exhibit103nelnetcapitala






DocuSign Envelope ID: 46BB3508-267C-4318-8883-D004D7A5098C                          CAPITAL AND LIQUIDITY MAINTENANCE AGREEMENT                   This CAPITAL AND LIQUIDITY MAINTENANCE AGREEMENT (the           "Agreement"), dated as of                       , is made and entered into by and among           the FEDERAL DEPOSIT IAISURANCE CORPORATION, a Federal banking agency            existing under the laws of the United States and having its principal office in Washington, DC           (the "FDIC"); NELNET, INC., a corporation duly organized and existing under the laws of the            State of Nebraska with headquarters at 121 South 13t~' Street, Suite 100, Lincoln, NE, 68508 (the           "Parent Company"); MICI3AEL DUNLAP, controlling shareholder of the Parent Company (the           "Controlling Shareholder"); and NELNET BANK, a proposed Utah-chartered industrial bank,            located at 13907 S. Minuteman Drive, Draper, Salt Lake County, Utah 84020 (the "Applicant").                                               WITNESSETH:                   WHEREAS, the FDIC Board of Directors is charged by section 5 of the Federal            Deposit Insurance Act (the "FDI Act"), 12 U.S.C. § 1815, with the responsibility of acting upon            applications for Federal Deposit Insurance by all depository institutions;                    WHEREAS, the Applicant is a proposed Utah-chartered industrial bank being formed            as a wholly-owned subsidiary of the Parent Company;                    WHEREAS, the Parent Company is a publicly traded company and desires to organize            the Applicant to originate, refinance and service private student and consumer loans, and to            offer deposit products;                   WHEREAS, the Applicant submitted an application for Federal deposit insurance (the            "Application") to the FDIC pursuant to section 5 of the FDI Act on November 12, 2019;                   WHEREAS, the FDIC is required to consider, among other things, the statutory factors           described in section 6 of the FDI Act, 12 U.S.C. § 1816, (the "Statutory Factors") and will           generally grant an application for Federal deposit insurance if it finds favorably upon all of the           Statutory Factors; and as a pant of the application process, the FDIC also considers the financial           resources of a parent company when evaluating the adequacy of an applicant's capital;                   WHEREAS, the FDIC is required by section 38A(b) of the FDI Act, 12 U.S.C. §           18310-1(b), to require the Parent Company to serve as a source of financial strength to the           Applicant;                   WHEREAS, the Applicant, the Parent Company, and the Controlling Shareholder have           expressed their willingness to submit to such conditions as the FDIC may determine are           reasonable and necessary to ensure the adequacy of the Applicant's capital and maintain           sufficient liquidity; 





 






DocuSign Envelope ID: 46BB3508-2B7C-4318-8683-D004D7A5098C                    WHEREAS, paragraphs 5 and 6 hereof are intended to provide separate and independent            mechanisms to ensure that Parent Company serves as a source of financial strength to the            Applicant;                    WHEREAS, the FDIC is unable to find favorably on the Statutory Factors if the             Applicant, the Parent Company, and the Controlling Shareholder do not enter into and             comply with the terms of this Agreement;                    NOW, THEREFORE, in consideration of the premises, terms, and conditions             contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties             hereby agree as follows:             1. Effectiveness; Approval by FDIC. Upon approval of the Application by the FDIC, this               Agreement shall become fully effective and binding upon the parties hereto.             2. Capital• The Parent Company shall maintain the capital levels of the Applicant at all times               such that the Applicant's capital satisfies the following conditions (the capital requirements               contained in this paragraph are referred to herein as the "Minimum Capital Ratios.");               ~  Meets or exceeds the levels required for the Applicant to be considered "well capitalized"                  under section 324.403(b) of the FDIC's Rules and Regulations, 12 C.F.R. § 324.403(b);               •  In no event shall the Leverage ratio (as defined in the FDIC's capital regulations) be                  maintained at less than twelve percent (12%); and               •  The Applicant shall also maintain an adequate allowance for loan and lease losses.                a) Maintenance of Required Minimum Capital Ratios. If at any time the Applicant's                  capital ratios fall below the Minimum Capital Ratios, the Parent Company shall (or the                  Controlling Shareholder shall cause the Parent Company to) immediately contribute                  sufficient additional capital to the Applicant to comply with the Minimum Capital                  Ratios.                b) Maintenance of Revised Capital Ratios. If the FDIC determines it necessary,                  pursuant to its regulatory authority, for the Applicant to maintain capital ratios that are                  greater than the Minimum Capital Ratios (the "Revised Capital Ratios"), it shall provide                  written notice of such determination to the Applicant, the Controlling Shareholder, and                  the Parent Company. Within thirty (30) days after the FDIC issues such notice, if the                  Applicant has not met the Revised Capital Ratios, the Parent Company shall (or the                  Controlling Shareholdet~ shall cause the Parent Company to) immediately contribute                  sufficient additional capital to the Applicant to comply with the Revised Capital Ratios                  specified by the FDIC. 





 






DocuSign Envelope ID: 46863508-2B7C-4318-8883-D004D7A5098C                 c) Capital Contributions. All capital contributions from the Parent Company to the                  Applicant will be in the form of cash, or if appropriate and approved by the FDIC, other                  assets acceptable to the FDIC. Any and ail such capital contributions shall be credited                  to the Applicant's surplus account.                Li uidi .The Parent Company shall (or the Controlling Shareholder shall cause the               Parent Company to) maintain the Applicant's liquidity at such levels as the FDIC deems               appropriate and take such other actions as the FDIC deems appropriate to provide the               Applicant with a source of additional liquidity. In particular, the Parent Company shall               (or the Controlling Shareholder shall cause the Parent Company to) provide the               Applicant with financial assistance, as specified below, to permit the Applicant to meet               its short- and long-term liquidity demands.                a) Short-Term Liquidity. The Parent Company shall provide and maintain a Revolving                  Line of Credit ("Line of Credit") for the benefit of the Applicant that provides the                  greater of:                     Ten (10) percent of the Applicant's total assets as of the most recent Call Report                     date; or                  •  Such additional amount as may later be negotiated between the Parent Company and                     the Applicant.                  The Applicant may draw on the Line of Credit provided by the Parent Company at any                  time the Applicant or the FDIC considers it necessary, .Any and all agreements related                  to the Line of Credit must contain only such terms and conditions as the FDIC, in its                  sole discretion, finds acceptable, At a minimum, the Line of Credit is subject to the                  restrictions of section 23B of the Federal Reserve Act, 12 U.S.C. § 371c-1, and cannot                  contain terms and conditions that are less favorable to the Applicant than a comparable                  transaction with an unaffiliated third party.                b) Long-Term Liquidity. If the Applicant identifies liquidity requirements that it cannot                  satisfy, then at the written request of the Applicant or the FDIC, the Parent Company,                  within ten (10) days of receiving such request, shall provide the Applicant with financial                  support, including cash, in such amount and for such duration as may be necessary for the                  Applicant to meet its ongoing liquidity obligations.             4. Enhanced Safeguard (Pledged Deposit-Other Limitations). To further ensure that the               Parent Company selves as a source of financial strength for the Applicant, the Patent               Company shall (or the Controlling Shareholder shall cause the Parent Company to)               establish and, at all times, maintain a pledged deposit (the "PD") of $40,000,000 in cash               with the Applicant as part of the Parent Company's obligations under paragraphs 2 and 3               hereof; provided however, that the establishment of the PD does not relieve the Parent 





 






DocuSign Envelope ID: 46863508-2B7C-4318-8883-D004D7A5098C                 Company of its responsibility to (or relieve the Controlling Shareholder of causing the               Parent Company to) serve such other support obligations identified herein.               a) The PD shall be in the name of the Parent Company earmarked for the sole benefit of                  the Applicant and to be used by the Applicant in the event the Parent Company fails to                  provide the support required under paragraphs 2 and 3 hereof.               b) If at any time the Applicant's capital ratios fall below any of the Minimum Capital                  Ratios or Revised Capital Ratios (as appropriate), or the Parent Company ceases to                  provide the Line of Credit of at least the amounts specified in paragraph 3 a) hereof,                  the Applicant shall immediately provide written notice to the Parent Company and the                  Controlling Shareholder demanding the Parent Company provide sufficient funds to                  restore the Applicant's capital levels or reinstate the Line of Credit to meet the                  requirements under paragraph 3 hereof.               c) If, within five (5) calendar days, the Parent Company does not provide sufficient funds                  to restore the Applicant's capital levels to the Minimum Capital Ratios or Revised                  Capital Ratios (as appropriate) or reinstate the Line of Credit, the Applicant shall                  immediately draw upon the PD in such amounts as is necessary to restore the                  Applicant's capital levels to the Minimum Capital Ratios or Revised Capital Ratios (as                  appropriate) or as necessary to meet the Applicant's liquidity needs.               d) The Applicant shall immediately provide the FDIC with written notification whenever                  notice is provided to the Parent Company and the Controlling Shareholder in                  accordance with paragraph 4 b) hereof and whenever the Applicant draws upon the PD                  in accordance with paragraphs 4 c) hereof.               e) In the event that the Applicant draws on the PD, the Parent Company shall                  immediately take such steps as are necessary to replenish the PD to the amount of                  $40,000,000 in cash or unencumbered readily-marketable securities acceptable to the                  FDIC.               ~j Any and all agreements related to the PD shall only be made with the prior written                  approval of the FDIC and upon such terms and conditions as the FDIC, in its                  discretion, finds acceptable.               g) Other Limitations. In the event the Parent Company fails to provide the support                  required under paragraphs 2 and 3 hereof, the Parent Company and the Applicant shall                  further take the following actions in order to ensure the continued safe and sound                  operation of the Applicant:                   •  The Applicant shall not make, without the prior written consent of the FDIC, any                      "extension of credit" (as defined in section 215,3 of the Regulations of the Board of                      Governors of the Federal Reserve, 12 C.F.R. § 215,3) to the Parent Company or to                      any affiliate, and shall not enter into any "covered transaction" (as defined in                      sections 23A and 23B of the Federal Reserve Act, 12 U.S.C. §§ 371c and 3710-1)                      with the Parent Company or any affiliate.                   •  The Applicant shall not, without the prior written consent of the FDIC, declare or                      pay any dividends.                   •  The Applicant shall not, without the prior written consent of the FDIC, permit the                      amount of "brokered deposits" (as defined by part 337 of the FDIC's Rules and                                                      4 





 






DocuSign Envelope ID: 46663508-267C-4318-8683-D004D7A5098C                        Regulations, 12 C.F.R. part 337) held by the Applicant to exceed the amount held as                      of the date that these limitations are implemented.             5, Authority of the Parent Company and the Applicant. The governing boards of the               Parent Company and the Applicant have each approved a resolution ("Resolution")               authorizing the execution and performance of this Agreement. A certified copy of each               Resolution is attached hereto and incorporated herein by reference.             6. Miscellaneous.               a) Enforceability as a Written Agreement. In addition to any other remedies provided                  by law, the parties agree that this Agreement is binding and enforceable by the FDIC                  as a written agreement pursuant to sections 8 and 50 of the FDI Act, 12 U.S.C. §§                  1818 and 1831aa, against the Applicant, the Parent Company, and the Controlling                  Shareholder, and their successors and assignees.                b) Bankruptcy Treatment of Commitments.   The parties agree that obligations of the                  Parent Company and the Applicant contained in this Agreement include commitments                  to maintain the capital and liquidity of the Applicant and, if a bankruptcy petition is                  filed by or against the Parent Coinpariy, the obligations of the Parent Company                  contained in this Agreement shall be immediately cured by the Parent Company                  pursuant to 11 U.S.C. § 365(0) and any claim for a subsequent breach of the Parent                  Company's obligations herein shall be entitled to priority under 11 U.S.C. § 507(a)(9),                c) Conservatorship or Receivership. In the event of the appointment of a conservator                  or receiver for the Applicant, the obligations of the Applicant, the Parent Company,                  and the Controlling Shareholder hereunder shall survive said appointment and be                  enforceable by the FDIC as conservator or receiver.                d) Change in Control.                  i) In event that the Controlling Shareholder disposes of some or all of the voting                     securities of the Parent Company so that the Controlling Shareholder no longer                     controls (as that term is used in Section 7(j) of the FDI Act and in the presumptions of                     control 12 CFR §303.82(b)) the Parent Company, then upon notification to the FDIC,                     the Controlling Shareholder may request a release from this Agreement.                   ii) The FDIC may grant a release if the following conditions are met to the FDIC's                     satisfaction at the time of the release: 1) the Conteolling Shareholder has performed                     all obligations under the provisions of this Agreement; 2) the FDIC has issued a non-                     objection to any notices pursuant to the Change in Banlc Control Act if the transfer of                      Controlling Shareholder's voting securities occurs in a transaction that requires one or                      more persons to file such a notice with the FDIC; 3) any other necessary and final 





 






DocuSign Envelope ID: 46663508-267C-4318-8683-D004D7A5098C                       regulatory approvals have been obtained; and 4) any successor controlling                     shareholder of the Parent Company has agreed to the terms of this Agreement.                e) Governing Laws. This Agreement and the rights and obligations hereunder shall                  be governed by, and shall be construed in accordance with the Federal laws of the                  United States and, in the absence of controlling Federal laws, in accordance with                  the laws of the State of Delaware.                fj No Waiver. No failure or delay in the exercise of any right or remedy on the part of                  any of the parties hereto shall operate as a waiver or termination thereof, nor shall any                  exercise or partial exercise of any right or remedy preclude any other or further                  exercise of such right oc remedy or any other right or remedy.                g) Fees and Expenses, The Parent Company shall (or the Controlling Shareholder shall                  cause the Parent Company to) pay any attorneys' fees and other reasonable expenses                  incurred by the Applicant in exercising its rights or seeking any remedies hereunder.                h) Severability. In the event any one or more of the provisions contained herein should be                  held invalid, illegal, or unenforceable in any respect, the validity, legality, and                  enforceability of the remaining provisions contained herein shall not in any way be                  affected or unpaired thereby. The patties shall endeavor in good faith to replace the                  invalid, illegal, or unenforceable provision with a valid provision, the effect of which                  comes as close as possible to that of the invalid, illegal, or unenforceable provision.                i) Enforcement by Applicant. The Applicant may, in its discretion, enforce this                  Agreement against the Parent Company.                j) Modification. This Agreement may not be modified, amended, changed, discharged,                  terminated, released, renewed, or extended in any manner except by a writing signed by                  all of the parties.                lc) Addresses for aYid Receipt of Notice. Any notice hereunder shall be in writing and                  shall be delivered by hand or sent by United States express mail or commercial express                  mail, postage prepaid, and addressed as follows: 





 






DocuSign Envelope ID: 46683508-2B7C-4318-8B83-D004D7A5098C                    If to the Parent Company:                        Nelnet, Inc.                        Attn: Timothy Tewes, President                        1248 "O" Street, Ste. 900                        Lincoln, NE 68508                   If to the Controlling Shareholder:                        Michael S. Dunlap                        1248 "O" Street, Ste. 900                        Lincoln, NE 68508                   If to the Applicant:                        Nelnet Bank                        Attn: Timothy Tewes                        1248 "O" Stt•eet, Ste. 900                        Lincoln, NE 68508                   If to the FDIC:                        Associate Director, Division of Rislc Management Supervision                        Rislc Management Examination Branch                        Federal Deposit Insurance Corporation                        550 17`h Street, NW                        Washington, DC 20429                1) No Assignment.  This Agreement inay not be assigned or transferred, in whole or in                  part, without the prior written consent of the FDIC.                m) Binding on Parties, Successors and Assigns. This Agreement is binding on the panties                  hereto, their successors and assigns.                n) Complete Agreement.  This Agreement is the complete and exclusive statement of the                  agreement between the parties concerning the commitments set forth in the Agreement,                  and supersedes all -prior written or oral communications, representations and agreements                  relating to the subject matter of the Agreement, except that this Agreement does not                  affect or otherwise alter the Parent Company Agreement entered into by and among the                  FDIC, the Parent Company, the Controlling Shareholder, and the Applicant.                o) Counterparts. This agreement may be executed in two or more counterparts, each of                  which shall be deemed an original and all such counterparts taken together shall                  constitute one and the same Agreement. 





 






DocuSign Envelope ID: 46BB3508-2B7C-4318-8683-D004D7A5098C              IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day            and year indicated above.             N ~9ned             B                 ocsecsoac000a~z...~eff Noot'dhoel<                  Name:                  Title:    cEo              MI            By:~~~a~~                               39A188C794CE407...                             Mile Dunlap                  Name:                  Title:             N o~    ~~~ed b :                       A~T~~ TT            B~tn,~VY,oi, I~I.bSS                  assz2EeoeccFazz...Andrea Moss                  Name:                            Press ent CEO                  Tltle:             FEDERAL DEP~SI~ INSURANCE CORPORATION                                      _u,            By:                  Name:                  Title: --       —                        ~     a