Exhibit 10.29
SECOND AMENDMENT OF
MARKETING EXPENSE REIMBURSEMENT AGREEMENT
This Second Amendment of Marketing Expense Reimbursement Agreement (the
"Second Amendment") is made and entered into as of this 21st day of December,
2001, by and between Union Bank and Trust Company, a Nebraska bank and trust
company, acting in its own right and in its capacity as trustee ("Union Bank")
and NELnet, Inc., a Nevada corporation f/k/a National Education Loan Network,
Inc. ("NELnet").
WHEREAS, the parties hereto entered into that certain Marketing Expense
Reimbursement Agreement dated as of January 1, 1999 (the "Agreement"), and the
parties hereto have also entered into that certain First Amendment of Marketing
Expense Reimbursement Agreement dated as of April 1, 2001 (the "First
Amendment"), and whereas the parties hereto wish to amend the Agreement and the
First Amendment under the terms set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereto agree as follows:
1. Definitions. Unless otherwise expressly stated herein,
capitalized terms in this Second Amendment shall have the same meanings given to
them in the Agreement and the First Amendment.
2. Reduction of Services to Be Provided by Union Bank. Section 2
of the First Amendment shall be deleted in its entirety and the following
substituted in lieu thereof:
Notwithstanding provisions to the contrary contained in
Section 1 of the Agreement, Union Bank may, at its option, and
in its sole discretion, reduce its Student Loan and
Alternative Loan marketing and origination efforts as compared
to historic levels of such efforts by reducing its marketing
personnel commitment. Union Bank agrees that if it reduces its
marketing personnel commitment, it shall enable NELnet to
offer employment to such personnel and, at NELnet's reasonable
request, continue such personnel as dual employees of NELnet
and Union Bank provided, however, that such personnel shall
not be entitled to any salary paid by Union Bank or Union Bank
employee benefits. NELnet shall provide nonexclusive marketing
and promotional services with respect to Student Loan
originations under the Union Bank brand name in the states of
Nebraska, Kansas, Iowa and portions of the western region of
the United States where the Union Bank brand name is currently
used to market Student Loans (including Alaska, Arizona,
California, Colorado, Hawaii, Oregon, Nevada and Washington),
at least at historic levels previously furnished by Union Bank
itself in those states, or as the parties may otherwise
mutually agree; provided, however, that NELnet
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shall not provide such services with respect to Student Loans
to borrowers (other than medical students) attending
University of Phoenix or Loma Xxxxx College unless Union Bank
ceases origination efforts at such educational institutions or
otherwise consents to such services being provided by NELnet.
3. Reimbursement of Marketing Costs. Section 3 of the First
Amendment shall be deleted in its entirety and the following substituted in lieu
thereof:
Section 3 of the Agreement shall be deleted in its entirety and the
following substituted in lieu thereof: "Marketing Costs" as defined
herein shall mean all direct costs and expenses during the term of this
Agreement, in connection with or arising from marketing activities by
Union Bank and NELnet relating to Student Loans, excluding any
administrative or overhead costs and expenses associated therewith,
and, following April 1, 2001, excluding any costs for marketing
representatives and related expenses arising from Student Loan
activities in the northeastern region of the United States (including,
without limitation, New York, New Jersey, Connecticut, Pennsylvania,
Vermont, New Hampshire and Maine) as well as the states of Illinois,
South Dakota, Minnesota and Texas. Marketing Costs incurred with
respect to the states of Nebraska, Kansas, Iowa and portions of the
western region of the United States where the brand name of Union Bank
is currently used to market Student Loans (including Alaska, Arizona,
California, Colorado, Hawaii, Oregon, Nevada and Washington) shall be
included in the computation of Marketing Costs. NELnet and Union Bank
shall each be responsible for their respective pro rata share of
Marketing Costs during each calendar year during the term of this
Agreement, and each party's respective share shall be calculated based
upon the following formulas:
A. NELnet's annual = All annual Marketing Costs X ($120 million + 75% of annual
share of Union Bank originations in excess of $240 Million)/
Marketing Costs All Union Bank Student Loan Originations for the year
B. Union Bank's share of Marketing Costs = all Marketing Costs for the
year minus NELnet's share of Marketing Costs as calculated pursuant to
(A) above; and
C. Union Bank also agrees to pay 25% of the marketing and promotional
costs (excluding any administrative or overhead costs and expenses
associated therewith) incurred by NELnet with respect to origination of
student loans and alternative loans under non-Union Bank brand names as
they may occur in the states of Alaska, Arizona, California, Colorado,
Hawaii, Iowa, Kansas, Oregon, Nevada and Washington (the "NELnet Brand
Loans").
Such reimbursements set forth above shall be paid by Union Bank to
NELnet on a monthly basis, upon receipt by Union Bank of written
billing statements from NELnet with respect to good faith estimates of
the above-described costs, with reconciliation to reflect actual costs
at the end of each calendar year.
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Union Bank also hereby transfers all of its rights and interest in
certain software products utilized in connection with Student Loans,
including without limitation "EnConcert," "Notes on Student Loans,"
"Notes on Credit," "Notes on Investments," "Union Station," and
"Student Exchange" (collectively, the "Student Loan Software"). Union
Bank shall take all reasonable acts necessary to effectuate such
transfer as reasonably requested by NELnet. NELnet shall assume
responsibility for any future enhancements or development of the
Student Loan Software. NELnet shall reimburse Union Bank and its
affiliates for any expense in connection with Alternative Loans
originated after January 1, 2000. It is acknowledged that NELnet is
providing substantial consideration by assuming a greater share of
Marketing Expenses such as salary expenses related to hiring of
marketing personnel, marketing expenses related to Alternative Loans,
software development expenses related to EnConcert and other
intellectual properly development, and access granted by NELnet to
Union Bank to all future enhancements to the EnConcert software or
modifications thereof.
4. Purchase Option and Right of First Refusal. In consideration
of the payments set forth in Section 3 C above, Union Bank shall have the right
to purchase 25% of the NELnet Brand Loans made during each calendar year. Said
loan purchases shall occur on such dates and in such quantities as may be
mutually agreed to by the parties; Union Bank's right to purchase shall be
deemed to be waived if not exercised in writing prior to the end of each
calendar year. On each applicable purchase date, Union Bank shall pay to NELnet
an amount equal to the then outstanding principal balance of the NELnet Brand
Loans to be purchased on said sale date, plus interest and special allowance
payments accrued but unpaid with respect to such loans, if any. All NELnet Brand
Loans purchased hereunder will be subject to a life of loan servicing agreement
with NELnet or any of its affiliates. In the event Union Bank desires to sell
any Student Loans owned by or on behalf of Union Bank, Union Bank must give
NELnet a right of first refusal to repurchase said loans, subject to any
existing sale commitments between Union Bank and NELnet or its affiliates.
NELnet shall have the right to purchase such Student Loans from Union Bank for
an amount equal to the then outstanding principal balance of such Student Loans
on the applicable sale date, plus interest and special allowance payments
accrued by unpaid with respect to such loans, if any. On each such purchase
date, NELnet shall also pay to Union Bank a fee equal to the product of (a) the
aggregate principal balance outstanding on the Student Loans purchased on such
date multiplied by (b) the annual rate of fifty basis points (0.50%). NELnet
shall also reimburse Union Bank a portion of the costs paid by Union Bank
pursuant to Section 3 C of this Second Amendment that are associated with any
NELnet Brand Loans to be repurchased. The exact amount to be reimbursed shall be
determined by the mutual agreement of the parties after considering the
remaining life of the NELnet Brand Loans to be repurchased. Within 60 days
written notice from Union Bank of its desire to sell any NELnet Brand Loans,
NELnet shall provide Union Bank written notice of its decision to accept or
reject any right of first refusal granted hereunder. If NELnet rejects its right
of first refusal granted hereunder and arranges for a sale of the Union Bank
Student Loans, then Union Bank shall pay to NELnet any amount by which the sale
price of the Student Loans paid by a third party purchaser exceeds the sum of
101.5% of the outstanding principal balance and 100% of the accrued and unpaid
interest on such Student Loans.
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5. Effect of Amendment. Unless expressly modified or amended by
this Second Amendment, all terms and provision contained in the Agreement and
First Amendment shall remain in full force and effect without modification.
Union Bank and Trust Company NELnet, Inc.
By: /s/ Xxxxxxx X.Xxxxxxxxxx By: /s/ Xxxx Xxxxxx
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Title: Sr. V.P. Title: CEO
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