AGREEMENT FOR PURCHASE OF LLC MEMBERSHIP INTEREST

 

 

                                                                    Exhibit 2.17

 

                AGREEMENT FOR PURCHASE OF LLC MEMBERSHIP INTEREST

 

         This   AGREEMENT   FOR  PURCHASE  OF  LLC   MEMBERSHIP   INTEREST  (the

"Agreement")  is made as of the 28 day of  January,  2004,  among David A. Hoeft

("Hoeft"),  Todd J. Wolfe ("Wolfe"),  (collectively,  the "Sellers") and Tina D.

Mercer  ("Mercer"),  Premiere  Credit of North America,  LLC, an Indiana Limited

Liability  Company  having  a place  of  business  at 2002 N.  Wellesley  Blvd.,

Indianapolis,  IN 46219 ("the Company"), and Nelnet, Inc., a Nevada corporation,

having a place of  business  at 121  South  13th  Street,  Suite  201,  Lincoln,

Nebraska, 68508 ("Purchaser"), concerning Membership interests in the Company.

 

                              W I T N E S S E T H :

 

         WHEREAS,  Sellers  and Mercer are the  owners in the  aggregate  of one

hundred  percent (100%) of the membership  interests  (the  "Interests")  of the

Company; and

 

         WHEREAS,  the Company is in the  business of  providing  collection  of

accounts and related  services to student loan lenders and others (the  "Company

Business"); and

 

         WHEREAS,  Sellers wish to sell to  Purchaser  and  Purchaser  wishes to

purchase from Sellers fifty percent (50%) of the Interests; and

 

         WHEREAS,  Purchaser wishes to invest in and make a capital contribution

to  Company  for the  purchase  of  certain  real  estate  and  other  potential

investments; and

 

         WHEREAS,  Purchaser desires that Hoeft and Wolfe remain as employees of

the Company after the Closing as further set forth in those  certain  Employment

Agreements  between each of Hoeft and Wolfe and Company,  which Agreements shall

be executed  contemporaneously  herewith and are attached as Schedules 5.1(b)(i)

and 5.1(b)(ii).

 

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                                                                    Exhibit 2.17

 

         NOW, THEREFORE,  in consideration of the  representations,  warranties,

covenants and other agreements and  undertakings of the parties  hereinafter set

forth,  and  for  other  good  and  valuable  consideration,   the  receipt  and

sufficiency  of which are  hereby  acknowledged,  the  parties  hereby  agree as

follows:

 

                                   ARTICLE ONE

 

                         SALE AND PURCHASE OF INTERESTS

 

         1.1 Sale and Purchase of Interests. On the Closing Date, as hereinafter

defined, subject to the terms and conditions of this Agreement the Sellers agree

to and shall sell transfer and deliver the Interests to the  Purchaser,  and the

Purchaser shall purchase, acquire and accept the Interests from Sellers. Sellers

are selling the following Interests respectively:

 

         (a) Hoeft: 26.75%

         (b) Wolfe: 23.25%

 

The  percentage of Interests held by each of Sellers and Mercer prior to Closing

(as defined in section 1.2) and the  percentage of Interests held by all Members

subsequent  to Closing is indicated on Schedule 1.1 hereto.  Upon  Closing,  the

Operating  Agreement of Company (as further defined in section 2.5 hereof) shall

be deemed  amended to reflect  Purchaser as a Member of Company,  holding  fifty

percent (50%) of the Interests, and all references to "Member" in said Operating

Agreement  shall be deemed to  include  Purchaser.  Schedule  1.1  hereto  shall

replace  Exhibit A to the Operating  Agreement.  The parties and Mercer  further

agree to enter into a revised Operating  Agreement for the Company  simultaneous

with the  Closing,  which  Agreement  shall  include  but not be  limited to the

amendments agreed to herein.

 

         1.2  Closing.  Upon  satisfaction  of  the  conditions  to  Purchaser's

obligations  as set  forth

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                                                                    Exhibit 2.17

 

in this Agreement,  the sale and purchase of the Interests (the "Closing") under

this  Agreement  shall  commence  on the date  hereof,  simultaneously  with the

execution of this  Agreement,  at the offices of Nelnet,  Inc.,  8425  Woodfield

Crossing  Blvd.,  Indianapolis,  IN 46240.  The date and time of the Closing are

herein referred to as the Closing Date.

 

         1.3 Purchase Price. The aggregate purchase price (the "Purchase Price")

payable to Sellers at  Closing  in  consideration  of the sale of the  Interests

hereunder  shall  be  two  million  three  hundred  sixteen   thousand   dollars

($2,316,000), paid in cash or other good funds, it being agreed that said amount

also represents adequate consideration for the agreements of Wolfe and Hoeft not

to compete with Company as set forth in the Employment Agreements.  The Purchase

Price shall be paid to Sellers in the following amounts:

 

         (a) Hoeft:  $1,239,060

         (b) Wolfe: $1,076,940

 

         1.4 Purchaser's  Capital  Contribution.  Purchaser shall make a capital

contribution  to the Company of two million,  nine hundred  thirty four thousand

dollars ($2,934,000), of which amount:

 

         (a)  one million six hundred  thousand  dollars  ($1,600,000)  shall be

              paid by Company to the holder of the mortgage on the real property

              owned by  Company  and  commonly  known as 2002  Wellesley  Blvd.,

              Indianapolis,  IN 46219,  which amount shall be  sufficient to pay

              the  mortgage  in  full . The  Business  Loan  Agreement  aka  the

              Mortgage on the real property has a 1% prepayment  penalty and the

              parties  recognize  that  such  penalty  will  be  incurred,   and

              therefore,  Hoeft and Wolfe and SEL,  LLC,

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                                                                    Exhibit 2.17

 

              jointly and  severally  agree to satisfy and pay such  penalty and

              related  monies  and to  hold  Nelnet  and  the  Mercers  harmless

              therefrom.

 

         (b)  four hundred twenty five thousand dollars ($425,000) shall be held

              and used by the Company to service other existing debt or for such

              other  business  purposes  as  agreed  by the  Managing  Board (as

              defined in Section 9.5 hereof) following the Closing; and

 

         (c)  nine hundred nine thousand dollars ($909,000) shall be distributed

              to Sellers as a membership distribution simultaneous with Closing,

              divided in amounts  proportionate  to their  percentage of selling

              Interests.

 

         1.5  Options.  The  Operating  Agreement of Company  shall  include the

following provisions:

 

         (a)  Call Option.  From and after seventy-two (72) months following the

              Closing,  Purchaser  shall have a "call"  option  (the  "Call") to

              acquire up to one hundred percent (100%)  ownership of the Company

              at a price  equal to ten (10)  times  the  higher  of (i) the most

              recent  three-year  (3-year)  average  after tax net  income  (the

              parties  recognize that the Company does not have tax impact,  but

              for  purposes of the  calculations  in this Section 1.5 "after tax

              net income" will be  calculated  using the  corporate  tax rate of

              forty  percent  (40%)) of the Company or (ii) after tax net income

              of the most recent year prior to the purchase, either amount being

              multiplied by the  percentage  of ownership  being  acquired,  and

              excluding  any  extraordinary  and  nonrecurring  items,  plus any

              future real estate  purchased by Premiere Credit of North America,

              LLC,  valued at the original  purchase price Book  Value[define?],

              less  depreciation,  less debt in proportion to the the Membership

              Interests  at  the  time  of  selling  (excluding   herefrom  2002

              Wellesley Blvd. Indianapolis, Indiana.

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                                                                    Exhibit 2.17

 

         (b)  Put  Option.  From and  after  sixty  (60)  months  following  the

              Closing,  the  Company  will have a "put"  option  (the "Put") for

              Purchaser to acquire up to one hundred percent (100%) ownership of

              Company  at a price  equal  to ten  (10)  times  the  most  recent

              three-year  (3-year)  average  after tax net income  (the  parties

              recognize  that the  Company  does not  have tax  impact,  but for

              purposes of the  calculations  in this  Section 1.5 "after tax net

              income" will be  calculated  using the corporate tax rate of forty

              percent  (40%))  of the  Company,  plus  any  future  real  estate

              purchased by Premiere Credit of North America,  LLC, valued at the

              Book Value, less depreciation,  less debt in proportion to the the

              Membership  Interests at the time of selling  (excluding  herefrom

              2002 Wellesley Blvd. Indianapolis, ).

 

         (c)  Process for  Exercise of Call and Put. The Member  exercising  the

              Call or Put Option ("Exercising Member") shall give written notice

              of same to the other  Members and the Company at the addresses set

              forth in section 11.2 below.  Such notice shall  specify the price

              of the  Option,  and within  thirty  (30) days after the notice is

              given, the parties,  as appropriate,  shall execute such documents

              and  instruments  reasonably  required to effectuate the Option at

              the purchase  price as calculated  using the formula in (a) or (b)

              above and on the other terms as specified  in the notice,  and the

              closing  of  such   transaction   shall  take  place  as  soon  as

              practicable  but in any  event  not  more  than  sixty  (60)  days

              following  receipt of the  notice.  At such  closing,  the selling

              parties shall sell and transfer

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                                                                    Exhibit 2.17

 

              their entire equity interest to the appropriate  purchasing  party

              free and clear of all liens,  claims or  encumbrances,  other than

              the Operating Agreement, as amended by this provision.

 

         1.6 Offer to Purchase. The Operating Agreement of Company shall include

the following provision.:

 

         Offer to Purchase.

 

         (a)  From and after thirty-six (36) months following Closing, a member,

              (hereinafter  referred to as the "Offeror  Member") shall have the

              right,  exercisable  by written notice (the "Offer") to any or all

              of the other  Members (the "Offeree  Member(s)"),  to offer to buy

              the Offeree  Members'  entire equity  interest in the Company at a

              purchase price and upon the other terms  determined by the Offeror

              Members and specified in the Offer. The Offeree Members must elect

              by written notice (the "Notice of Election") to the Offeror Member

              not less than twenty (20) days after receipt of the Offer,  either

              (i) to sell the Offeree  Members'  entire  equity  interest in the

              Company to the  Offeror  Member at the  purchase  price and on the

              other terms  specified in the Offer,  or (ii) to offer to purchase

              the Offeror  Member's  entire equity  interest in the Company at a

              purchase  price  equal to the price set  forth in the  Offer.  Not

              later  than ten (10)  days  after  the  Notice  of  Election,  the

              parties,   as  appropriate,   shall  execute  such  documents  and

              instruments  reasonably  required to sell and transfer  either the

              Offeror  Member's or the Offeree  Members' (as applicable)  entire

              equity  interest in the Company at the  purchase  price and on the

              other  terms as  specified  in the Offer,  and the closing of such

              sale shall take place as soon as practicable  but in any event

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                                                                    Exhibit 2.17

 

              not more than one hundred eighty (180) days  following  receipt of

              the Notice of Election.  At such closing,  the selling party shall

              sell and transfer its entire  equity  interest to the  appropriate

              purchasing   party  free  and  clear  of  all  liens,   claims  or

              encumbrances,  other than the Operating  Agreement,  as amended by

              this provision.

 

         (b)  For the  purposes of this  section  1.6, if the Offeror is Nelnet,

              Inc.  then  the  Offer  must be made to all  other  then  existing

              Members and Membership  Interests.  If the Offeree is Nelnet, Inc.

              the Offeror must consist of all of the other then existing Members

              and Membership Interests.

 

         1.7 Rights of Refusal. The Operating Agreement of Company shall include

following provisions:

 

         (a)  First Right of Refusal. Subsequent to the Closing, Hoeft and Wolfe

              shall each have a first right of refusal to acquire the  ownership

              interests  of any  Member  should  the  Member  wish to sell  such

              interests, including pursuant to Purchaser's exercise of the Call.

              In order to  exercise  this  first  right of  refusal,  the Member

              desiring  to  sell,  transfer  or  assign  all of any  part of the

              Member's   interest  to  a  third  party  shall  communicate  such

              intention in writing to the other  Members  (including  Purchaser)

              and the  Company  stating  the  purchase  price  proposed  for the

              transfer.  Such notice shall be via registered or certified  mail,

              return  receipt  requested  to the  address  for each of the other

              Members  and to the  office of the  Company  and  shall  state the

              action  the   Member   intends  to  take  and  the  terms  of  the

              transaction.  Within thirty (30) days after receiving this

 

                                                                               7

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                                                                    Exhibit 2.17

 

              notice, Hoeft or Wolfe, as applicable,  may purchase at his option

              all or any part of the  interest  described  in the notice for the

              purchase  price  stated in the  notice,  by giving  notice of such

              within 30 days after receiving the notice, but Hoeft and Wolfe, as

              applicable,   shall  have  180  days  to  arrange   financing  and

              consummate the purchase.

 

         (b)  Second  Right of  Refusal.  If the offer  contained  in the notice

              described  above is not accepted by Hoeft or Wolfe, as applicable,

              within  thirty  (30) days from the date of receipt of the  notice,

              then  Purchaser may exercise a second right of refusal to purchase

              the  Interest,  at a price  determined by the formula set forth in

              Section 1.5(b) hereof. Such right shall be exercised within thirty

              (30) days of the  expiration  of Hoeft or Wolfe's right of refusal

              period.

 

                                   ARTICLE TWO

 

                    REPRESENTATIONS AND WARRANTIES OF SELLERS

 

         Sellers,  jointly and  severally,  represent  and warrant to  Purchaser

(except  as to  Section  2.1,  which  representation  is made  individually  and

severally), as follows:

 

         2.1 Ownership of the Interests.  Sellers are the beneficial  owners and

holders  of record  of the  Interests,  free and  clear of any  lien,  mortgage,

security  interest,  encumbrance,  title defect or claim restricting or limiting

Sellers'  ability to transfer the  Interests to Purchaser  under and pursuant to

this  Agreement,  and  there  is no  subscription,  warrant,  call,  unsatisfied

preemptive right,  option,  convertible  securities,  rights of first refusal or

other agreement of any kind to issue, purchase or otherwise receive from Sellers

any of the Interests or any other  security of the

 

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                                                                    Exhibit 2.17

 

Company. The percentages of Interests owned by each of the Sellers are set forth

in Schedule 1.1 hereto.  Upon execution hereof,  Purchaser will be the title and

beneficial  owner of fifty percent  (50%) of the Interests in the Company,  free

and clear from any lien, mortgage, security interest,  encumbrance, title defect

or restriction.

 

         2.2  Organization  of the Company.  The Company is a limited  liability

company, duly organized, validly existing and in good standing under the laws of

the State of Indiana,  and is legally  qualified to transact  business and is in

good  standing  in  every  jurisdiction  in which  the  nature  of the  business

conducted by it or the character or location of properties owned or leased by it

makes such  qualification  necessary,  including  transaction of the business of

collection of accounts,  except in such jurisdiction where failure to be so duly

qualified would not have a material  adverse effect upon the Company.  A list of

the  jurisdictions in which the Company is qualified to transact business is set

forth in Schedule 2.2(a)(1) attached hereto. As of the Closing,  the Company and

Sellers  have not  conducted  meetings  of the  Members  on a regular  or formal

business,  and no minute  books  have been  kept.  The  Company  has  provided a

resolution,  attached hereto as Schedule 2.2(a)(2), signed by all Members (prior

to Closing)  and the  Company,  approving  and  ratifying  all Company  business

decisions  made prior to  Closing.  The  Company  is not in default  under or in

violation  of any  provision  of  its  articles  of  organization  or  operating

agreement. The Company has all licenses, permits and authorizations necessary to

carry on the businesses in which it is engaged and to own and use the properties

owned and used by it. None of the licenses,  permits and  authorizations  of the

Company  will  be  terminated  or  are  terminable  due to  consummation  of the

transaction provided for herein.

 

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<PAGE>

 

                                                                    Exhibit 2.17

 

         2.3  Capitalization  of the  Company.  The Company  has 100  membership

Interests  issued and  outstanding,  all of which have been duly  authorized and

validly issued, are fully paid and non-assessable and were issued by the Company

in compliance with all applicable  federal and state  securities laws, rules and

regulations.  There  is  no  outstanding  or  authorized  option,  subscription,

warrant, call, right,  commitment or other agreement of any character obligating

the Company to sell or issue any  additional  membership  interests or any other

securities  convertible  into or  exercisable  for or  evidencing  the  right to

subscribe for any membership interests.  There are no voting trusts,  proxies or

other  agreements  or  understandings  with respect to voting of the  Interests.

Purchaser agrees that subsequent to Closing, the Sellers may enter into a voting

trust or other  proxy  that will allow the  Sellers  to vote as a block,  to the

extent Member votes are authorized by the Operating Agreement and such votes are

taken.

 

         2.4  Authority.  This Agreement has been duly executed and delivered by

Sellers,  and Sellers have the right,  power,  authority  and legal  capacity to

enter into and perform under this  Agreement and to consummate the sale of their

interests pursuant hereto.  This Agreement is valid and binding upon Sellers and

enforceable  in  accordance  with its terms.  The execution and delivery of this

Agreement  by  Sellers  do  not,  and  the   consummation  of  the  transactions

contemplated  hereby  and  the  performance  by  Sellers  of the  terms  of this

Agreement  will not (a) violate any federal,  state or local law or  regulation,

(b) conflict with, result in a breach of, constitute a default under,  result in

the  acceleration  of,  create in any person or entity the right to  accelerate,

modify or cancel,  or require any notice under any contract to which the Company

is a party or by which  the  Company  is bound or which  any of its  assets  are

subject, or (c) result in acceleration of any obligation under, or constitute an

event of default  under any order,  judgment  or decree to which the  Company or

Sellers are bound.

 

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                                                                    Exhibit 2.17

 

         2.5 Articles of  Organization,  Certificate  of Existence and Operating

Agreement.  Prior to the execution of this Agreement,  Sellers have delivered to

Purchaser a true and complete  copy of the Company's  Articles of  Organization,

Certificate of Existence and Operating Agreement, and any amendments thereto, as

in effect on the date hereof and the Closing  Date;  neither the  execution  and

delivery of this Agreement nor the consummation of the transactions contemplated

hereby will violate any provision of the Articles of  Organization  or Operating

Agreement of the Company.

 

         2.6  Financial  Statements.  Schedule 2.6 attached  hereto  contains an

accurate  and complete  balance  sheet of the Company as of, and profit and loss

statements relating to the Company  (collectively,  the "Financial  Statements")

for: December 31, 2000;  December 31, 2001;  December 31, 2002; and December 31,

2003. Such  information  fairly presents the financial  condition and results of

operation  of the Company as of and for such  periods,  have been  prepared on a

consistent  basis  throughout  the  periods  covered  thereby,  are  correct and

complete,  and are consistent with the books and records of the Company.  All of

the  Financial  Statements  prior to  December  of 2003 are  audited  statements

prepared in  accordance  with  generally  accepted  accounting  principles  on a

consistent  basis  throughout the periods  covered  thereby.  Interim  financial

information  for the period ended December 31, 2003,  shall be  supplemented  by

independent  auditors as of the  Closing  Date.  The  Company  does not have any

direct or  indirect,  primary  or  secondary,  liability  of any  type,  whether

accrued,  absolute  or  contingent,  liquidated  or  unliquidated,   matured  or

unmatured,  or  otherwise  that  will  have,  or is  reasonably  likely to have,

individually  or in the aggregate,  a material  adverse effect upon the Company,

except for the

 

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                                                                    Exhibit 2.17

 

 liabilities  which are accrued or reserved  against and reflected

upon the Financial Statements of the Company.

 

         2.7 No  Consent.  No  consent,  license  or permit of any  governmental

authority is required in connection  with the execution,  delivery,  validity or

enforceability  of  this  Agreement  or the  consummation  of  the  transactions

contemplated  hereby,  and neither the execution and delivery of this  Agreement

nor the  consummation  of the  transactions  contemplated  hereby will  violate,

conflict with or result in the breach or termination  of any contract,  lease or

other  instrument  to which the  Company  or  Sellers is a party or by which the

Company or Sellers is bound.

 

         2.8  Subsidiaries and Other  Affiliates.  The Company does not have any

subsidiaries or affiliates.

 

         2.9 Ordinary Course of Business. The Company has not engaged in Company

Business  other than in the ordinary  and usual  course of  business,  including

payment of compensation to Sellers, entering into contracts, making expenditures

or  entering  into  commitments  of  the  Company.  Sellers  have  not  received

distributions of dividends,  bonuses,  or other  remuneration  from the Company,

other than their ordinary salaries and employee  benefits,  amounts necessary to

satisfy tax obligations, and as disclosed in Schedule 2.9 annexed hereto.

 

         2.10 Accounts Receivable. Schedule 2.10 sets forth a list of all of the

Company  Receivables  as of the Closing  Date.  Each of the Company  Receivables

arose in the ordinary  and usual course of business of the Company,  but Sellers

do not guarantee or otherwise promise that said Receivables will be paid.

 

         2.11  Equipment  and Other  Tangible  Property.  Schedule 2.11 attached

hereto sets forth

 

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                                                                    Exhibit 2.17

 

a list of all items of equipment, furniture, fixtures or other tangible property

owned or leased by the Company  with a fair market  value in each case in excess

of $5,000.00  (collectively,  "Tangible Properties").  Schedule 2.11 lists those

items of  Tangible  Property  which are  leased by the  Company.  Except for the

rights  of the  lessor(s)  thereof,  the  Tangible  Properties  are owned by the

Company  free  and  clear  of  all  liens  or  other  security   interests.   No

representation  or warranty is made  concerning  the  physical  condition of the

Tangible  Properties.  The  Company  has  delivered  to  Purchaser a correct and

complete  copy of the  lease(s) of Tangible  Property  (the  "Tangible  Property

Leases") The Tangible  Property Leases are in full force and effect and have not

been  amended or modified  except as disclosed  in Schedule  2.11.  Sellers have

received  no written  notice of  default  from any  lessor  with  respect to the

Tangible Property Leases. The Company is the sole and unconditional owner of (or

has a validly sold interest  in), and has good and  marketable  title,  free and

clear of any security interests,  liens, mortgages or encumbrances of any nature

to the properties  and assets used by it,  located on its premises,  or shown in

the most recent  financial  statements.  The  properties and assets owned by the

Company as of the Closing Date shall permit the Company to continue and carry on

business and operations in the ordinary course of business.

 

         2.12 Space Leases.  The Abrams & Weldy,  P.A. Lease. The Company has no

space or real  property  leases  other than the  office  lease  between  Company

andAbrams & Weldy,  P.A.  ("Tenant")  as set forth in Schedule  2.12(a)  annexed

hereto (the "Space Lease").  The Space Lease is in full force and effect and has

not been  amended or modified,  except as may be disclosed in Schedule  2.12(a).

The Company has not  received any notice of default from the Tenant with respect

thereto,  and  the  Company  is not in  default  with  respect  thereto.  To the

Company's

 

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                                                                    Exhibit 2.17

 

knowledge,  Tenant is not in material default under the Space Lease. The Company

shall obtain and attach hereto as Schedule 2.12(b) an Estoppel  Certificate from

Tenant effective as of the Closing Date.

 

         2.13 Intellectual Property. Schedule 2.13 sets forth a complete list of

all patents,  pending  applications  for patents and  registration  certificates

(including  a brief  description  of the  subject  matter  thereof,  the date of

filing,  the jurisdiction and the patent application  number),  all trade names,

trademarks  and   servicemarks   and   applications   therefor,   all  copyright

registrations,  copyrights not registered,  all internet domain registrations of

the Company, all source codes used in the Business and operations of the Company

as  presently  conducted,  and all the  software  developed  by the  Company and

offered by the Company for use by its clients as a part of the Company  Business

(collectively,  the "Intellectual Property").  Sellers own no other intellectual

property,  other than such common law rights, if any, as the Company may have in

its  Company  name by reason of the  organization  of the Company and the use of

such name in the Company Business, and in its web address. The Company makes use

of certain  third party  off-shelf  operating  and  application  software in its

operation,