Exhibit 10.86
GUARANTY AGREEMENT
(Subsidiaries)
WHEREAS, NELNET, INC. and NATIONAL EDUCATION LOAN NETWORK,
INC. (together "BORROWERS") have entered into that certain Credit Agreement
dated September 25, 2003, with M&I XXXXXXXX & XXXXXX BANK, SUNTRUST BANK, FIRST
NATIONAL BANK OF OMAHA and FIFTH THIRD BANK, INDIANA (the "BANKS") (such Credit
Agreement, as it may hereafter be amended or otherwise modified from time to
time, being hereinafter referred to as the "CREDIT AGREEMENT", and capitalized
terms not otherwise defined herein shall have the same meaning as set forth in
the Credit Agreement);
WHEREAS, the execution of this Guaranty Agreement is a
condition to the Bank's obligations under the Credit Agreement and an inducement
to the other Secured Parties to extend credit to the Borrowers;
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each of the undersigned Subsidiaries
and any Subsidiary hereafter added as a "GUARANTOR" hereto pursuant to a
Subsidiary Joinder Agreement (individually a "GUARANTOR" and collectively the
"GUARANTORS"), hereby irrevocably and unconditionally guarantees to M&I Xxxxxxxx
& Ilsley Bank, as agent for itself and the other Secured Parties (the "AGENT")
the full and prompt payment and performance of the Guaranteed Indebtedness
(hereinafter defined), this Guaranty Agreement being upon the following terms:
1. The term "GUARANTEED INDEBTEDNESS", as used herein means all
of the "OBLIGATIONS", as defined in the Credit Agreement (which includes both
Article I (the Refinancing Credit Facility) and Article II (the Commercial Paper
Facility)) and shall include any and all post-petition interest and expenses
(including reasonable attorneys' fees) whether or not allowed under any
bankruptcy, insolvency, or other similar law; provided that (a) the Guaranteed
Indebtedness shall be limited, with respect to each Guarantor, to an aggregate
amount equal to the largest amount that would not render such Guarantor's
obligations hereunder subject to avoidance under Section 544 or 548 of the
United States Bankruptcy Code or under any applicable state law relating to
fraudulent transfers or conveyances, and (b) the Guaranteed Indebtedness shall
be limited, with respect to UFS Securities, LLC ("UFS") only, to an aggregate
amount equal to the largest amount that would not put UFS in violation of the
net capital requirements applicable to UFS by reason of UFS's status as a
registered broker dealer.
2. This instrument shall be an absolute, continuing, irrevocable
and unconditional guaranty of payment and performance, and not a guaranty of
collection, and each Guarantor shall remain liable on its obligations hereunder
until the payment and performance in full of the Guaranteed Indebtedness. No
set-off, counterclaim, recoupment, reduction, or diminution of any obligation,
or any defense of any kind or nature which either Borrower may have against
Agent, any Secured Party or any other party, or which any Guarantor may have
against either Borrower, Agent, any Secured Party or any other party, shall be
available to, or shall be asserted by, any Guarantor against Agent, any Secured
Party or any subsequent holder of the Guaranteed Indebtedness or any part
thereof or against payment of the Guaranteed Indebtedness or any part thereof.
3. If a Guarantor becomes liable for any indebtedness owing by
either Borrower to Agent or any Secured Party by endorsement or otherwise, other
than under this Guaranty Agreement, such liability shall not be in any manner
impaired or affected hereby, and the rights of Agent and the Secured Parties
hereunder shall be cumulative of any and all other rights that Agent and the
Secured Parties may ever have against such Guarantor. The exercise by Agent and
the Secured Parties of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.
4. In the event of default by either Borrower in payment or
performance of the Guaranteed Indebtedness, or any part thereof, when such
Guaranteed Indebtedness becomes due, whether by its terms, by acceleration, or
otherwise, the Guarantors shall, jointly and severally, promptly pay the amount
due thereon to Agent, without notice or demand, in lawful currency of the United
States of America, and it shall not be necessary for Agent or any Secured Party,
in order to enforce such payment by any Guarantor, first to institute suit or
exhaust its remedies against either Borrower or others liable on such Guaranteed
Indebtedness, or to enforce any rights against any collateral which shall ever
have been given to secure such Guaranteed Indebtedness. In the event such
payment is made by a Guarantor, then such Guarantor shall be subrogated to the
rights then held by Agent and any Secured Party with respect to the Guaranteed
Indebtedness to the extent to which the Guaranteed Indebtedness was discharged
by such Guarantor and, in addition, upon payment by such Guarantor of any sums
to Agent and any Secured Party hereunder, all rights of such Guarantor against
Borrowers, any other guarantor or any Collateral arising as a result therefrom
by way of right of subrogation, reimbursement, or otherwise shall in all
respects be subordinate and junior in right of payment to the prior indefeasible
payment in full of the Guaranteed Indebtedness. Each Guarantor also agrees to be
bound by the contribution and subrogation provisions of SECTION 3.7 of the
Credit Agreement.
5. If acceleration of the time for payment of any amount payable
by either Borrower under the Guaranteed Indebtedness is stayed upon the
insolvency, bankruptcy, or reorganization of either Borrower, all such amounts
otherwise subject to acceleration under the terms of the Guaranteed Indebtedness
shall nonetheless be payable by the Guarantors hereunder forthwith on demand by
Agent or any Secured Party.
6. Each Guarantor hereby agrees that its obligations under this
Guaranty Agreement shall not be released, discharged, diminished, impaired,
reduced, or affected for any reason or by the occurrence of any event,
including, without limitation, one or more of the following events, whether or
not with notice to or the consent of any Guarantor: (a) the taking or accepting
of collateral as security for any or all of the Guaranteed Indebtedness or the
release, surrender, exchange, or subordination of any collateral now or
hereafter securing any or all of the Guaranteed Indebtedness; (b) any partial
release of the liability of any Guarantor hereunder, or the full or partial
release of any other guarantor from liability for any or all of the Guaranteed
Indebtedness; (c) any disability of either Borrower, or the dissolution,
insolvency, or bankruptcy of either Borrower, any Guarantor, or any other party
at any time liable for the payment of any or all of the Guaranteed Indebtedness;
(d) any renewal, extension, modification, waiver, amendment, or rearrangement of
any or all of the Guaranteed Indebtedness or any instrument, document, or
agreement evidencing, securing, or otherwise relating to any or all of the
Guaranteed Indebtedness; (e) any adjustment, indulgence, forbearance, waiver, or
compromise
that may be granted or given by Agent or any Secured Party to either Borrower,
any Guarantor, or any other party ever liable for any or all of the Guaranteed
Indebtedness; (f) any neglect, delay, omission, failure, or refusal of Agent or
any Secured Party to take or prosecute any action for the collection of any of
the Guaranteed Indebtedness or to foreclose or take or prosecute any action in
connection with any instrument, document, or agreement evidencing, securing, or
otherwise relating to any or all of the Guaranteed Indebtedness; (g) the
unenforceability or invalidity of any or all of the Guaranteed Indebtedness or
of any instrument, document, or agreement evidencing, securing, or otherwise
relating to any or all of the Guaranteed Indebtedness; (h) any payment by
either Borrower or any other party to Agent or any Secured Party is held to
constitute a preference under applicable bankruptcy or insolvency law or if for
any other reason Agent or any Secured Party is required to refund any payment
or pay the amount thereof to someone else; (i) the settlement or compromise of
any of the Guaranteed Indebtedness; (j) the non-perfection of any security
interest or lien securing any or all of the Guaranteed Indebtedness; (k) any
impairment of any collateral securing any or all of the Guaranteed
Indebtedness; (l) the failure of Agent or any Secured Party to sell any
collateral securing any or all of the Guaranteed Indebtedness in a commercially
reasonable manner or as otherwise required by law; (m) any change in the
corporate existence, structure, or ownership of either Borrower; or (n) any
other circumstance which might otherwise constitute a defense available to, or
discharge of, either Borrower or any Guarantor (other than payment of the
Guaranteed Indebtedness).
7. Each Guarantor represents and warrants to the Agent and the
Secured Parties as follows:
(a) All representations and warranties in the Credit
Agreement relating to it are true and correct as of the date hereof and on each
date the representations and warranties hereunder are restated pursuant to any
of the Loan Documents with the same force and effect as if such representations
and warranties had been made on and as of such date except to the extent that
such representations and warranties relate specifically to another date.
(b) It has, independently and without reliance upon the
Agent or any Secured Party and based upon such documents and information as it
has deemed appropriate, made its own analysis and decision to enter into the
Loan Documents to which it is a party.
(c) It has adequate means to obtain from Borrowers on a
continuing basis information concerning the financial condition and assets of
Borrowers and it is not relying upon the Agent or any Secured Party to provide
(and neither the Agent nor any Secured Party shall have any duty to provide) any
such information to it either now or in the future.
(d) The value of the consideration received and to be
received by each Guarantor as a result of Borrowers' and the Banks' entering
into the Credit Agreement and each Guarantor's executing and delivering the Loan
Documents to which it is a party is reasonably worth at least as much as the
liability and obligation of each Guarantor hereunder, and such liability and
obligation and the Credit Agreement have benefited and may reasonably be
expected to benefit each Guarantor directly or indirectly.
8. Each Guarantor covenants and agrees that, as long as the
Guaranteed Indebtedness or any part thereof is outstanding or the Banks have any
commitment under the Credit Agreement, it will comply with all covenants set
forth in the Credit Agreement specifically applicable to it.
9. When an Event of Default exists, each Secured Party shall have
the right to set-off and apply against this Guaranty Agreement or the Guaranteed
Indebtedness or both, at any time and without notice to any Guarantor, any and
all deposits (general or special, time or demand, provisional or final) or other
sums at any time credited by or owing from any Secured Party to any Guarantor
whether or not the Guaranteed Indebtedness is then due and irrespective of
whether or not the Agent shall have made any demand under this Guaranty
Agreement. Each Secured Party agrees promptly to notify Borrowers after any such
setoff and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application. The rights and remedies of
the Secured Parties hereunder are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Secured
Parties may have.
10. (a) Each Guarantor hereby agrees that the Subordinated
Indebtedness (as defined below) shall be subordinate and junior in right of
payment to the prior payment in full of all Guaranteed Indebtedness as herein
provided. The Subordinated Indebtedness shall not be payable, and no payment of
principal, interest or other amounts on account thereof, and no property or
guarantee of any nature to secure or pay the Subordinated Indebtedness shall be
made or given, directly or indirectly by or on behalf of any Debtor (hereafter
defined) or received, accepted, retained or applied by any Guarantor unless and
until the Guaranteed Indebtedness shall have been paid in full in cash; except
that prior to the occurrence and continuance of a Default, a Guarantor shall
have the right to receive payments on the Subordinated Indebtedness made in the
ordinary course of business. When a Default exists, no payments of principal or
interest may be made or given, directly or indirectly, by or on behalf of any
Debtor or received, accepted, retained or applied by any Guarantor unless and
until the Guaranteed Indebtedness shall have been paid in full in cash. If any
sums shall be paid to a Guarantor by any Debtor or any other Person on account
of the Subordinated Indebtedness when such payment is not permitted hereunder,
such sums shall be held in trust by such Guarantor for the benefit of the Agent
and shall forthwith be paid to Agent without affecting the liability of any
Guarantor under this Guaranty Agreement and may be applied by Agent against the
Guaranteed Indebtedness in accordance with the Credit Agreement. Upon the
request of Agent, a Guarantor shall execute, deliver, and endorse to Agent such
documentation as Agent may request to perfect, preserve, and enforce its rights
hereunder. For purposes of this Guaranty Agreement and with respect to a
Guarantor, the term "SUBORDINATED INDEBTEDNESS" means all indebtedness,
liabilities, and obligations of either Borrower or any Obligated Party other
than such Guarantor (Borrowers and such Obligated Parties herein the "DEBTORS")
to such Guarantor, whether such indebtedness, liabilities, and obligations now
exist or are hereafter incurred or arise, or are direct, indirect, contingent,
primary, secondary, several, joint and several, or otherwise, and irrespective
of whether such indebtedness, liabilities, or obligations are evidenced by a
note, contract, open account, or otherwise, and irrespective of the Person or
Persons in whose favor such indebtedness, obligations, or liabilities may, at
their inception, have been, or may hereafter be created, or the manner in which
they have been or may hereafter be acquired by such Guarantor.
(b) Each Guarantor agrees that any and all Liens (including
any judgment liens), upon any Debtor's assets securing payment of any
Subordinated Indebtedness shall be and remain inferior and subordinate to any
and all Liens upon any Debtor's assets securing payment of the Guaranteed
Indebtedness or any part thereof, regardless of whether such Liens in favor of a
Guarantor, Agent or any Secured Party presently exist or are hereafter created
or attached. Without the prior written consent of Agent, no Guarantor shall (i)
file suit against any Debtor or exercise or enforce any other creditor's right
it may have against any Debtor, or (ii) foreclose, repossess, sequester, or
otherwise take steps or institute any action or proceedings (judicial or
otherwise, including without limitation the commencement of, or joinder in, any
liquidation, bankruptcy, rearrangement, debtor's relief or insolvency
proceeding) to enforce any obligations of any Debtor to such Guarantor or any
Liens held by such Guarantor on assets of any Debtor.
(c) In the event of any receivership, bankruptcy,
reorganization, rearrangement, debtor's relief, or other insolvency proceeding
involving any Debtor as debtor, Agent shall have the right to prove any claim
under the Subordinated Indebtedness and to receive directly from the receiver,
trustee or other court custodian all dividends, distributions, and payments made
in respect of the Subordinated Indebtedness until the Guaranteed Indebtedness
has been paid in full in cash. Agent may apply any such dividends,
distributions, and payments against the Guaranteed Indebtedness in accordance
with the Credit Agreement.
(d) Each Guarantor agrees that all promissory notes, accounts
receivable, ledgers, records, or any other evidence of Subordinated Indebtedness
shall contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under the terms of this Guaranty Agreement.
11. Except for modifications made pursuant to the execution and
delivery of a Subsidiary Joinder Agreement (which needs to be signed only by the
Subsidiary party thereto), no amendment or waiver of any provision of this
Guaranty Agreement or consent to any departure by any Guarantor therefrom shall
in any event be effective unless the same shall be in writing and signed by the
Agent. No failure on the part of the Agent or any Secured Party to exercise, and
no delay in exercising, any right, power, or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power, or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
12. To the extent permitted bylaw, any acknowledgment or new
promise, whether by payment of principal or interest or otherwise and whether by
either Borrower or others (including any Guarantor), with respect to any of the
Guaranteed Indebtedness shall, if the statute of limitations in favor of a
Guarantor against the Agent or any Secured Party shall have commenced to run,
toll the running of such statute of limitations and, if the period of such
statute of limitations shall have expired, prevent the operation of such statute
of limitations.
13. This Guaranty Agreement is for the benefit of the Agent and
the Secured Parties and their successors and assigns, and in the event of an
assignment of the Guaranteed Indebtedness, or any part thereof, the rights and
benefits hereunder, to the extent applicable to the indebtedness so assigned,
may be transferred with such indebtedness. This Guaranty
Agreement is binding not only on each Guarantor, but on each Guarantor's
successors and assigns; provided that no Guarantor may assign its rights or
obligations hereunder without the prior written consent of the Bank.
14. Each Guarantor recognizes that the Banks are relying upon this
Guaranty Agreement and the undertakings of each Guarantor hereunder and under
the other Loan Documents to which each is a party in making extensions of credit
to Borrowers under the Credit Agreement and further recognizes that the
execution and delivery of this Guaranty Agreement and the other Loan Documents
to which each Guarantor is a party is a material inducement to the Bank in
entering into the Credit Agreement and continuing to extend credit thereunder.
Each Guarantor hereby acknowledges that there are no conditions to the full
effectiveness of this Guaranty Agreement or any other Loan Document to which it
is a party.
15. Any notice or demand to any Guarantor under or in connection
with this Guaranty Agreement or any other Loan Document to which it is a party
shall be deemed effective if given to the Guarantor, care of Borrowers in
accordance with the notice provisions in the Credit Agreement.
16. The Guarantors shall, jointly and severally, pay on demand all
reasonable attorneys' fees and all other reasonable costs and expenses incurred
by the Agent in connection with the enforcement or collection of this Guaranty
Agreement.
17. Each Guarantor hereby waives promptness, diligence, notice of
any default under the Guaranteed Indebtedness, demand of payment, notice of
acceptance of this Guaranty Agreement, presentment, notice of protest, notice of
dishonor, notice of the incurring by either Borrower of additional indebtedness,
and all other notices and demands with respect to the Guaranteed Indebtedness
and this Guaranty Agreement.
18. The Credit Agreement, and all of the terms thereof, are
incorporated herein by reference, the same as if stated verbatim herein, and
each Guarantor agrees that the Agent may exercise any and all rights granted to
it under the Credit Agreement and the other Loan Documents without affecting the
validity or enforceability of this Guaranty Agreement.
19. THIS GUARANTY AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT
OF EACH GUARANTOR, THE AGENT AND THE SECURED PARTIES WITH RESPECT TO EACH
GUARANTOR'S GUARANTY OF THE GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY AGREEMENT
IS INTENDED BY EACH GUARANTOR, THE AGENT AND THE SECURED PARTIES AS A FINAL AND
COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY AGREEMENT, AND NO COURSE OF
DEALING AMONG ANY GUARANTOR, THE AGENT AND THE SECURED PARTIES, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
GUARANTY AGREEMENT.
THERE ARE NO ORAL AGREEMENTS AMONG ANY GUARANTOR, THE AGENT AND THE SECURED
PARTIES.
20. This Guaranty Agreement 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.
21. Each Guarantor waives (a) promptness, diligence, and notice of
acceptance of this Guaranty and notice of the incurring of any obligation,
indebtedness, or liability to which this Guaranty applies or may apply and
waives presentment for payment, notice of nonpayment, protest, demand, notice of
protest, notice of intent to accelerate, notice of acceleration, notice of
dishonor, diligence in enforcement, and indulgences of every kind, and (b) the
taking of any other action by the Agent, including without limitation, giving
any notice of default or any other notice to, or making any demand on,
Borrowers, any other guarantor of all or any part of the Guaranteed Indebtedness
or any other party. To the maximum extent lawful, each Guarantor waives all
rights by which it might be entitled to require suit on an accrued right of
action in respect of any Guaranteed Indebtedness or require suit against either
Borrower or others.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
EXECUTED as of the date first written above.
GUARANTORS:
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 CORPORATION
NELNET GUARANTEE SERVICES, INC.
NELNET MARKETING SOLUTIONS, INC.
STUDENT PARTNER SERVICES, INC.
By: /s/ XXXXX XXXXXX
______________________________
UFS SECURITIES, LLC
By: /s/ XXXX XXXXX
______________________________
XXXXXXXX FINANCIAL CORP.
By: /s/ XXXX XXXXX
______________________________
