EXHIBIT 10.70
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment"),
entered into as of September 24, 2004, is by and among NELNET, INC. ("NELNET"),
a corporation duly organized and validly existing under the laws of the State of
Nebraska and formerly known as Nelnet Loan Services, Inc., NATIONAL EDUCATION
LOAN NETWORK, INC. ("NETWORK"), a corporation duly organized and validly
existing under the laws of the State of Nevada and formerly known as Nelnet,
Inc. (NETWORK and NELNET, herein individually a "Borrower" and collectively
"Borrowers"), and M&I MARSHALL & ILSLEY BANK ("M&I"), SUNTRUST BANK, FIRST
NATIONAL BANK OF OMAHA and FIFTH THIRD BANK (individually "Bank" and
collectively the "Banks") and M&I, in its capacity as agent for the Banks (the
"Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers, the Agent and the Banks are parties to
that certain Credit Agreement dated as of September 25, 2003 (the "Credit
Agreement"), pursuant to which the Banks have agreed to make certain loans to
the Borrower upon the terms and subject to the conditions set forth therein; and
WHEREAS, the Borrowers have issued to the Banks their CP Notes
(the "Existing CP Notes"), each dated September 25, 2003, in the aggregate
principal amount of $35,000,000 and their Revolving Notes (the "Revolving
Notes"), each dated September 25, 2003, in the aggregate principal amount of
$35,000,000; and
WHEREAS, as of the date of this Amendment there are no
outstanding Loans under the Credit Agreement; and
WHEREAS, the Borrowers have requested that the Agent and the
Banks modify the terms and conditions of the Credit Agreement, including to: (a)
extend the term of this Agreement to September 23, 2005; (b) increase the
aggregate CP Commitment, (c) amend the Applicable Rate, (d) amend certain
covenants of the Borrowers, and (e) make certain other modifications to the
Credit Agreement; and
WHEREAS, the Agent and the Banks are agreeable to such
modifications on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms by the Credit
Agreement.
2. COMMERCIAL PAPER FACILITY. The Borrowers request that the
aggregate commitment of the Banks to make CP Loans pursuant to Article II of the
Credit Agreement be increased to an aggregate CP Commitment of $50,000,000,
allocated among the Banks as set forth in Exhibit A hereto. Any loans made
pursuant any Bank's CP Commitment shall be evidenced by the new CP Note of the
Borrowers in favor of such Bank in the form of Exhibit B annexed hereto (each a
"New CP Note" and, collectively, the "New CP Notes") to be dated September 24,
2004. The New CP Notes shall be issued in the aggregate principal amount of
$50,000,000 in substitution for and replacement of, but not as a novation of,
the Existing CP Notes, and shall be executed by the Borrowers and delivered to
the Banks against return of the Existing CP Notes to the Borrowers.
3. AMENDMENTS TO CREDIT AGREEMENT. Upon satisfaction of the
conditions set forth in Section 6 below and effective as of the date hereof, the
Credit Agreement shall be amended as follows:
a. All references to the Credit Agreement in the Credit
Agreement and in any of the Notes or Loan Documents
shall refer to the Credit Agreement as amended hereby.
b. All references in the Credit Agreement to the CP Notes
issued thereunder and the Loans evidenced thereby shall
refer to the New CP Notes issued hereunder and the Loans
evidenced thereby.
c. The following definitions shall be added to Section A of
the Credit Agreement, reading as follows:
"Amendment No. 1" means that certain Amendment
No. 1 to Credit Agreement, dated as of September 24,
2004, among the Borrowers, the Agent and the Banks.
"Amendment No. 1 Closing Date" means September
24, 2004.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations
issued thereunder.
d. The definition of "Consolidated Tangible Net Worth" set
forth in Section A of the Credit Agreement shall be
amended by replacing the reference in clause (b) thereof
to "December 31, 2002" with a reference to "December 31,
2003" and by amending clause (d) thereof in its entirety
to read as follows:
minus (d) the amount of deferred income tax assets;
e. The definition of "Funded Debt" set forth in Section A
of the Credit Agreement shall be amended in its entirety
to read as follows:
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"Funded Debt" means, at the time of
determination, all the Debt of Borrowers and the Regular
Subsidiaries under this Agreement, including the
Revolving Credit Facility under Article I, outstanding
Commercial Paper and CP Loans under Article II, and all
other Debt of any Borrower or Regular Subsidiary,
measured on a consolidated basis, that has actually been
funded and is outstanding at such time, whether or not
such amount is due or payable at such time.
f. The definition of "Maturity Date" set forth in Section A
of the Credit Agreement shall be amended in its entirety
to read as follows:
"Maturity Date" means September 23, 2005 (364
days from the Amendment No. 1 Closing Date).
g. The definition of "Permissible Withdrawal Amount" set
forth in Section A of the Credit Agreement shall be
amended in its entirety to read as follows:
"Permissible Withdrawal Amount" means, with
respect to any Asset Securitization as of a date of
determination, the amount of assets which have been
withdrawn under the terms of the Securitization
Documents relating to that Asset Securitization during
the four fiscal quarters then ending from the funds
securing the securities backed by such assets and held
by or on behalf of the trustee or other collateral agent
for such securities; provided, however, that the
Permissible Withdrawal Amount shall not include any
amounts permitted to be withdrawn under the terms of
such Securitization Documents only for limited purposes
relating to such Asset Securitization, including the
payment of debt service, administrative expenses,
servicing fees and expenses, and other fees and expenses
directly related to that Asset Securitization and the
securities backed by such assets.
h. The definition of "Termination Date" set forth in
Section A of the Credit Agreement shall be amended to
delete the reference to Section 2.1 and insert in its
place a reference to Section 1.1.
i. The second sentence of Section 3.3 of the Credit
Agreement shall be amended to read in its entirety as
follows:
The term "Applicable Rate" means the Adjusted
Libor Rate plus one and three quarters percent (1.75%)
per annum.
j. Section 3.10 of the Credit Agreement shall be amended in
its entirety to read as follows:
Section 3.10. Facility Fee.
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Borrowers agree, jointly and severally, to pay to
the Agent for the pro rata benefit of the Banks a facility
fee calculated at a per annum rate equal to one-quarter of
one percent (0.25%): (i) for the period from and including
the Closing Date through the Termination Date, on the
amount of the Revolving Commitment, payable in arrears on
the Quarterly Payment Dates (prorated for the first
quarter if less than a full quarter) and on the
Termination Date and (ii) for the period from and
including the Amendment No. 1 Closing Date through the
Maturity Date, on the amount of the CP Commitment, payable
in advance on the Amendment No. 1 Closing Date.
k. Section 7.1(a) of the Credit Agreement shall be amended
to insert the following proviso at the end thereof:
provided, however, that for any annual period for which
NELNET is required, pursuant to the Exchange Act, to
file an annual report on Form 10-K with the Securities
and Exchange Commission, the requirements of this
Section 7.1(a) will be deemed satisfied if the Borrowers
provide a copy of the report so filed within the time
such report is required to be filed with the Securities
and Exchange Commission;
l. Section 7.1(b) of the Credit Agreement shall be amended
to insert the following proviso at the end thereof:
provided, however, that for any quarterly period for
which NELNET is required, pursuant to the Exchange Act,
to file a quarterly report on Form 10-Q with the
Securities and Exchange Commission, the requirements of
this Section 7.1(b) will be deemed satisfied if the
Borrowers provide a copy of the report so filed within
the time such report is required to be filed with the
Securities and Exchange Commission;
m. Section 8.1 of the Credit Agreement shall be amended to:
i. remove "and" at the end of subsection (i);
ii. replace "." with "; and" at the end of
subsection (j); and
iii. add a new subsection (k) reading in its entirety
as follows:
(k) Other unsecured Debt in an aggregate amount
outstanding from time to time not to exceed the lesser
of (i) 50% of the Consolidated Tangible Net Worth of
Borrowers and their Subsidiaries as of the most recent
date for which financial statements are then required to
have been delivered and (ii) $185,000,000; provided that
(u) the Borrowers shall have provided 30 days advance
written notice to the Agent of their intention to incur
any such Debt, (w) the Borrower shall have provided
prior to the incurrence of such Debt a certificate
signed by an appropriate officer of each Borrower
demonstrating compliance with this subsection (k) and
compliance with the financial covenants set forth in
Article IX of this Agreement on a pro forma basis, after
giving effect to the proposed incurrence of Debt, as of
the most recent date for which financial statements are
then required to have been delivered, (x) the Agent and
the Banks shall be satisfied that such incurrence of
Debt will not result in a downgrade in the Standard &
Poor's Rating Group's rating of the unsecured long-term
debt of the Borrowers and their Subsidiaries, (y) the
terms and conditions of each instrument, document and
agreement evidencing or governing such Debt shall be no
more restrictive than the terms and conditions of the
Loan Documents, and (z) no Default or Event of Default
shall have occurred and be continuing or would result
therefrom.
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n. Section 8.4 of the Credit Agreement shall be amended by
replacing the proviso therein with the following:
PROVIDED, HOWEVER, that if no Default exists or would
result after giving pro forma effect thereto, (a) Parent
may declare and pay dividends on account of its Equity
Interests and (b) Parent may redeem, purchase, retire,
or otherwise acquire its Equity Interests, provided that
the aggregate amount paid by Parent for the redemption,
purchase, retirement or other acquisition of its Equity
Interests, plus the aggregate amount of the prepayments
made under the permissions of Section 8.10 during any
twelve-month period ending during the term of this
Agreement, shall not exceed an aggregate amount equal to
One Million Dollars ($1,000,000).
o. Section 8.5(i)(ii) of the Credit Agreement shall be
amended in its entirety to read as follows:
(ii) Consideration. Either (a) the
consideration, regardless of form, including assumption
of debt, given by the purchaser in connection with the
transaction, shall not exceed, when aggregated with all
other transactions under this subsection during the
preceding 12 months, 15% of the Consolidated Tangible
Net Worth of Borrowers and their Subsidiaries as of the
most recent date for which financial statements are then
required to have been delivered or (b) no Loan
Obligations are outstanding hereunder; provided,
however, that purchases of portfolios of Student Loans
in the normal course of business, without any payment of
goodwill, going concern value or the like shall not be
counted for purposes of the 15% limit;
p. Section 8.10 of the Credit Agreement shall be amended in
its entirety to read as follows:
Section 8.10. Prepayment or Payment of Debt.
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Neither Borrower shall prepay, and shall not
permit any Regular Subsidiary to prepay, any Debt,
except (i) the Obligations and (ii) if no Default exists
or would result therefrom, Borrowers and their
respective Regular Subsidiaries may pay any Debt if the
aggregate amount of the payment made under the
permissions of this Section 8.10 during any twelve-month
period ending during the term of this Agreement, plus
the aggregate amount paid by Borrowers for the
redemption, purchase, retirement or other acquisition of
its Equity Interests under the permissions of Section
8.4 during such twelve-month period, shall not exceed an
aggregate amount equal to One Million Dollars
($1,000,000). In addition, provided that Borrowers
deliver a certificate to Banks certifying that no
Default or Event of Default exists.
q. Section 9.1 of the Credit Agreement shall be amended in
its entirety to read as follows:
Section 9.1. Consolidated Tangible Net Worth.
Borrowers and their Subsidiaries will at all
times maintain Consolidated Tangible Net Worth in an
amount not less than the sum of (a) Two Hundred Fifty
Million Dollars ($250,000,000) plus (b) seventy-five
percent (75%) of the positive Consolidated Net Income of
Borrowers and their Subsidiaries for each fiscal quarter
to have completely elapsed since December 31, 2003.
r. Section 9.4 of the Credit Agreement shall be amended in
its entirety to read as follows:
Section 9.4. Minimum Loan Loss Reserve to Total
Student Loans.
At the end of each fiscal quarter beginning with
the quarter ended September 30, 2004, Borrowers and
their Subsidiaries will maintain a Loan Loss Reserve of
at least 0.040% of Total Student Loans.
s. Exhibit D to the Credit Agreement (Compliance
Certificate) shall be amended in its entirety such that
it is replaced by Exhibit C to this Amendment.
t. Exhibit H to the Credit Agreement (Schedule of Banks)
shall be amended in its entirety such that it is
replaced by Exhibit A to this Amendment.
u. Schedule 6.14 to the Credit Agreement (Subsidiaries)
shall be amended in its entirety such that it is
replaced by Exhibit D to this Amendment.
4. Conditions: Notwithstanding the foregoing, this Amendment
shall not become effective unless and until (x) this Amendment has been approved
in writing by the Borrowers, the Agent and the Banks; and (y) the Borrowers
shall have delivered each of the following to the Agent, in form and substance
satisfactory to the Agent and the Banks:
a. Resolutions of the Board of Directors of each Borrower
and each Obligated Party certified by its Secretary or
an Assistant Secretary which authorize its execution,
delivery, and performance of the Amendment and the New
CP Notes or the Guaranty, as applicable;
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b. A certificate of incumbency for each Borrower and each
Obligated Party certified by its Secretary or an Assistant Secretary
certifying the name of each of its officers (i) who is authorized to
sign the Amendment and the New CP Notes to which it is or is to be a
party (including the certificates contemplated herein) together with
specimen signatures of each such officer and (ii) who will, until
replaced by other officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices
and other communications in connection with the Amendment, the Credit
Agreement and the transactions contemplated hereby and thereby;
c. The certificate of incorporation of each Borrower and each
Obligated Party certified by the Secretary of State of the state of its
incorporation and dated a current date;
d. The bylaws of each Borrower and each Obligated Party
certified by its Secretary or an Assistant Secretary;
e. Certificates of the appropriate government officials of the
state of incorporation of each Borrower and each Obligated Party as to
their respective existence, authority to do business and good standing,
as applicable, in such states, each dated a current date;
f. The New CP Notes executed by each Borrower;
g. A favorable opinion of legal counsel to Borrowers and the
Obligated Parties as to such matters as the Bank may reasonably request;
h. The Acknowledgment of Guarantors attached hereto, executed by
each party to the Guaranty;
i. A Subsidiary Joinder Agreement, in the form attached hereto
as Exhibit E, executed by any Regular Subsidiary of either Borrower that
is not currently party to the Guaranty.
j. Payment to the Agent of a fee pursuant to the fee letter
between the Borrowers and the Agent;
k. Payment to the Agent of the $125,000 facility fee for the CP
Commitment pursuant to Section 3.10(ii);
l. Payment of all other fees and expenses payable by the
Borrowers pursuant to the Credit Agreement as amended hereby; and
m. Such other documents as the Agent or its counsel may
reasonably request.
5. OTHER FACILITIES. Each of the Borrowers represents and
warrants to the Agent and the Banks that each of the Bank of America Facility
and the F&M Facility has been terminated and paid in full and that there is no
F&M Replacement Facility in effect.
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6. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers repeats
and reaffirms the representations and warranties set forth in Article VI of the
Credit Agreement, except to the extent that such representations and warranties
relate solely to an earlier date. Each of the Borrowers also represents and
warrants that the execution, delivery and performance of this Amendment, and the
documents required herein, are within the corporate powers of such Borrower,
have been duly authorized by all necessary corporate action and do not and will
not (i) require any consent or approval of the shareholders such Borrower; (ii)
violate any provision of the articles of incorporation or by-laws of such
Borrower or of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to such
Borrower or any subsidiary of such Borrower; (iii) require the consent or
approval of, or filing a registration with, any governmental body, agency or
authority; or (iv) result in any breach of or constitute a default under, or
result in the imposition of any lien, charge or encumbrance upon any property of
such Borrower or any subsidiary of such Borrower pursuant to, any indenture or
other agreement or instrument under which such Borrower or any subsidiary of
such Borrower is a party or by which it or its properties may be bound or
affected. This Amendment constitutes legal, valid and binding obligations of
each Borrower enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy or similar laws affecting the
enforceability of creditors' rights generally.
7. OBLIGATIONS ENFORCEABLE, ETC. Each Borrower acknowledges and
agrees that its obligations under the Credit Agreement and the Notes are not
subject to any offset, defense or counterclaim assertable by such Borrower and
that the Credit Agreement, the Notes and the Loan Documents are valid, binding
and fully enforceable according to their respective terms. Except as expressly
provided above, the Credit Agreement and the Loan Documents shall remain in full
force and effect, and this Amendment shall not release, discharge or satisfy any
present or future debts, obligations or liabilities to the Agent and the Banks
of either Borrower or of any debtor, guarantor or other person or entity liable
for payment or performance of any of such debts, obligations or liabilities of
either Borrower, or any security interest, lien or other collateral or security
for any of such debts, obligations or liabilities of either Borrower or such
debtors, guarantors, or other persons or entities, or waive any default, and the
Agent and the Banks expressly reserve all of their rights and remedies with
respect to each Borrower and all such debtors, guarantors or other persons or
entities, and all such security interests, liens and other collateral and
security. This is an amendment and not a novation. Without limiting the
generality of the foregoing, all present and future debts, obligations and
liabilities of the Borrowers under the Credit Agreement, as amended, are and
shall continue to be secured by the Security Agreements given by the Borrowers,
and shall continue to be guaranteed by the Guaranty given by the Guarantors.
8. FEES AND EXPENSES. Each Borrower shall be responsible for the
payment of all fees and out-of-pocket disbursements incurred by the Agent in
connection with the preparation, execution and delivery of this Amendment. Each
Borrower further acknowledges and agrees that such Borrower is and shall be
responsible for the payment of other fees, expenses, costs and charges arising
under or relating to the Loan Agreement, as amended hereby, and the Loan
Documents, as set forth in Section 11.1 of the Credit Agreement.
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9. LIMITATION OF LIABILITY. None of the Agent, the Banks, or any
Affiliate, officer, director, employee, attorney, or agent thereof, shall have
any liability with respect to, and each Borrower and each Obligated Party hereby
waives, releases, and agrees not to sue any of them upon, any claim for any
special, indirect, incidental, consequential, exemplary or punitive damages
suffered or incurred by either Borrower or any Obligated Party in connection
with, arising out of, or in any way related to, this Amendment, the Credit
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Amendment, the Credit Agreement or any of the other Loan
Documents.
10. SURVIVAL. All representations and warranties made or deemed
made in this Amendment in any document, statement, or certificate furnished in
connection with this Amendment shall survive the execution and delivery of this
Agreement and the making of the Loans under the Credit Agreement, and no
investigation by the Banks or any closing shall affect the representations and
warranties or the right of the Banks to rely upon them.
11. ENTIRE AGREEMENT. THIS AMENDMENT AND THE OTHER LOAN
DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
THERETO.
12. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Amendment
shall be governed by, and construed in accordance with, the laws of the State of
Wisconsin and applicable laws of the United States of America. BORROWERS AND
EACH OBLIGATED PARTY HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
UNITED STATES FEDERAL COURTS SITTING IN MILWAUKEE COUNTY, WISCONSIN, FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AMENDMENT,
ANY LOAN DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BORROWERS
AND EACH OBLIGATED PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH BORROWER AND EACH OBLIGATED PARTY AGREES THAT SERVICE OF PROCESS UPON IT
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS
ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION
11.13 OF THE CREDIT AGREEMENT. NOTHING IN THIS AMENDMENT OR ANY LOAN DOCUMENT
SHALL AFFECT THE RIGHT OF THE AGENT OR THE BANKS TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE AGENT OR THE BANKS TO
BRING ANY ACTION OR PROCEEDING AGAINST EITHER BORROWER OR ANY OBLIGATED PARTY OR
WITH RESPECT TO ANY OF THEIR RESPECTIVE PROPERTIES IN COURTS IN OTHER
JURISDICTION. ANY ACTION OR PROCEEDING BY EITHER BORROWER OR ANY OBLIGATED PARTY
AGAINST THE AGENT OR THE BANKS SHALL BE BROUGHT ONLY IN A FEDERAL COURT LOCATED
IN MILWAUKEE COUNTY, WISCONSIN.
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13. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
14. SEVERABILITY. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision held to be invalid or illegal.
15. CONSTRUCTION. Each Borrower, each Obligated Party, and the
Banks acknowledge that each of them has had the benefit of legal counsel of its
own choice and has been afforded an opportunity to review this Amendment and the
New CP Notes with its legal counsel and that this Amendment and the New CP Notes
shall be construed as if jointly drafted by the parties hereto.
16. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO AND EACH OBLIGATED PARTY HEREBY
IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AMENDMENT, ANY OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF THE AGENT OR ANY
BANK IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT HEREOF OR THEREOF.
17. MISCELLANEOUS. This Amendment is solely for the benefit of
the parties hereto and their permitted successors and assigns. No other person
or entity shall have any rights under, or because of the existence of, this
Amendment.
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IN WITNESS WHEREOF, this Amendment has been duly executed as of
the day and year first above written.
NELNET, INC.
By: /s/ Terry J. Heimes
------------------------------------
Its:
------------------------------
NATIONAL EDUCATION LOAN NETWORK, INC.
By: /s/ Terry J. Heimes
------------------------------------
Its:
------------------------------
M&I MARSHALL & ILSLEY BANK, for itself and
as Agent
By: /s/ PD Koepl
------------------------------------
Its: Senior Vice President
------------------------------------
And: /s/ Brendan Moran
------------------------------------
Its: Assistant Vice President
------------------------------------
SUNTRUST BANK
By: /s/ Dawn Dorsey
------------------------------------
Its: Vice President
------------------------------
FIRST NATIONAL BANK OF OMAHA
By: /s/ Brock Taylor
------------------------------------
Its: Officer
------------------------------
FIFTH THIRD BANK
By: /s/ Mike Mendenhall
------------------------------------
Its: Corporate Banking Officer
------------------------------------
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ACKNOWLEDGEMENT OF GUARANTORS
The undersigned Guarantors hereby consent to the foregoing
Amendment No. 1 to Credit Agreement (the "AMENDMENT"), and agree that their
Guaranty Agreement dated September 25, 2003 in favor of the Agent for the
benefit of the Secured Parties (the "Guaranty"), and all collateral or security
therefor, shall remain in full force and effect notwithstanding the amendments
made above and that the references to the "Credit Agreement" in the Guaranty
shall refer to the Credit Agreement as amended by the Amendment.
Dated September 24, 2004.
CHARTER ACCOUNT SYSTEMS, INC.
CLASSCREDIT, INC.
EFS, INC.
EFS SERVICES, INC.
GUARANTEC, LLP
IDAHO FINANCIAL ASSOCIATES, INC.
INTUITION, INC.
NATIONAL HIGHER EDUCATIONAL
LOAN PROGRAM, INC.
NELNET CANADA, INC.
NELNET CORPORATE SERVICES, INC.
(f/k/a Nelnet Corporation)
NELNET GUARANTEE SERVICES, INC.
NELNET MARKETING SOLUTIONS, INC.
STUDENT PARTNER SERVICES, INC.
UFS SECURITIES, LLC
By: /s/ Terry J. Heimes
------------------------------------
Their: Chief Financial Officer
----------------------------
SHOCKLEY FINANCIAL CORP.
By: /s/ Mark Portz
------------------------------------
Its: President
------------------------------
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EXHIBIT A
SCHEDULE OF BANKS
Commercial Commercial
Revolving Revolving Paper Paper Total Total
Commitment Percentage Commitment Percentage Commitment Commitment
Bank Address for Notice Amount Interest Amount Interest Amount Percentage
- ------------------- ------------------------- ------------ ----------- ------------ ---------- ------------ -----------
M&I Marshall & 770 North Water Street $17,500,000 50% $17,500,000 35% $35,000,000 41.2%
Ilsley Bank Milwaukee, WI 53202
First National Bank 1620 Dodge Street, Stop $7,500,000 21.4% $12,500,000 25% $20,000,000 23.5%
of Omaha 1196
Omaha, NE 68197
SunTrust Bank 76 South Laura Street, $5,000,000 14.3% $10,000,000 20% $15,000,000 17.65%
20th Floor
Jacksonville, FL 32202
Fifth Third Bank 38 Fountain Square Plaza $5,000,000 14.3% $10,000,000 20% $15,000,000 17.65%
MD 109046
Indianapolis, IN 46204
Total $35,000,000 100% $50,000,000 100% $85,000,000 100%
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EXHIBIT B
PROMISSORY NOTE
COMMERCIAL PAPER LOANS
$__________ September __, 2004
FOR VALUE RECEIVED, the undersigned, NELNET, INC. and NATIONAL
EDUCATION LOAN NETWORK, INC. ("Borrowers"), hereby, jointly and severally,
promise to pay to the order of ________________________ (the "Bank"), at the
Principal Office (defined in the Credit Agreement referred to below), in lawful
money of the United States of America and in immediately available funds, the
principal amount of _______________ Million Dollars ($__________) or such lesser
amount as shall equal the aggregate unpaid principal amount of the CP Loans made
by the Bank to Borrowers under the Credit Agreement referred to below, on the
dates and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
Borrowers hereby authorize the Bank to record in its records the
amount of each Loan made to Borrowers by the Bank and all payments of principal
in respect to each such Loan, which records shall, in the absence of manifest
error, be conclusive as to the outstanding principal amount of all such Loans;
provided, however, that the failure to make such records with respect to any
such Loan or payment shall not limit or otherwise affect the obligations of
Borrowers under the Credit Agreement or this Note.
This Note is one of the CP Notes referred to in the Credit
Agreement dated as of September 25, 2003, among Borrowers, the Bank, M&I
Marshall & Ilsley Bank, as Agent (the "Agent"), and certain other Lenders, as
amended by Amendment No. 1 to Credit Agreement, dated as of September 24, 2004,
among Borrowers, the Bank, the Agent, and certain other Lenders (such Credit
Agreement, as the same may be further amended or otherwise modified from time to
time, being referred to herein as the "Credit Agreement"), and evidences Loans
made by the Bank thereunder. The Credit Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the happening of
certain stated events and for prepayments of CP Loans prior to the maturity of
this Note upon the terms and conditions specified in the Credit Agreement.
Capitalized terms used in this Note have the respective meanings assigned to
them in the Credit Agreement.
14
This Note shall be governed by and construed in accordance with
the laws of the State of Wisconsin and the applicable laws of the United States
of America. This Note is performable in Milwaukee County, Wisconsin. Borrowers
and each surety, guarantor, endorser, and other party ever liable for payment of
any sums of money payable on this Note jointly and severally waive notice,
presentment, demand for payment, protest, notice of protest and non-payment or
dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, diligence in collecting, grace, and all other formalities of
any kind except for those specifically provided for in the Credit Agreement, and
consent to all extensions without notice for any period or periods of time and
partial payments, before or after maturity, and any impairment of any collateral
securing this Note, all without prejudice to the holder. The holder shall
similarly have the right to deal in any way, at any time, with one or more of
the foregoing parties without notice to any other party, and to grant any such
party any extensions of time for payment of any of said indebtedness, or to
release or substitute any such party or part or all of the collateral securing
this Note, or to grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the personal
liability of any party hereunder.
NELNET, INC.
By:
-----------------------------
Name:
----------------------
Authorized Officer
NATIONAL EDUCATION LOAN NETWORK, INC.
By:
-----------------------------
Name:
----------------------
Authorized Officer
15
EXHIBIT C
Compliance Certificate
16
COMPLIANCE CERTIFICATE
for the
quarter ending ________ __, ____
To: M&I Marshall & Ilsley Bank
777 North Water Street
Milwaukee, Wisconsin 53202
Attention: _______________
Ladies and Gentlemen:
This Compliance Certificate (the "Certificate") is being
delivered pursuant to Section 7.1(e) of that certain Credit Agreement dated as
of September 25, 2003 (as amended, the "Agreement"), among NELNET, INC.,
NATIONAL EDUCATION LOAN NETWORK, INC. (together, the "Borrowers"), and M&I
Marshall & Ilsley Bank, SunTrust Bank, First National Bank of Omaha and Fifth
Third Bank (the "Banks"). All capitalized terms, unless otherwise defined
herein, shall have the same meanings as in the Credit Agreement. All the
calculations set forth below shall be made pursuant to the terms of the Credit
Agreement.
The undersigned, a financial officer of Borrowers authorized
under certified resolutions delivered to the Banks, in his capacity as such
financial officer and not in his individual capacity, does hereby certify to the
Bank that:
- ------ ---------------------------------------------------------------------- ------ --------- -------
1. DEFAULT.
- ------ ---------------------------------------------------------------------- ------ --------- -------
No Default exists under this Agreement, or, if a Default exists, I have
described on the attached Exhibit "A "the nature thereof and the steps
taken or proposed to remedy such Default.
- ------ -----------------------------------------------------------------------------------------------
Compliance
- ------ ----------------------------------------------------------------------------- -----------------
2. SECTION 7.1 - Reporting Requirements.
- ------ ----------------------------------------------------------------------------- ----- ----- -----
(a) Annual audited financial statements of Borrowers on a
consolidated and consolidating basis within
90 days after the end of each fiscal year end or 10-K
(together with Compliance Certificate). Yes No N/A
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
(b) Quarterly unaudited financial statements of Borrowers
and their respective Subsidiaries on a
consolidated and consolidating basis within 45 days
after each fiscal quarter end or 10-Q (together with
Compliance Certificate). Yes No N/A
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
(c) Report listing Permissible Withdrawal Amounts and SLIMS
Commitment Amounts. Yes No N/A
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
(d) Annual Forecast Yes No N/A
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
(e) Report on Borrowers' and Subsidiaries' Student Loan
portfolio within 45 days after each fiscal quarter ends. Yes No N/A
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
(f) Annual audit report, SAS 70 report, servicer attestation
reports and lender attestation report. Yes No N/A
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
(g) Student Loan and DOE and Guaranty Agency audit reports
within 45 days after each fiscal quarter ends. Yes No N/A
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
(h) Other Yes No N/A
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
17
3. SECTION 7.12 -Servicing Performance.
- ------ ----------------------------------------------------------------------------- ----- ----- -----
Has the guarantee applicable to any Student Loans owned or by either
Borrower or any Subsidiary been reduced below 98%? Yes No
- ------ ----------------------------------------------------------------------------- ----- ----- -----
4. SECTION 8.5 - Investments.
- ------ ----------------------------------------------------------------------------- ----- ----- -----
(a) Basket of loans to officers, directors, $ 100,000
agents and employees
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(b) Actual outstanding principal amount of loans $ ______
to officers etc.
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
(c) Total Acquisitions during period [Describe]
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(d) Other investments pursuant to Section 8.5(k)
made in previous periods $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(e) Other Investments in Subject Period [specify] $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(f) Sum of (c) minus (d) plus (e) plus (f) $ ______
------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(g) 5% of Borrowers' consolidated net assets at $ ______
book value
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(h) Is (g) greater than (f)? Yes No
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
5. SECTION 9.1 - Consolidated Tangible Net Worth.
- ------ ----------------------------------------------------------------------------- ----- ----- -----
(a) Beginning Consolidated Tangible Net Worth. $250,000,000
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(b) 75% of Borrowers' and Subsidiaries positive
GAAP consolidated net income (for each $ ______
completed fiscal quarter since December 31,
2003)
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(c) Required Consolidated Net Worth (the sum of $ ______
(a) plus (b))
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(d) Actual Consolidated Tangible Net Worth as of quarter end:
- ------ ---- ------ ---- ------------------------------------------------------------ ----- ----- -----
(i) Stockholders equity $ ______
- ------ ---- ----------- ----------------------------------------------- ------------ ----- ----- -----
(ii) Increase in stockholder's equity due $ ______
to write-up
- ------ ---- ----------- ----------------------------------------------- ------------ ----- ----- -----
(iii) Intangibles $ ______
- ------ ---------------- ----------------------------------------------- ------------ ----- ----- -----
(iv) Deferred income tax assets $ ______
- ------ ---------------- ----------------------------------------------- ------------ ----- ----- -----
(v) Securities not marketable $ ______
- ------ ---------------- ----------------------------------------------- ------------ ----- ----- -----
(vi) Cash held in sinking fund or other $ ______
similar fund
- ------ ---------------- ----------------------------------------------- ------------ ----- ----- -----
(vii) Shares of capital stock $ ______
- ------ ---------------- ----------------------------------------------- ------------ ----- ----- -----
(viii) Minority interests $ ______
- ------ ---------------- ----------------------------------------------- ------------ ----- ----- -----
(ix) Sum of (ii) through (viii) $ ______
- ------ ---------------- ----------------------------------------------- ------------ ----- ----- -----
(x) (i) minus (ix) $ ______
- ------ ---------------- ----------------------------------------------- ------------ ----- ----- -----
(e) Is (x) greater than (c)? Yes No
- ------ ----------------------------------------------------------------------------- ----- ----- -----
6. SECTION 9.2 - Maximum Leverage Ratio.
- ------ ----------------------------------------------------------------------------- ----- ----- -----
1. Calculation of Funded Debt
- ------ ---- ----------- ----------------------------------------------- ------------ ----- ----- -----
(a) Revolving Loans plus interest $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(b) Commercial Paper outstanding $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(c) CP Loans plus interest $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(d) Other funded Debt, including interest $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(e) Funded Debt (Sum of (a) through (d)) $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
18
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
2. Calculation of Leverage Denominator
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
2.1 Calculation of Adjusted EBTDA
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(a) Borrowers and Regular Subsidiaries' EBTDA (as $ ______
described on Schedule 1)
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(b) Pro Forma EBTDA as Prior Target or $ ______
attributable to Prior Target Assets (as
described on Schedule 2)
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(c) Prior Company or Prior Asset EBTDA (as $ ______
detailed on Schedule 3)
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(d) Amount paid under participation agreements $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(e) Other adjustments approved by Agreement $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(f) Adjusted EBTDA sum of (a) and (b) minus (c) $ ______
and (f) and plus or minus (e)
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
2.2 Calculation of SLIMS Difference
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(a) Permissible Withdrawal Amount for each Asset $ ______
Securitization
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
$ ------
- ------ ---- ----------- ----------------------------------------------- ------------ ----- ----- -----
$ ------
- ------ ---- ----------- ----------------------------------------------- ------------ ----- ----- -----
$ ------
- ------ ---- ----------- ----------------------------------------------- ------------ ----- ----- -----
(b) Aggregate Permissible Withdrawal Amount sum of $ ______
all items in (a)
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(c) SLIMS Commitment Amount for each Asset $ ______
Securitization described in (a) representing $ ______
sum of (1) required payments, (2) amounts $ ______
required to be transferred and (3) pledged or $ ______
secured amounts
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(d) Aggregate SLIMS Commitment Amount sum of all $ ______
items in (c)
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(e) SLIMS Difference [if (b) - (d) is negative $ ______
number, enter 0]
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
2.3 Calculation of Leverage Denominator
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(a) Sum of 2.1(f) and 2.2(e) $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
2.4 Calculation of ratios
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(a) Line 1(e) / 2.3 (a) $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(b) Maximum ratio 2.25 to 1
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(c) Is line 2.4(b) less than 2.4(a)? Yes No
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
7. MINIMUM LOAN LOSS RESERVE TO TOTAL STUDENT LOANS
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(a) Total Student Loans $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(b) Reserves for bad loans $ ______
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(c) Minimum % required 0.040%
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(d) (b) / (a) times 100 (to convert to %)
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
(e) Is (d) greater than (c)? Yes No
- ------ ---- ------ ---- ----------------------------------------------- ------------ ----- ----- -----
19
8. ATTACHED SCHEDULES
- ------ -----------------------------------------------------------------------------------------------
Attached hereto as schedules are the calculations supporting the
computations set forth above in this Certificate. All information
contained herein and on the attached schedules is true and correct.
- ------ -----------------------------------------------------------------------------------------------
9. FINANCIAL STATEMENTS.
- ------ -----------------------------------------------------------------------------------------------
The financial statements attached hereto were prepared in accordance with
GAAP and fairly present (subject to year end audit adjustments) the
financial conditions and the results of the operations of the Persons
reflected thereon, at the date and for the periods indicated therein.
- ------ -----------------------------------------------------------------------------------------------
10. CONFLICT.
- ------ -----------------------------------------------------------------------------------------------
In the event of any conflict between this compliance certificate and the
Credit Agreement, the Credit Agreement shall control.
- ------ -----------------------------------------------------------------------------------------------
IN WITNESS WHEREOF, the undersigned has executed this Certificate effective this _____
day of ________, ____.
BORROWERS:
NELNET, INC.
By:
------------------------------------
Name:
----------------------
Authorized Officer
NATIONAL EDUCATION LOAN NETWORK, INC.
By:
------------------------------------
Name:
----------------------
Authorized Officer
20
Schedule 1
to
Compliance Certificate
BORROWERS' EBTDA
CONSOLIDATED NET INCOME OF BORROWERS AND REGULAR SUBSIDIARIES
(a) GAAP consolidated net income $_________
(b) Income of others not received $_________
(c) Investments to fund deficits or loss $_________
(d) Income subject to restrictions $_________
(e) Income of a Target for periods prior to Acquisition $_________
(f) Gains realized upon the sale or refinancing of assets $_________
(g) Increases in book value of assets acquired $_________
(h) Other extraordinary, non recurring, non-operating or
non-cash gains $_________
(i) Sum of (b) through (h) $_________
(j) Line (a) minus line (i) $_________
(k) Plus provisions for tax $_________
(1) Less benefit from tax $_________
(m) Plus amortization $_________
(n) Plus depreciation $_________
(o) Minus other non-cash credits $_________
(p) Plus interest and admin on SLIMS 2 and 3 $_________
(p) Borrowers' and the Regular Subsidiaries' EBTDA: (j) plus (k),
(m), (n) and (p) and less (l) and (o) $_________
21
Schedule 2
to
Compliance Certificate
Prior Target and Asset EBTDA
22
Schedule 3
to
Compliance Certificate
Prior Company EBTDA
23
EXHIBIT D
Subsidiaries
24
EXHIBIT E
Subsidiary Joinder Agreement
25
SUBSIDIARY JOINDER AGREEMENT
This SUBSIDIARY JOINDER AGREEMENT (the "Agreement") dated as of
September 24, 2004 is executed by the undersigned (each an "Obligated Party")
for the benefit of M&I MARSHALL AND ILSLEY BANK, as agent for itself and the
other Secured Parties, in connection with that certain Credit Agreement dated
September 25, 2003, among NELNET, INC., NATIONAL EDUCATION LOAN NETWORK, INC.
(together the "Borrowers") and M&I MARSHALL & ILSLEY BANK, SUNTRUST BANK, FIRST
NATIONAL BANK OF OMAHA and FIFTH THIRD BANK (formerly known as Fifth Third Bank,
Indiana) (the "Banks"), as amended by that certain Amendment No. 1 to Credit
Agreement dated as of September 24, 2004 (as modified to date, and as it may be
further modified from time to time, the "Credit Agreement", and capitalized
terms not otherwise defined herein being used herein as defined in the Credit
Agreement).
Each Obligated Party is a newly formed or newly acquired
Subsidiary (but not a Special Purpose Vehicle) and is required to execute this
Agreement pursuant to the Credit Agreement.
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Obligated Party hereby agrees as follows:
Each Obligated Party hereby assumes all the obligations of a "Guarantor"
under the Guaranty and agrees that it is a "Guarantor" and bound as a
"Guarantor" under the terms of the Guaranty as if it had been an original
signatory thereto. In accordance with the forgoing and for valuable
consideration, the receipt and adequacy of which are hereby acknowledged, each
Obligated Party irrevocably and unconditionally guarantees to the Agent and the
Secured Parties the full and prompt payment and performance of the Guaranteed
Indebtedness (as defined in the Guaranty) upon the terms and conditions set
forth in the Guaranty.
This Agreement shall be deemed to be part of, and a modification to, the
Guaranty and shall be governed by all the terms and provisions of the Guaranty,
which terms are incorporated herein by reference, are ratified and confirmed and
shall continue in full force and effect as valid and binding agreements of each
Obligated Party enforceable against such Obligated Party. Each Obligated Party
hereby waives notice of the Agent's or any Secured Party's acceptance of this
Agreement.
[Signature page follows]
26
IN WITNESS WHEREOF, each Obligated Party has executed this
Agreement as of the day and year first written above.
Obligated Party:
NATIONAL EDUCATION LOAN OF NEW ENGLAND, INC.
By: /s/ Terry J. Heimes
------------------------------------
Name: Terry J. Heimes
------------------------------
Title: Chief Financial Officer
-----------------------------
BST HOLDINGS, INC.
By: /s/ Terry J. Heimes
------------------------------------
Name: Terry J. Heimes
------------------------------
Title: Chief Financial Officer
-----------------------------
27