, relating to or
affecting Parent or any of its subsidiaries, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
which could reasonably be expected, either alone or in the aggregate with all
such claims, actions or proceedings, to have a Parent Material Adverse Effect,
have been disclosed to the Company. Except as set forth in the Parent Financial
Statements, neither Parent nor any of its subsidiaries is subject to any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have any Parent Material Adverse Effect.
SECTION 4.9 NO VIOLATION OF LAW. Neither parent nor any of its
subsidiaries is in violation of, or has been given notice or been charged with
any violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable environmental law,
ordinance or regulation) of any governmental or regulatory body or authority,
except for violations which, in the aggregate, do not have a Parent Material
Adverse Effect or which have otherwise been disclosed to the Company. As of the
date of this Agreement, no investigation or review by any governmental or
regulatory body or authority is pending or, to the knowledge of Parent, is
threatened, nor has any governmental or regulatory body or authority indicated
an intention to conduct the same, other than, in each case, those the outcome of
which, as far as reasonably can be foreseen, will not have a Parent Material
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Adverse Effect or which have otherwise been disclosed to the Company. Parent and
its subsidiaries have all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals necessary
to conduct their businesses as presently conducted (the "Parent Permits"),
except for permits, licenses, franchises, variances, exemptions, orders,
authorizations, consents and approvals the absence of which, alone or in the
aggregate, would not have a Parent Material Adverse Effect. Parent and its
subsidiaries (a) have duly and currently filed all reports and other information
required to be filed with the Department of Education or any other governmental
or regulatory authority in connection with the Parent Permits; and (b) are not
in violation of the terms of any Parent Permit, except for delays in filing
reports or violations which, alone or in the aggregate, would not have a Parent
Material Adverse Effect or which have otherwise been disclosed to the Company.
SECTION 4.10 COMPLIANCE WITH AGREEMENTS. Parent and each of its
subsidiaries are not in breach or violation of or in default in the performance
or observance of any term or provision of, and no event has occurred which, with
lapse of time or action by a third party, could result in a default under (a)
the respective charters, by-laws or other similar organizational instruments of
Parent or any of its subsidiaries; or (b) any contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which Parent or any of its subsidiaries is a party or by
which any of them is bound or to which any of their property is subject, which
breaches, violations and defaults, would have, in the aggregate, a Parent
Material Adverse Effect or have otherwise not been disclosed to the Company.
SECTION 4.11 TAXES.
(a) Parent and its subsidiaries have (i) duly filed with the appropriate
governmental authorities all material Tax Returns (as defined in Section
4.11(c)) required to be filed by them for all periods ending on or prior
to the Effective Time, other than those Tax Returns the failure of which
to file would not have a Parent Material Adverse Effect, and such Tax
Returns are true, correct and complete in all material respects; and
(ii) duly paid in full or made adequate provision for the payment of all
Taxes for all periods ending at or prior to the Effective Time. The
liabilities and reserves for Taxes reflected in the Parent balance sheet
as of December 31, 2006, (the "2006 Parent Balance Sheet") is, and will
be, adequate to cover all Taxes for all periods ending on or prior to
December 31, 2006, and there are no material liens for Taxes not yet
due. There are no unresolved issues of law or fact arising out of a
notice of deficiency, proposed deficiency or assessment from the
Internal Revenue Service (the "IRS") or any other governmental taxing
authority with respect to Taxes of the Parent or any of its subsidiaries
which, if decided adversely, singly or in the aggregate, would have a
Parent Material Adverse Effect. Neither Parent nor any of its
subsidiaries is a party to any agreement providing for the allocation or
sharing of Taxes with any entity that is not, directly or indirectly, a
wholly owned corporate subsidiary of Parent other than agreements the
consequences of which are fully and adequately reserved for on the 2006
Parent Balance Sheet. Neither Parent nor any of its corporate
subsidiaries has, with regard to any assets or property held, acquired
or to be acquired by any of them, filed a consent to the application of
Section 341(f) of the Code.
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(b) For purposes of this Agreement, the term "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales,
withholding, social security, occupation, use, service, service use,
license, payroll, franchise, transfer and record taxes, fees and
charges, imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof whether computed on a
separate, consolidated, unitary, combined or any other basis; and such
term shall include any interest, fines, penalties or additional amounts
attributable or imposed or with respect to any such taxes, charges,
fees, levies or other assessments.
(c) For purposes of this Agreement, the term "Tax Return" shall mean any
return, report or other document or information required to be supplied
to a taxing authority in connection with Taxes.
SECTION 4.12 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Except as disclosed to the Company, at the date hereof, Parent and
its subsidiaries do not maintain or contribute to any material employee
benefit plans, programs, arrangements or practices (such plans,
programs, arrangements or practices of Parent and its subsidiaries being
referred to as the "Parent Plans"), including employee benefit plans
within the meaning set forth in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or other similar
material arrangements for the provision of benefits. Neither Parent nor
its subsidiaries has any obligation to create any additional such plan
or to amend any such plan so as to increase benefits thereunder, except
as required under the terms of the Parent Plans, under existing
collective bargaining agreements or to comply with applicable law.
(b) Except as disclosed by Parent; (i) there have been no prohibited
transactions within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Code with respect to any of the Parent Plans that
could result in penalties, taxes or liabilities which, singly or in the
aggregate, could have a Parent Material Adverse Effect; (ii) except for
premiums due, there is no outstanding liability in excess of
$100,000.00, whether measured alone or in the aggregate, under Title IV
of ERISA with respect to any of the Parent Plans; (iii) neither the
Pension Benefit Guaranty Corporation nor any plan administrator has
instituted proceedings to terminate any of the Parent Plans subject to
Title IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA; (vi) none of the Parent Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each of the Parent Plans ended prior to
the date of this Agreement; (v) the current present value of all
projected benefit obligations under each of the Parent Plans which is
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subject to Title IV of ERISA did not, as of its latest valuation date,
exceed the then current value of the assets of such plan allocable to
such benefit liabilities by more than the amount, if any, disclosed in
the Parent Financial Statements, based upon reasonable actuarial
assumptions currently utilized for such Parent Plan; (vi) each of the
Parent Plans has been operated and administered in all material respects
in accordance with applicable laws during the period of time covered by
the applicable statute of limitations; (vii) each of the Parent Plans
which is intended to be "qualified" within the meaning of Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified and such determination has not been modified, revoked or
limited by failure to satisfy any condition thereof or by a subsequent
amendment thereto or a failure to amend, except that it may be necessary
to make additional amendments retroactively to maintain the "qualified"
status of such Parent Plans, and the period for making any such
necessary retroactive amendments has not expired; (viii) to the best
knowledge of Parent and its subsidiaries, there are no material pending,
threatened or anticipated claims involving any of the Parent Plans other
than claims for benefits in the ordinary course; and (ix) Parent and its
subsidiaries have no current liability in excess of $100,000.00, whether
measured alone or in the aggregate, for plan termination or withdrawal
(complete or partial) under Title IV of ERISA based on any plan to which
any entity that would be deemed one employer with Parent and its
subsidiaries under Section 4001 of ERISA or Section 414 of the Code
contributed during the period of time covered by the applicable statute
of limitations (a "Parent Controlled Group Plan"), and Parent and its
subsidiaries do not reasonably anticipate that any such liability will
be asserted against Parent or any of its subsidiaries, none of the
Parent Controlled Group Plans has an "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Code), and no
Parent Controlled Group Plan has an outstanding funding waiver which
could result in the imposition of liens, excise taxes or liability in
excess of $100,000.00 against Parent and its subsidiaries.
SECTION 4.13 INVESTMENT COMPANY ACT. Parent and each of its
subsidiaries either (a) is not an "investment company," or a company
"controlled" by, or an "affiliated company" with respect to, an "investment
company," within the meaning of the Investment Company Act of 1940 (the
"Investment Company Act"); or (b) satisfies all conditions for an exemption from
the Investment Company Act, and, accordingly, neither Parent nor any of its
subsidiaries is required to be registered under the Investment Company Act.
SECTION 4.14 LABOR CONTROVERSIES. Except as disclosed by Parent
(a) there are no significant controversies pending or, to the knowledge of
Parent, threatened between Parent or its subsidiaries and any representatives of
any of their employees; (b) to the knowledge of Parent, there are no material
organizational efforts presently being made involving any of the presently
unorganized employees of Parent and its subsidiaries; (c) Parent and its
subsidiaries have, to the knowledge of Parent, complied in all material respects
with all laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes; and (d) no
person has, to the knowledge of Parent, asserted that Parent or any of its
subsidiaries is liable in any material amount for any arrears of wages, or any
taxes or penalties for failure to comply with any of the foregoing, except for
such controversies, organizational efforts, non-compliance and liabilities
which, singly or in the aggregate, could not reasonably be expected to have a
Parent Material Adverse Effect.
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SECTION 4.15 ENVIRONMENTAL MATTERS. To the knowledge of Parent,
neither Parent nor any of its subsidiaries has disposed of or arranged for the
disposal of any hazardous substance at any facility, location or site so as to
be or become a potentially liable party for remedial action or response costs in
connection with such facility, location or site under the Federal Comprehensive
Environmental Response, Compensation and Liability Act, as amended, the Federal
Resource Conservation and Recovery Act, as amended, or similar state statutes
which liability could reasonably be expected to have a material adverse effect
on the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Parent and its subsidiaries taken as a
whole.
SECTION 4.16 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Subsidiary.
SECTION 4.17 SUBSEQUENT LIQUIDATION OR SALE; NO REACQUISITION OF
NELNET Stock. Parent has no plan or intention (i) to liquidate Subsidiary, (ii)
to merge Subsidiary with and into another corporation, (iii) to sell or
otherwise dispose of the stock of Subsidiary, or (iv) to cause Subsidiary to
sell or otherwise dispose of any of the assets of the Company acquired in the
Merger, except for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code. Parent has no plan or
intention to reacquire or redeem, directly or indirectly, any of the Nelnet
Stock issued in the Merger. Following the Merger, the Subsidiary intends to
continue the historical business of the Company or use a significant portion of
the Company's assets in business operations. There is no intercompany
indebtedness between or among any of the Parent, the Subsidiary or the Company.
SECTION 4.18 REPRESENTATIONS MADE IN CONNECTION WITH PRIVATE
LETTER RULING. All representations made in connection with the Private Letter
Ruling are as of the Effective Date, true and accurate in all material respects.
11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Subsidiary as
follows:
SECTION 5.1 ORGANIZATION AND QUALIFICATION. Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nebraska and has the requisite corporate power and
authority to own, lease, and operate its assets and properties and to carry on
its business as it is now being conducted. Company is qualified to do business
and is in good standing in each jurisdiction in which the properties owned,
leased, or operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so qualified and in
good standing will not, when taken together with all other such failures, have a
material adverse effect on the business, financial condition, or results of
operations of Company (a "Company Material Adverse Effect"). True, accurate, and
complete copies of Company's Articles of Incorporation and Bylaws in each case
as in effect on the date hereof, including all amendments thereto, have
heretofore been delivered to Parent.
SECTION 5.2 CAPITALIZATION.
(a) As of the date hereof, 100,000 shares of Common Stock of the Company
were issued and outstanding. All of the issued and outstanding shares of
stock in the Company are validly issued and are fully paid and
nonassessable.
(b) As of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, commitments, understandings, restrictions,
arrangements, rights, or warrants, including any right of conversation
or exchange under any outstanding security, instrument, or other
agreement obligating Company to issue, deliver, or sell, or cause to be
issued, delivered, or sold, additional shares of the capital stock of
Company or obligating Company to grant, extend, or enter into any such
agreement or commitment. There are no voting trusts, proxies, or other
agreements or understandings to which Company is a party or is bound
with respect to the voting of any shares of capital stock of Company,
except for a Stockholders Agreement disclosed previously by the Company.
SECTION 5.21 NELNET STOCK NOT REGISTERED. The Company
acknowledges that the shares of Nelnet Stock to be issued pursuant to this
Agreement have not been registered with the Securities and Exchange Commission
under the Securities Act of 1933 (the "Securities Act") or the state securities
laws of any state, in reliance on exemptions from registration based in part on
the representations to be made by the shareholders of the Company pursuant to
Section 8.3 (c) of this Agreement, and that no federal or state agency will make
any findings or determination as to the fairness for investment, nor any
recommendation nor endorsement, of the shares of Nelnet Stock. Accordingly, the
shares of Nelnet Stock to be issued pursuant to this Agreement will be
"restricted securities," as that term is defined in Rule 144 under the
Securities Act and cannot be resold or otherwise transferred unless they are
subsequently registered under the Securities Act or an exemption form such
registration is available and established to the satisfaction of the Parent.
Consistent with the foregoing, the stock certificates evidencing the shares of
Nelnet Stock to be issued pursuant to this Agreement will bear a customary
restrictive legend in substantially the following form:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTRED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND ARE
"RESTRICTED SECURITIES," AS THAT TERM IS DEFINED IN RULE 144 UNDER THE
SECURITIES ACT. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND SALE AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT, THE AVAILABILITY OF WHICH IS TO
BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
SECTION 5.3 NO SUBSIDIARIES. Company does not own any interest in
any corporation, partnership, business organization, or other entity, other than
those previously disclosed by the Company.
SECTION 5.4 AUTHORITY: NON-CONTRAVENTION; APPROVALS.
(a) Company has full corporate power and authority to enter into this
Agreement and, subject to Company Shareholders' Approval and Company
Required Statutory Approvals (as defined in Section 5.4(c)), to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation by Company of the
transactions contemplated hereby, have been duly authorized by Company's
Board of Directors, and no other corporate proceedings on the part of
Company are necessary to authorize the execution and delivery of this
Agreement and the consummation by Company of the transactions
contemplated hereby, except for Company Shareholders' Approval and the
obtaining of Company Required Statutory Approvals. This Agreement has
been duly and validly executed and delivered by Company, and assuming
the due authorization, execution, and delivery hereof by Parent and
Subsidiary, constitutes a valid and binding agreement of Company,
enforceable against Company in accordance with its terms, except that
such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting or relating
to enforcement of creditors' rights generally; and (ii) general
equitable principles.
(b) The execution and delivery of this Agreement by Company does not,
and the consummation by Company of the transactions contemplated hereby
will not, violate, conflict with, or result in a breach of any provision
of or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in
a right of termination or acceleration under, or result in the creation
of any lien, security interest, charge, or encumbrance upon any of the
properties or assets of Company under any of the terms, conditions, or
provisions of (i) the articles of incorporation or bylaws of Company;
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(ii) subject to obtaining Company Required Statutory Approvals and the
receipt of Company Shareholders' Approval, any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit, or
license of any court or government authority applicable to Company or
any of its properties or assets; or (iii) subject to obtaining Company
Required Statutory Approvals, any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, concession, contract, lease, or
other instrument, obligation, or agreement of any kind to which Company
is now a party or by which Company or any of its properties or assets
may be bound or affected, excluding from the foregoing clauses (ii) and
(iii) such violations, conflicts, breaches, defaults, terminations,
accelerations, or creations of liens, security interests, charges, or
encumbrances that would not, in the aggregate, have a Company Material
Adverse Effect.
(c) Except for (i) the filings by Company and consents as may be
required by Nebraska law relating to change in control of First
National; and (ii) the making of the Merger Filing with the Secretary of
State of the State of Nebraska in connection with the Merger approvals
referred to in clauses (i) and (ii), collectively referred to as the
"Company Required Statutory Approvals," no declaration, filing, or
registration with, or notice to, or authorization, consent, or approval
of, any governmental or regulatory body or authority is necessary for
the execution and delivery of this Agreement by Company or the
consummation by Company of the transactions contemplated hereby, other
than such declarations, filings, registrations, notices, authorizations,
consents, or approvals which, if not made or obtained, as the case may
be, would not, in the aggregate, have a Company Material Adverse Effect.
SECTION 5.5 FINANCIAL STATEMENTS. The Company has previously
furnished complete copies of the financial statements of Company consisting of
(i) balance sheets of Company as of December 31, 2005 (including the notes
contained therein or annexed thereto); and (ii) an unaudited balance sheet of
Company as of December 31, 2006 and interim financials thereafter (the "Recent
Balance Sheet"). All of such financial statements (including all notes and
schedules contained therein and annexed thereto) have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, for the absence of footnote disclosure) applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present, in all material respects, the financial position, results of
operations, and cash flows of Company as of the dates and for the years and
periods indicated, subject, in the case of the unaudited interim financial
statements, to normal year-end and audit adjustments and any other adjustments
described therein.
SECTION 5.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as
disclosed in the Recent Balance Sheet, Company does not have any liabilities or
obligations (whether absolute, accrued, contingent, or otherwise) of any nature
(a) except liabilities, obligations, or contingencies (i) which are accrued or
reserved against in the Recent Balance Sheet or reflected in the notes thereto;
or (ii) which were incurred after the date of the Recent Balance Sheet and were
incurred in the ordinary course of business and consistent with past practice;
and (b) except for any liabilities, obligations, or contingencies which (i)
would not, in the aggregate, have a Company Material Adverse Effect; or (ii)
have been discharged or paid in full prior to the date hereof.
14
SECTION 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date
of the Recent Balance Sheet, there has not been any material adverse change in
the business, operations, properties, assets, liabilities, condition (financial
or other), results of operations or prospects of Company and its subsidiaries,
as a whole.
SECTION 5.8 LITIGATION. There are no claims, suits, actions, or
proceedings pending or, to the knowledge of Company, threatened against,
relating to or affecting Company, before any court, governmental department,
commission, agency, instrumentality, or authority, or any arbitrator which could
reasonably be expected, either alone or in the aggregate with all such claims,
actions, or proceedings, to have a Company Material Adverse Effect. Company is
not subject to any judgment, decree, injunction, rule, or order of any court,
governmental department, commission, agency, instrumentality, or authority, or
any arbitrator which prohibits or restricts the consummation of the transactions
contemplated hereby or would have any Company Material Adverse Effect.
SECTION 5.9 NO VIOLATION OF LAW. Company is not in violation of
and has not been given notice or been charged with any violation of any law,
statute, order, rule, regulation, ordinance, or judgment (including, without
limitation, any applicable environmental law, ordinance, or regulation) of any
governmental or regulatory body or authority, except for violations which, in
the aggregate, do not have a Company Material Adverse Effect. As of the date of
this Agreement, no investigation or review by any governmental or regulatory
body or authority is pending or, to the knowledge of Company, threatened nor has
any governmental or regulatory body or authority indicated an intention to
conduct the same other than, in each case, those the outcome of which, as far as
reasonably can be foreseen, will not have a Company Material Adverse Effect.
Company has all permits, licenses, franchises, variances, exemptions, orders,
and other governmental authorizations, consents, and approvals necessary to
conduct its business as presently conducted (the "Company Permits"), except for
permits, licenses, franchises, variances, exemptions, orders, authorizations,
consents, and approvals, the absence of which, alone or in the aggregate, would
not have a Company Material Adverse Effect. Company (a) has duly and currently
filed all reports and other information required to be filed with the Department
of Education or any other governmental or regulatory authority in connection
with Company Permits; and (b) is not in violation of the terms of any Company
Permit, except for delays in filing reports or violations which, alone or in the
aggregate, would not have a Company Material Adverse Effect.
SECTION 5.10 COMPLIANCE WITH AGREEMENTS. Company is not in breach
or violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party could result in, a default under (a) the articles of incorporation
or bylaws of Company; or (b) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval, or other
instrument to which Company is a party or by which it is bound or to which any
of its property is subject, which breaches, violations, and defaults, in the
case of clause (b) of this Section 5.10, would have, in the aggregate, a Company
Material Adverse Effect.
15
SECTION 5.11 TAXES. Company has (i) duly filed with the
appropriate governmental authorities all Tax Returns required to be filed by it
for all periods ending on or prior to the Effective Time, other than those Tax
Returns, the failure of which to file would not have a Company Material Adverse
Effect, and such Tax Returns are true, correct, and complete in all material
respects; and (ii) duly paid in full or made adequate provision for the payment
of all Taxes for all periods ending at or prior to the Effective Time. The
liabilities and reserves for Taxes reflected in the Recent Balance Sheet are
adequate to cover all Taxes for all periods ending on or prior to the date of
the Recent Balance Sheet, and there are no material liens for Taxes upon any
property or assets of Company, except for liens for Taxes not yet due. There are
no unresolved issues of law or fact arising out of a notice of deficiency,
proposed deficiency, or assessment from the IRS or any other governmental taxing
authority with respect to Taxes of Company, which, if decided adversely, singly
or in the aggregate, would have a Company Material Adverse Effect.
SECTION 5.12 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Except as disclosed by Company at the date hereof, Company does not
maintain or contribute to any material employee benefit plans, programs,
arrangements, and practices (such as plans, programs, arrangements, and
practices of Company being referred to as the "Company Plans"),
including employee benefit plans within the meaning set forth in Section
3(3) of ERISA. Company has no obligation to create any additional such
plan or to amend any such plan so as to increase benefits thereunder,
except as required under the terms of Company Plans or to comply with
applicable law.
(b) Except as disclosed by Company, (i) there have been no non-exempt
prohibited transactions within the meaning of Sections 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of Company Plans
that could result in penalties, taxes, or liabilities, which, singly or
in the aggregate, could have a Company Material Adverse Effect; (ii)
except for premiums due, there is no outstanding liability in excess of
$100,000, whether measured alone or in the aggregate, under Title IV of
ERISA with respect to any of Company Plans; (iii) neither the Pension
Benefit Guaranty Corporation nor any plan administrator has instituted
proceedings to terminate any of Company Plans subject to Title IV of
ERISA other than in a "standard termination" described in Section 404(b)
of ERISA; (iv) none of Company Plans has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, as of the last day of the most
recent fiscal year of each such Company Plan ended prior to the date of
this Agreement for which the required time for making contributions has
expired; (v) the current present value of all projected benefit
obligations under each of Company Plans which is subject to Title IV of
16
ERISA did not, as of its latest valuation date, exceed the then current
value of the assets of such plan allocable to such benefit liabilities
by more than the amount, if any, disclosed in the Recent Balance Sheet
(based upon reasonable actuarial assumptions currently utilized for such
Company Plan); (vi) each of Company Plans has been operated and
administered in all material respects in accordance with applicable laws
during the period of time covered by the applicable statute of
limitations; (vii) each of Company Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified and such
determination has not been modified, revoked, or limited by failure to
satisfy any condition thereof or by a subsequent amendment thereto or a
failure to amend, except that it may be necessary to make additional
amendments retroactively to maintain the "qualified" status of such
Company Plans, and the period for making any such necessary retroactive
amendments has not expired; (viii) to the best knowledge of Company,
there are no material pending, threatened, or anticipated claims
involving any of Company Plans other than claims for benefits in the
ordinary course; and (ix) Company has no current liability in excess of
$100,000, whether measured alone or in the aggregate, for plan
termination or withdrawal (complete or partial) which has occurred under
Title IV of ERISA based on any plan to which any entity that would be
deemed one employer with Company under Section 4001 of ERISA or Section
414 of the Code contributed during the period of time covered by the
applicable statute of limitations (the "Company Controlled Group
Plans"), and Company has no knowledge that any such liability will be
asserted against it, none of Company Controlled Group Plans has an
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code) as of the last day of the most recent fiscal
year of such plan ended prior to the date of this Agreement for which
the required time for making contributions has expired, and no Company
Controlled Group Plan has an outstanding funding waiver which could
result in the imposition of liens, excise taxes, or liability against
Company in excess of $100,000, whether measured alone or in the
aggregate.
SECTION 5.13 INVESTMENT COMPANY ACT. Company either (a) is not an
"investment company," or a company "controlled" by, or an "affiliated company"
with respect to an "investment company" within the meaning of the Investment
Company Act; or (b) satisfies all conditions for an exemption from the
Investment Company Act and, accordingly, Company is not required to be
registered under the Investment Company Act.
SECTION 5.14 LABOR CONTROVERSIES. Except as disclosed by the
Company, (a) there are no significant controversies pending or, to the knowledge
of Company, threatened between Company and any representatives of any of its
employees; (b) to the knowledge of Company, there are no material organization
efforts presently being made involving any of the presently unorganized
employees of Company; (c) Company has, to its knowledge, complied in all
material respects with all laws relating to the employment of labor, including,
without limitation, any provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes; and (d) no
person has, to the knowledge of Company, asserted that Company is liable, in any
material amount, for any arrears of wages or any taxes or penalties for failure
to comply with any of the foregoing, except for such controversies,
organizational efforts, non-compliance and liabilities, which, singly or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect.
17
SECTION 5.15 ENVIRONMENTAL MATTERS. The applicable federal,
state, or local laws ("Laws") relating to pollution or protection of the
environment, including Laws relating to emissions, discharges, generation,
storage, releases, or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic, hazardous, or petroleum, or petroleum-based
substances or wastes ("Waste") into the environment (including, without
limitation, ambient air, surface water, ground water, land surface, or
subsurface strata), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Waste, including, without limitation, the Clean Water Act, the Clean Air Act,
the Resource Conservation and Recovery Act, the Toxic Substances Control Act,
and the Comprehensive Environmental Response Compensation Liability Act
("CERCLA"), as amended, and their state and local counterparts are herein
collectively referred to as the "Environmental Laws." Company is in full
compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and time tables contained in
the Environmental Laws or contained in any regulation, code, plan, order,
decree, judgment, injunction, notice, or demand letter issued, entered,
promulgated, or approved thereunder, except to the extent that noncompliance
would not have a Company Material Adverse Effect. There is no civil, criminal,
or administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice, or demand letter pending or, to Company's
knowledge, threatened against Company relating in any way to the Environmental
Law or any regulation, code, plan, order, decree, judgment, injunction, notice,
or demand letter issued, entered, promulgated, or approved thereunder. To
Company's knowledge, there are no past or present events, conditions,
activities, practices, incidents, actions, omissions, or plans which would
interfere with or prevent compliance, or continued compliance, with the
Environmental Laws or with any regulation, code, plan, order, decree, judgment,
injunction, notice, or demand letter issued, entered, promulgated, or approved
thereunder or which would give rise to any liability thereunder, including,
without limitation, liability under CERCLA or similar state or local Laws, or
otherwise form the basis of any claim, action, demand, \suit, proceeding,
hearing, notice of violation, study, or investigation, based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release, or threatened
release into the environment of any Waste, except to the extent that such
noncompliance, liability, or claim would not have a Company Material Adverse
Effect.
SECTION 5.16 INTELLECTUAL PROPERTY. Company is licensed or
otherwise has the right to use all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, service marks, service xxxx rights,
copyrights, and other proprietary intellectual property rights and computer
programs which are material to the business, financial condition, or results of
operation of Company. No claims are pending or, to the knowledge of Company,
threatened that Company is infringing or otherwise adversely affecting the
rights of any person with regard to any patent, license, trademark, trade name,
service xxxx, copyright, or other intellectual property right, except for any of
the foregoing as would not have a Company Material Adverse Effect.
18
SECTION 5.17 TITLE TO AND CONDITION OF PROPERTIES. Company has
good and marketable title to all of Company's material assets, business, and
properties, including, without limitation, all such properties (tangible and
intangible) reflected in the Recent Balance Sheet, free and clear of all
mortgages, liens (statutory or otherwise), security interests, claims, pledges,
licenses, equities, options, conditional sales contracts, assessments, levies,
easements, covenants, reservations, restrictions, rights-of-way, exceptions,
limitations, charges, or encumbrances of any nature whatsoever (collectively,
"Liens"), except those previously disclosed by Company.
SECTION 5.18 BROKERS. No broker, finder, or investment banker is
entitled to any brokerage, finder's, or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Company.
SECTION 5.19 VALUE OF COMPANY ASSETS. The fair market value of
the assets of the Company transferred to the Subsidiary in accordance with the
terms of the Merger shall, on the effective date of the merger, exceed the sum
of liabilities to which such assets are subject.
SECTION 5.20 REPRESENTATIONS AND WARRANTIES APPLICABLE TO
COMPANY'S SUBSIDIARY. All representations set forth in Article V hereof shall
also apply in all respects to the Company's subsidiary, First National.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 CONDUCT OF BUSINESS BY COMPANY PENDING THE MERGER.
Except as otherwise contemplated by this Agreement after the date hereof and
prior to the Closing Date or earlier termination of this Agreement, unless the
parties hereto shall otherwise agree in writing, each of the Company shall and
First National shall each:
(a) Conduct its business in the ordinary and usual course of business,
consistent with past practice;
(b) not (i) amend or propose to amend its organizational documents; or
(ii) split, combine, or reclassify its outstanding capital stock or
declare, set aside, or pay any dividend or distribution payable in cash,
stock, property, or otherwise;
(c) not issue, sell, pledge, or dispose of, or agree to issue, sell,
pledge, or dispose of any additional shares of, or any options,
warrants, or rights of any kind to acquire any shares of its capital
stock of any class or any debt or equity securities convertible into or
exchangeable for such capital stock;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than borrowings in the ordinary
course of business; (ii) redeem, purchase, acquire, or offer to purchase
or acquire any shares of its capital stock; (iii) take or fail to take
any action, which action or failure to take action would cause Company
or its shareholders (except to the extent that any shareholders receive
19
consideration other than Nelnet Stock) or Parent or its shareholders
(except to the extent that any shareholders receive consideration other
than Common Stock) to recognize gain or loss for federal income tax
purposes as a result of the consummation of the Merger; (iv) make any
acquisition of any material amount of assets or any businesses other
than expenditures for fixed or capital assets in the ordinary course of
business; (v) sell any material amount of assets or any businesses,
other than sales, in the ordinary course of business; or (vi) enter into
any contract, agreement, commitment, or arrangement with respect to any
of the foregoing;
(e) use all reasonable efforts to preserve intact its business
organization and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill
and business relationships with suppliers, distributors, customers, and
others having business relationships with it and not engage in any
action, directly or indirectly, with the intent to adversely impact the
transactions contemplated by this Agreement;
(f) confer, on a regular and frequent basis, with one or more
representatives of the other parties hereto to report operational
matters of materiality and the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment, or other similar
arrangements or agreements with any directors, officers, or key
employees, except in the ordinary course and consistent with past
practice; (h) not adopt, enter into, or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
health care, employment, or other employee benefit plan, agreement,
trust, fund, or arrangement for the benefit or welfare of any employee
or retiree, except in the ordinary course of business and consistent
with past practice or as required under the terms of such plans; and
(i) maintain with financially responsible insurance companies insurance
on its tangible assets and its businesses, in such amounts and against
such risks and losses as are consistent with past practice.
SECTION 6.2 CONTROL OF COMPANY'S OPERATIONS. Nothing contained in
this Agreement shall give to Parent, directly or indirectly, rights to control
or direct Company's operations. Nothing contained in this Agreement shall give
to Company, directly or indirectly, rights to control or direct Parent's
operations. Prior to the Effective Time, Parent and Company shall exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision of their respective operations.
20
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 ACCESS TO INFORMATION. Company shall afford to Parent
and Subsidiary and their respective accountants, counsel, financial advisors,
and other representatives (the "Parent Representatives") and Parent and its
subsidiaries shall afford to its accountants, counsel, financial advisors and
other representatives (the "Company Representatives") full access during normal
business hours throughout the period prior to the Effective Time to all of their
respective properties, books, contracts, commitments, and records (including,
but not limited to, Tax Returns) and during such period shall furnish promptly
to one another such other information concerning their respective businesses,
properties, and personnel as Parent or Subsidiary or Company, as the case may
be, shall reasonably request; provided that no investigation pursuant to this
Section 7.1 shall affect any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
Merger. Parent and its subsidiaries shall hold and shall use their best efforts
to cause the Parent Representatives to hold, and Company shall hold and shall
use its best efforts to cause Company Representatives to hold in strict
confidence all non-public documents and information furnished to Parent and
Subsidiary or to Company, as the case may be, in connection with the
transactions contemplated by this Agreement, except that Parent, Subsidiary, and
Company may disclose such information as may be necessary in connection with
seeking the Parent Required Statutory Approvals, Company Required Statutory
Approvals, and Company Shareholders' Approval, and Parent, Subsidiary, and
Company may disclose any information that any of them is required by law or
judicial or administrative order to disclose; provided that the party required
to disclose such information shall provide the other parties with adequate prior
notice to such effect, and such party shall cooperate with any other party which
wishes to obtain a protective order or injunction covering such information. In
the event that this Agreement is terminated in accordance with its terms, each
party shall promptly re-deliver to the other all non-public written material
provided pursuant to this Section 7.1 and shall not retain any copies, extracts,
or other reproductions, in whole or in part, of such written material. In such
event, all documents, memoranda, notes, and other writing whatsoever prepared by
Parent or Company based on the information in such material shall be destroyed
(and Parent and Company shall use their respective best efforts to cause their
advisors and representatives to similarly destroy their documents, memoranda,
and notes), and such destruction (and best efforts) shall be certified, in
writing, by an authorized officer supervising such destruction. Company shall
promptly advise Parent, and Parent shall promptly advise Company in writing, of
any change or the occurrence of any event after the date of this Agreement
having, or which, insofar as can reasonably be foreseen, in the future may have
any material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations, or prospects of Company
or Parent and its subsidiaries, taken as a whole.
SECTION 7.2 COMPANY SHAREHOLDERS' APPROVAL. The parties hereto
shall promptly submit this Agreement and the transactions contemplated hereby
for their respective shareholders' approval at a meeting of shareholders and
shall use its best efforts to obtain shareholder approval and adoption of this
Agreement and the transactions contemplated hereby. Such meeting shall be held
as soon as practicable following the date hereof. Each party hereto shall,
through its Board of Directors, recommend to its respective shareholders
approval of the transactions contemplated by this Agreement.
21
SECTION 7.3 EXPENSES. All cost and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses.
SECTION 7.4 AGREEMENT TO COOPERATE. Parent, Subsidiary, and
Company each agree to take such actions as may be necessary to obtain any
governmental consents, orders, and approvals legally required for the
consummation of the Merger, and the transactions contemplated hereby, including
the making of any filings, publications, and requests for extensions and waivers
and shall take all necessary and appropriate steps to obtain any required
approval of the change in control of First National.
SECTION 7.5 PUBLIC STATEMENTS. Both the timing and the content of
all disclosure to third parties and public announcements concerning the
transactions provided for in this Agreement by either Company or Parent shall be
subject to the prior approval of Parent, which shall not be unreasonably
withheld. Company and Parent expressly agree that a public announcement of the
transactions contemplated by this Agreement shall be made as agreed upon by
Company and Parent.
SECTION 7.6 NO CHANGE TO ARTICLES. No amendments will be required
to the Surviving Company's Articles of Organization as a result of the Merger or
this Agreement.
ARTICLE VIII
CONDITIONS
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of the shareholders or
members, as applicable, of Company, Parent and Subsidiary under
applicable law;
(b) Nelnet Stock, issuable in the Merger, shall have been authorized and
issued; (c) No preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of
the Merger shall have been issued and remain in effect (each party
agreeing to use its reasonable efforts to have any such injunction,
order, or decree lifted);
(d) No action shall have been taken, and no statute, rule, or regulation
shall have been enacted by any state or federal government or
governmental agency in the United States which would prevent the
consummation of the Merger; and
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(e) All governmental consents, orders, and approvals legally required
for the consummation of the Merger and the transactions contemplated
hereby shall have become Final Orders.
SECTION 8.2 CONDITIONS TO OBLIGATION OF COMPANY TO EFFECT THE
MERGER. Unless waived by Company, the obligation of Company to effect the Merger
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) Parent and Subsidiary shall have performed, in all material
respects, their agreements contained in this Agreement required to be
performed on or prior to the Closing Date, and the representations and
warranties of Parent and Subsidiary contained in this Agreement shall be
true and correct in all material respects on and as of (i) the date
made; and (ii) except in the case of representations and warranties
expressly made solely with reference to a particular date and to the
extent the failure of such to be true and correct in all material
respects on and as of the Closing Date is the result of actions
expressly mandated by Section 7.4;
(b) All governmental consents, orders, and approvals legally required
for the consummation of the Merger and the transactions contemplated
hereby shall have been obtained and be in effect at the Closing Date,
and no such consent, order, or approval shall have any terms which, in
the reasonable judgment of Company, when taken together with the terms
of all such consents, orders, or approvals, would materially impair the
value of the Merger to the shareholders of the Company, and no
governmental authority shall have promulgated any statute, rule, or
regulation which, when taken together with all such promulgations, would
materially impair the value of the Merger to the shareholders of the
Company;
SECTION 8.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUBSIDIARY TO
EFFECT THE MERGER. Unless waived by Parent and Subsidiary, the obligations of
Parent and Subsidiary to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the additional following conditions:
(a) Company shall have performed, in all material respects, its
agreements contained in this Agreement required to be performed on or
prior to the Closing Date, and the representations and warranties of
Company contained in this Agreement shall be true and correct in all
material respects on and as of (i) the date made; and (ii) except in the
case of representations and warranties expressly made solely with
reference to a particular date, and to the extent the failure of such to
be true and correct in all material respects on and as of the Closing
Date, is the result of actions expressly mandated by Section 7.4 the
Closing Date; and
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(b) All governmental consents, orders, and approvals legally required
for the consummation of the Merger and the transactions contemplated
hereby shall have been obtained and be in effect at the Closing Date,
and no such consent, order, or approval shall have any terms which, in
the reasonable judgment of Parent, when taken together with the terms of
all such consents, orders, or approvals, would materially impair the
value to Parent of the Merger, and no governmental authority shall have
promulgated any statute, rule, or regulation which, when taken together
with all such promulgations, would materially impair the value to Parent
of the Merger.
(c) The Parent shall have received from each shareholder of the Company,
or from such shareholder's representative, a subscription agreement in
customary form with respect to the qualification of the issuance of
Nelnet Stock to the shareholder of the Company for the exemption from
the registration requirements of the Securities Act under Section 4(2)
of the Securities Act, which subscription agreement shall include
customary representations from such shareholder regarding (i) their
ability to bear the economic risk of acquiring the Nelnet Stock, (ii)
their acquisition of such Nelnet Stock for investment and without a view
to distribution within the meaning of the Securities Act, (iii) their
substantial knowledge and experience in financial and business matters
and (iv) their receipt of all information with respect to the Parent
that they desire and their opportunity to obtain additional information
about the Parent, and the Parent shall have in other respects determined
to the reasonable satisfaction of the Parent the availability of the
Section 4(2) private placement exemption. If any shareholder of the
Company declines to provide such subscription agreement or
representations, the Parent may elect to treat such shareholder as a
holder of Dissenting Shares as described in Article III of this
Agreement.
(d) The shares of Nelnet Stock to be issued pursuant to this Agreement
shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
ARTICLE IX
TERMINATION, AMENDMENT, AND WAIVER
SECTION 9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval by the
shareholders of the parties:
(a) by mutual consent of Parent and Company;
(b) by any party hereto, by written notice to the other party, if
approval of such notifying party's shareholders shall not have been
obtained at a duly held special meeting, including any adjournments
thereof; and
(c) by any party hereto, if any state or federal law, order, rule, or
regulation is adopted or issued which has the effect, as supported by
the written opinion of outside counsel for such party, of prohibiting
the Merger or by any party hereto, if any court of competent
jurisdiction in the United States or any state shall have issued an
order, judgment, or decree permanently restraining, enjoining, or
otherwise prohibiting the Merger, and such order, judgment, or decree
shall have become final and nonappealable.
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SECTION 9.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Parent or Company as provided in Section 9.1, this
Agreement shall forthwith become void, and there shall be no further obligation
on the part of either Company, Parent, Subsidiary, or their respective officers
or directors (except as set forth in this Section 9.2 and in Sections 7.1 and
7.4 which shall survive the termination). Nothing in this Section 9.2 shall
relief any party from liability for any breach of this Agreement.
SECTION 9.3 AMENDMENT. This Agreement may be amended before or
after Company Shareholder Approval has been obtained but only by an instrument,
in writing, signed on behalf of each of the parties hereto and in compliance
with applicable law.
SECTION 9.4 WAIVER. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document delivered pursuant thereto, and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf of such party.
ARTICLE X
0GENERAL PROVISIONS
SECTION 10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in Articles IV and V of this Agreement
shall survive the Merger.
SECTION 10.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
mailed by registered or certified mail (return receipt requested) or sent via
facsimile to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) If to Parent or Subsidiary, to:
Nelnet, Inc.
Attention: Xxxxx X. Xxxxxx
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
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(b) If to Company, to:
Packers Service Group, Inc.
Attention: Xxx Xxxxxx
c/o Union Bank and Trust Company
00xx & Xxxxxxxx Xxxx.
Xxxxxxx, XX 00000
SECTION 10.4 INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 10.5 MISCELLANEOUS. This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof.
SECTION 10.6 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
SECTION 10.7 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except as
expressly herein provided, nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, Parent, Subsidiary and Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
Nelnet, Inc.
("Parent")
By: /s/ XXXXXXX X. XXXXXXXXX
-----------------------
Title: President
-----------------------
Nelnet Academic Services, LLC
("Subsidiary")
By: /s/ XXXXX X. XXXXXX
-----------------------------
Title: Manager
-----------------------------
Packers Service Group, Inc.
("Company")
By: /s/ XXX XXXXXX
-----------------------------
Title: President
-----------------------------
