Document:

FIRST AMENDMENT AGREEMENT

 

EXHIBIT 10.18.1

Execution Copy

FIRST AMENDMENT TO THE

MANAGEMENT AGREEMENT

     FIRST AMENDMENT, dated as of April 15, 2003 (the “Amendment”), to the
Management Agreement dated as of May 17, 2002 (the “Management Agreement”), by
and among Lightyear Capital, LLC, a Delaware limited liability company (the
“Consultant”), CFSL Holdings Corp., a Delaware corporation (“Holdings”), CFSL
Acquisition Corp., a Delaware corporation (“Acquisition”) and Collegiate
Funding Services, L.L.C., a Virginia limited liability company (“CFS LLC”).

W I T N E S S E T H:

     WHEREAS, the Consultant, Holdings, Acquisition and CFS LLC are parties to
the Management Agreement;

     WHEREAS, each of the parties to the Management Agreement desires to amend
the Management Agreement, as more fully described herein.

     NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:

     1. Defined Terms. Unless otherwise defined herein, capitalized terms used
herein have the meanings assigned to such terms in the Management Agreement.

     2. Amendment to Section 4.2 . Section 4.2 of the Management Agreement is
hereby amended by deleting the amount $1.0 million contained therein and
inserting in lieu thereof the amount $1.25 million.

     3. Continuing Effect of the Management Agreement. This Amendment shall
not constitute an amendment or waiver of any provision of the Management
Agreement not expressly referred to herein. Except as expressly amended
hereby, the provisions of the Management Agreement are and shall remain in full
force and effect.

     4. Counterparts. This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts (including by facsimile),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.

     5. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

	 	 	 	 	 
	 	LIGHTYEAR CAPITAL LLC

 	 
	 	By:  	/s/ Bruce J. Rubin
 	 
	 	 	Name:  Bruce J. Rubin

Title:  Managing Director and Chief Administrative Officer	 
	 
	 	CFSL HOLDINGS CORP.

 	 
	 	By:  	/s/ J. Barry Morrow
 	 
	 	 	Name:  J. Barry Morrow

Title: Chief Executive Officer	 
	 
	 	COLLEGIATE FUNDING SERVICES, L.L.C.

 	 
	 	By:  	/s/ J. Barry Morrow
 	 
	 	 	Name:  J. Barry Morrow

Title: President
	 
	 
	 	CFSL ACQUISITION CORP.

 	 
	 	By:  	/s/ J. Barry Morrow
 	 
	 	 	Name:  J. Barry Morrow

Title: Chief Executive Officer 	 

 

 

	 	 	 	 	 

Execution Copy

SECOND AMENDMENT TO THE

MANAGEMENT AGREEMENT

     SECOND AMENDMENT, dated as of June 18, 2004 (the “Amendment”), to the
Management Agreement dated as of May 17, 2002, as amended on April 15, 2003
(the “Management Agreement”), by and among Lightyear Capital, LLC, a Delaware
limited liability company (the “Consultant”), Collegiate Funding Services, Inc.
(formerly known as CFSL Holdings Corp.), a Delaware corporation (“Holdings”),
CFSL Acquisition Corp., a Delaware corporation (“Acquisition”) and Collegiate
Funding Services, L.L.C., a Virginia limited liability company (“CFS LLC”).

W I T N E S S E T H:

     WHEREAS, the Consultant, Holdings, Acquisition and CFS LLC are parties to
the Management Agreement;

     WHEREAS, Holdings, Acquisition and CFS LLC are parties to a Credit
Agreement dated as of October 30, 2003 with the lenders party thereto and
JPMorgan Chase Bank, as Administrative Agent (the “Credit Agreement”);

     WHEREAS, each of the parties to the Management Agreement desires to amend
the Management Agreement, as more fully described herein.

     NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:

     1. 
Defined Terms. Unless otherwise defined herein, capitalized terms used
herein have the meanings assigned to such terms in the Management Agreement.

     2. 
Amendment to Section 2 . Section 2 of the Management Agreement is
hereby amended by inserting the following new paragraph at the end thereof:

     “Notwithstanding the foregoing, the Board of Directors of Holdings acting
by majority may terminate this Agreement at any time. In the event of a
termination of this Agreement pursuant to the immediately preceding sentence,
CFS shall pay the Consultant (or its designated affiliate) (i) all unpaid
Management Fees (pursuant to Section 4.2 below) and expenses (pursuant to
Section 4.3 below) due with respect to periods prior to the date of termination
plus (ii) the net present value (using a discount rate equal to the then
existing London Interbank Offered Rate plus 300 basis points) of the Management
Fees that would have been payable with respect to the period from the date of
termination until the later of May 17, 2012 and the date to which the
Term shall have been extended, if any, pursuant to the last sentence of the
immediately preceding paragraph.”

 

 

     3. 
Conditions to Effectiveness of this Amendment. This Amendment shall
become effective upon the effectiveness of an amendment or waiver to the Credit
Agreement that permits the transactions contemplated by this Amendment and the
effectiveness hereof.

     4. 
Continuing Effect of the Management Agreement. This Amendment shall
not constitute an amendment or waiver of any provision of the Management
Agreement not expressly referred to herein. Except as expressly amended
hereby, the provisions of the Management Agreement are and shall remain in full
force and effect.

     5. 
Counterparts. This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts (including by facsimile),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.

     6. 
Severability. Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction will not invalidate or render unenforceable such provision in
any other jurisdiction.

     7. 
GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

	 	 	 	 	 
	 	LIGHTYEAR CAPITAL LLC

 	 
	 	By:  	/s/ Bruce J. Rubin
 	 
	 	 	Name:  Bruce J. Rubin

Title:  Managing Director and Chief Administrative Officer	 
	 
	 	COLLEGIATE FUNDING SERVICES, INC (f/k/a
CFSL HOLDINGS CORP.)

 	 
	 	By:  	/s/ J. Barry Morrow
 	 
	 	 	Name:  J. Barry Morrow

Title: Chief Executive Officer	 
	 
	 	COLLEGIATE FUNDING SERVICES, L.L.C.

 	 
	 	By:  	/s/ J. Barry Morrow
 	 
	 	 	Name:  J. Barry Morrow

Title: President
	 
	 
	 	CFSL ACQUISITION CORP.

 	 
	 	By:  	/s/ J. Barry Morrow
 	 
	 	 	Name:  J. Barry Morrow

Title: Chief Executive Officer<PAGE>

                                                                    EXHIBIT 4.01

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO A NOMINEE OF DTC OR BY DTC OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
TO CITIGROUP GLOBAL MARKETS HOLDINGS INC. OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

No. R-1                                           INITIAL PRINCIPAL AMOUNT
CUSIP 173076 50 6                                 REPRESENTED $82,000,000
                                                  representing 8,200,000 Notes
                                                  ($10 per Note)

                     CITIGROUP GLOBAL MARKETS HOLDINGS INC.
                   2% Principal-Protected Equity Linked Notes
             Based Upon the Nasdaq-100 Index Due September 28, 2009

         Citigroup Global Markets Holdings Inc., a New York corporation
(hereinafter referred to as the "Company", which term includes any successor
corporation under the Indenture herein referred to), for value received and on
condition that this Note is not redeemed by the Company prior to September 28,
2009 (the "Stated Maturity Date"), hereby promises to pay to CEDE & CO., or its
registered assigns, the Maturity Payment (as defined below), on the Stated
Maturity Date. This Note will bear semi-annual payments of interest, is not
subject to any sinking fund, is not subject to redemption at the option of the
holder thereof prior to the Stated Maturity Date, and is not subject to the
defeasance provisions of the Indenture.

         Payment of the Maturity Payment with respect to this Note shall be made
upon presentation and surrender of this Note at the corporate trust office of
the Trustee in the Borough of Manhattan, The City and State of New York, in such
coin or currency of the United States as at the time of payment is legal tender
for payment of public and private debts.

         This Note is one of the series of 8,200,000 2% Principal-Protected
Equity Linked Notes Based Upon the Nasdaq-100 Index (the "Index") Due September
28, 2009 (the "Notes").

<PAGE>

INTEREST

         The Notes bear interest at the rate of 2% per annum. Interest will be
paid in cash semi-annually on each 28th day of each March and September
commencing on September 28, 2004 (each such date, an "Interest Payment Date").
Interest will be payable to the persons in whose names the Notes are registered
at the close of business on the fifth Business Day preceding each Interest
Payment Date. Interest will be computed on the basis of a 360-day year of twelve
30-day months. If an Interest Payment Date falls on a day that is not a Business
Day, the interest payment to be made on such Interest Payment Date will be made
on the next succeeding Business Day with the same force and effect as if made on
such Interest Payment Date, and no additional interest will accrue as a result
of such delayed payment.

         "Business Day" means any day that is not a Saturday, a Sunday or a day
on which the securities exchanges or banking institutions or trust companies in
the City of New York are authorized or obligated by law or executive order to
close.

PAYMENT AT MATURITY

         On the Stated Maturity Date, holders of the Notes will receive for each
Note the Maturity Payment described below.

DETERMINATION OF THE MATURITY PAYMENT

         The Maturity Payment for each Note equals the sum of the initial
principal amount of $10 per Note plus the Interest Distribution Amount.

         The "Interest Distribution Amount" is calculated as follows:

               -    If the Index Return is less than or equal to the Interest
                    Received Percentage, the Interest Distribution Amount will
                    equal zero.

               -    If the Index Return is greater than the Interest Received
                    Percentage, the Interest Distribution Amount will equal the
                    product of will equal the product of:

               $10 * (Index Return - Interest Received Percentage)

         The "Index Return" will equal the compounded value of the Periodic
         Capped Return for each Reset Period.

         The "Periodic Capped Return" for any Reset Period (including the Reset
         Period ending at maturity) will equal:

                          Ending Value - Starting Value
                          -----------------------------
                                 Starting Value

provided that the Periodic Capped Return for any Reset Period shall not exceed
5.5%.

                                       2
<PAGE>

         The "Interest Received Percentage" is 10.5%.

         A "Reset Period" is the period between any two consecutive Reset Dates.

         A "Reset Date" is the 23rd day of each month, commencing June 23, 2004
and ending on September 23, 2009.

         The "Starting Value" will be:

             -    For the initial Reset Period, 1493.52, the closing value of
                  the Index on June 23, 2004.

             -    For each subsequent Reset Period, the Ending Value with
                  respect to the immediately preceding reset period.

         The "Ending Value" will be:

             -    For any Reset Period other than the Reset Period ending on the
                  Stated Maturity Date, the closing value of the Nasdaq-100
                  Index on the Reset Date at the end of the period.

             -    For the Reset Period that ends on the Stated Maturity Date,
                  the Ending Value for closing value of the Nasdaq-100 Index on
                  the date three Index Business Days before the Stated Maturity
                  Date.

         An "Index Business Day" means a day, as determined by the calculation
agent, on which the Index or any successor index is calculated and published and
on which securities comprising more than 80% of the value of the Index on such
day are capable of being traded on their relevant exchanges during the one-half
hour before the determination of the closing value of the Index. All
determinations made by the calculation agent will be at the sole discretion of
the calculation agent and will be conclusive for all purposes and binding on the
Company and the beneficial owners of the Notes, absent manifest error.

         A "Market Disruption Event" means, as determined by the calculation
agent in its sole discretion, the occurrence or existence of any suspension of
or limitation imposed on trading (by reason of movements in price exceeding
limits permitted by any relevant exchange or market or otherwise) of, or the
unavailability, through a recognized system of public dissemination of
transaction information, for a period longer than two hours, or during the
one-half hour period preceding the close of trading, on the applicable exchange
or market, of accurate price, volume or related information in respect of (a)
stocks which then comprise 20% or more of the value of the Index or any
successor index, (b) any options or futures contracts, or any options on such
futures contracts relating to the Index or any successor index, or (c) any
options or futures contracts relating to stocks which then comprise 20% or more
of the value of the Index or any successor index on any exchange or market if,
in each case, in the determination of the calculation agent, any such
suspension, limitation or unavailability is material. For the purpose of
determining whether a Market Disruption Event exists at any time, if trading in
a security included in the Index is

                                       3
<PAGE>

materially suspended or materially limited at that time, then the relevant
percentage contribution of that security to the value of the Index will be based
on a comparison of the portion of the value of the Index attributable to that
security relative to the overall value of the Index, in each case immediately
before that suspension or limitation.

         If no closing value of the Index is available on any Index Business Day
because of a Market Disruption Event or otherwise, the value of the Index for
that Index Business Day, unless deferred by the calculation agent as described
below, will be the arithmetic mean, as determined by the calculation agent, of
the value of the Index obtained from as many dealers in equity securities (which
may include Citigroup Global Markets Inc. or any of the Company's other
subsidiaries or affiliates), but not exceeding three such dealers, as will make
such value available to the calculation agent. The determination of the value of
the Index by the calculation agent in the event of a Market Disruption Event may
be deferred by the calculation agent for up to five consecutive Index Business
Days on which a Market Disruption Event is occurring, but not past the Index
Business Day prior to the Stated Maturity Date.

DISCONTINUANCE OF THE NASDAQ-100 INDEX

         If Nasdaq discontinues publication of the Index or if it or another
entity publishes a successor or substitute index that the calculation agent
determines, in its sole discretion, to be comparable to the Index, then the
Ending Value of any succeeding Reset Date will be determined by reference to the
value of that index, which is referred to as a "successor index."

         Upon any selection by the calculation agent of a successor index, the
calculation agent will cause notice to be furnished to the Company and the
Trustee, who will provide notice of the selection of the successor index to the
registered holders of the Notes.

         If Nasdaq discontinues publication of the Index and a successor index
is not selected by the calculation agent or is no longer published on any Reset
Date, the periodic index level to be substituted for the Index for that Reset
Date will be a value computed by the calculation agent for that Reset Date in
accordance with the procedures last used to calculate the Index prior to any
such discontinuance.

         If Nasdaq discontinues publication of the Index prior to the
determination of the Interest Distribution Amount and the calculation agent
determines that no successor index is available at that time, then on each Index
Business Day until the earlier to occur of (a) the determination of the Interest
Distribution Amount and (b) a determination by the calculation agent that a
successor index is available, the calculation agent will determine the value
that is to be used in computing the Interest Distribution Amount as described in
the preceding paragraph as if such day were a Reset Date. The calculation agent
will cause notice of those daily closing values to be published not less often
than once each month in The Wall Street Journal (or another newspaper of general
circulation).

                                       4
<PAGE>

         If a successor index is selected or the calculation agent calculates a
value as a substitute for the Index as described above, the successor index or
value will be substituted for the Index for all purposes, including for purposes
of determining whether an Index Business Day or Market Disruption Event occurs.

         All determinations made by the calculation agent will be at the sole
discretion of the calculation agent and will be conclusive for all purposes and
binding on the Company and the beneficial owners of the Notes, absent manifest
error.

ALTERATION OF METHOD OF CALCULATION

         If at any time the method of calculating the Index or a successor index
is changed in any material respect, or if the Index or a successor index is in
any other way modified so that the value of the Index or the successor index
does not, in the opinion of the calculation agent, fairly represent the value of
that index had the changes or modifications not been made, then, from and after
that time, the calculation agent will, at the close of business in New York, New
York, make those adjustments as, in the good faith judgment of the calculation
agent, may be necessary in order to arrive at a calculation of a value of a
stock index comparable to the Index or the successor index as if the changes or
modifications had not been made, and calculate the closing value with reference
to the Index or the successor index. Accordingly, if the method of calculating
the Index or the successor index is modified so that the value of the Index or
the successor index is a fraction or a multiple of what it would have been if it
had not been modified (e.g., due to a split in the Index), then the calculation
agent will adjust that index in order to arrive at a value of the index as if it
had not been modified (e.g., as if the split had not occurred).

GENERAL

         This Note is one of a duly authorized issue of debt securities of the
Company (the "Debt Securities"), issued and to be issued in one or more series
under a Senior Debt Indenture, dated as of October 27, 1993, as supplemented by
a First Supplemental Indenture, dated as of November 28, 1997, a Second
Supplemental Indenture, dated as of July 1, 1999, and as further supplemented
from time to time (the "Indenture"), between the Company and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the holders of the Notes, and the terms upon
which the Notes are, and are to be, authenticated and delivered.

         If an Event of Default with respect to the Notes shall have occurred
and be continuing, the principal of the Notes may be declared due and payable in
the manner and with the effect provided in the Indenture. In such case, the
amount declared due and payable upon any acceleration of the Notes will be
determined by the calculation agent and will equal, for each Note, the maturity
payment, calculated as though the maturity of the Notes were the date of early
repayment. If a Bankruptcy proceeding is commenced in respect of Citigroup
Global Markets Holdings, the beneficial owner of a Note will not be permitted to
make a claim for unmatured interest and therefore, under Section 502(b)(2) of
Title 11 of the United States Code, the claim of the beneficial owner of a Note
will be capped at the payment at maturity calculated as though the maturity date

                                       5
<PAGE>

of the Notes were the date of the commencement of the proceeding, plus an
additional amount of interest accrued on the principal amount of the Notes at 2%
per annum up to the date of the commencement of the proceeding.

         In case of default in payment at maturity of the Notes, the Notes will
bear interest, payable upon demand of the beneficial owners of the Notes in
accordance with the terms of the Notes, from and after the maturity date through
the date when payment of the unpaid amount has been made or duly provided for,
at the rate of 5% per annum on the unpaid amount due.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series affected thereby. The Indenture also contains provisions permitting
the holders of specified percentages in aggregate principal amount of the Debt
Securities of any series at the time Outstanding, on behalf of the holders of
all Debt Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the holder of
this Note shall be conclusive and binding upon such holder and upon all future
holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.

         The holder of this Note may not enforce such holder's rights pursuant
to the Indenture or the Notes except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company to pay the Maturity Payment with
respect to this Note, and to pay any interest on any overdue amount thereof at
the time, place and rate, and in the coin or currency, herein prescribed.

         All terms used in this Note which are defined in the Indenture but not
in this Note shall have the meanings assigned to them in the Indenture.

         Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purposes.

                                       6
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

                                      CITIGROUP GLOBAL MARKETS HOLDINGS INC.

                                      By:  /s/ Geoffrey S. Richards
                                         --------------------------------------
                                         Name: Geoffrey S. Richards
                                         Title: Vice President

Corporate Seal
Attest:

By:  /s/ Douglas C. Turnbull
   ---------------------------------
   Name: Douglas C. Turnbull
   Title: Assistant Secretary

Dated: June 28, 2004

CERTIFICATE OF AUTHENTICATION
     This is one of the Notes referred to in
     the within-mentioned Indenture.

The Bank of New York,
as Trustee

By:  /s/ Geovanni Barris
   ---------------------------------
   Authorized Signatory

                                        7

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