EXHIBIT 10.89
INTERCREDITOR AGREEMENT
This Intercreditor Agreement (this "Agreement") dated as of
September 25, 2003, among M&I Xxxxxxxx & Xxxxxx Bank, SunTrust Bank, First
National Bank of Omaha and Fifth Third Bank, Indiana (the "Lenders") and Bank of
America, N.A. ("B of A") (and together with the Lenders, the "Senior Lenders")
and M&I Xxxxxxxx & Ilsley Bank, as Agent for the Lenders under the Credit
Agreement referred to below. All capitalized terms used herein are used herein
as defined in Section 1 hereof.
WITNESSETH:
WHEREAS, the Lenders and the Agent are entering into the
Credit Agreement with the Borrowers, pursuant to which the Lenders have made and
provided, and may continue to make and provide, loans and other financial
accommodations to the Borrowers including providing for the issuance of
commercial paper;
WHEREAS, B of A has heretofore made and provided, and may
continue to make and provide, loans and other financial accommodations to one or
more of the Borrowers, pursuant to the terms and conditions of the B of A
Facility referred to below;
WHEREAS, the Senior Lenders wish to execute and deliver this
Agreement to define their rights and obligations with respect to each other such
that certain payments received by any Senior Lender on account of the Senior
Indebtedness shall be shared among all Senior Lenders equally and ratably in
accordance with the respective amounts of the Senior Indebtedness then held by
each of them, all as further set forth herein; and
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. DEFINITIONS
1.1. The following terms have the following meanings,
unless the context otherwise requires:
"Acceleration" shall mean the acceleration of all or any part
of the Senior Indebtedness.
"Affiliate" of any Person shall mean any other Person which
directly or indirectly controls, is controlled by or is under common control
with such first Person. A Person shall be deemed to control a corporation or
other entity if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such corporation
or other entity, whether through the ownership of voting securities, by contract
or otherwise.
"Agent" has the meaning stated in the Credit Agreement.
"B of A" has the meaning stated in the preamble to this
Agreement, and includes any successors and assigns.
"B of A Facility" shall mean that credit agreement between one
or more of the Borrowers and B of A, dated January 11, 2000, as amended,
supplemented or modified from time to time in accordance with the terms thereof.
"Borrowers" shall mean Nelnet, Inc., a Nebraska corporation
and National Education Loan Network, Inc., a Nevada corporation.
"Collateral" shall mean all property and assets, and interests
in property and assets which from time to time secures all or any part of the
Senior Indebtedness.
"Collateral Documents" shall mean all pledge agreements and
any security agreements, mortgages, assignments of intercompany agreements or
other agreements, documents or instruments in effect on the date of this
Agreement or executed by the Borrowers or any other Company under which the
Borrowers or such Company has granted a lien upon or security interest in any
property or assets to secure all or any part of the Senior Indebtedness, and all
financing statements, certificates, documents and instruments relating thereto
or executed or provided in connection therewith, each as amended, restated,
supplemented or otherwise modified from time to time.
"Companies" shall mean, collectively, the Borrowers and the
Guarantors and each individually a "Company".
"Credit Agreement" shall mean the Credit Agreement dated as of
September 25, 2003, among the Borrowers, the Lenders named therein and M & I
Xxxxxxxx & Xxxxxx Bank, as Agent, as amended, supplemented or modified from time
to time in accordance with the terms thereof.
"Enforcement" shall mean (a) an Acceleration, (b) the
occurrence of an Event of Default under either Section 10.1 of the Credit
Agreement or under Section 10.1 of the B of A Facility, which has not been
waived or cured, (c) the early termination of any Senior Indebtedness
Agreements, (d) any affirmative action taken by the Senior Lenders to liquidate
or dispose of the Collateral or (e) the exercise by any Senior Lender of its
rights of set-off against a deposit account of any Company.
"Event of Default" shall mean a "Default," as defined in the
Credit Agreement, or an "Event of Default", as defined in the B of A Facility.
"Guarantors" shall mean each Person which is or may become a
guarantor of all or any part of the Senior Indebtedness.
"Guaranty Agreements" shall mean those guaranty agreements
heretofore or hereafter executed and delivered by any Guarantor, pursuant to
which all or any part of the Senior Indebtedness is guaranteed.
"Lenders" has the meaning stated in the preamble to this
Agreement, and includes any successors and assigns.
"Notice of Enforcement" shall mean a written certification
given by or on behalf of any Senior Lender to the other Senior Lenders
certifying that an Enforcement has occurred.
"Person" shall mean an individual, partnership, limited
liability company, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture, governmental agency
or other authority.
"Pro Rata Portion" shall mean, on any date of determination
and with respect to any Senior Lender, the proportion which the portion of the
Total Obligations owed to such Senior Lender bears to the Total Obligations owed
to all Senior Lenders as of such date.
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"Receiving Lender" has the meaning stated in Section 3.3.
"Senior Indebtedness" shall mean the Obligations as defined in
the Credit Agreement and the Obligations as defined in the B of A Facility. The
term "Senior Indebtedness" shall include all of the foregoing Obligations
whether or not allowed as a claim in any bankruptcy, insolvency, receivership or
similar proceeding.
"Senior Indebtedness Agreements" shall mean, collectively, (a)
the Loan Documents as defined in the Credit Agreement, and (b) the Loan
Documents as defined in the B of A Facility.
"Shared Payment" shall mean any payment of any kind received
by any Senior Lender on or after the occurrence and during the continuance of an
Enforcement on account of any of the Senior Indebtedness (including, without
limitation, any proceeds of Collateral and any proceeds resulting from a set-off
of a deposit account (whether or not with respect to any Senior Indebtedness)
and any payment or distribution made in the context of any bankruptcy,
insolvency or reorganization proceeding).
"Total Obligations", shall mean, as of any date of
determination, the sum of the Obligations (as defined in the Credit Agreement)
and the Obligations (as defined in the B of A Facility) outstanding on such
date.
1.2. Certain Other Terms. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Section references are to this Agreement unless otherwise specified.
All terms defined in this Agreement in the singular shall have comparable
meanings when used in the plural, and vice versa, unless otherwise specified.
Section 2. LIEN ISSUES; OTHER MATTERS.
2.1. Lien Priorities. The parties to this Agreement
expressly agree that the security interests and liens granted to the Senior
Lenders and/or the Agent shall secure the Senior Indebtedness on a pari passu
basis for the benefit of the Senior Lenders, notwithstanding the relative
priority or the time of grant, creation, attachment or perfection under
applicable law of any security interests and liens, if any, of the Senior
Lenders upon or in any of the Collateral to secure any Senior Indebtedness,
whether such security interests and liens are now existing or hereafter acquired
or arising and whether such security interests and liens are in or upon now
existing or hereafter arising Collateral.
2.2. Senior Lender Credit Decision. Each Senior Lender
acknowledges that it has, independently and without reliance upon any other
Senior Lender and based on the financial statements prepared by the Borrowers
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and the other
Senior Indebtedness Agreements. Each Senior Lender also acknowledges that it
will, independently and without reliance upon any other Senior Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Senior Indebtedness Agreements.
2.3. Distributions and Consents. Each of the Senior
Lenders hereby agrees, on five business days' notice from any Senior Lender, to
confirm to all Senior Lenders in writing the outstanding balance of the Senior
Indebtedness (itemized as to principal, interest, fees and other amounts, if
any), owing to such Senior Lender as of the date of such notice.
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Section 3. PAYMENTS, ETC.
3.1. Permitted Payments. Prior to the occurrence of an
Enforcement, each Senior Lender may receive from any Company and retain for its
own account (subject to requirements of pro rata sharing among Lenders under the
Credit Agreement), all payments of any Senior Indebtedness owing to the Senior
Lenders or any of them provided for in the Senior Indebtedness Agreements.
3.2. Notice of Enforcement. Each Senior Lender shall give
a Notice of Enforcement to all other Senior Lenders as soon as possible, but in
any event, within ten days of becoming aware of the occurrence of an Enforcement
in respect of any of the Senior Indebtedness owed to such Senior Lender.
3.3. Turnover of Payments. Each Senior Lender that
receives any Shared Payment by or on behalf of any of the Companies or otherwise
from any Person or source (any such Senior Lender, a "Receiving Lender") shall,
immediately after receipt of a Notice of Enforcement (or, if such Senior Lender
gave such Notice of Enforcement, therewith), or, if later, immediately upon
receipt of such Shared Payment, notify all other Senior Lenders in writing of
the amount and date of receipt of such Shared Payment and deliver to each other
Senior Lender its Pro Rata Portion of such Shared Payment. Each delivery of any
Shared Payment shall be accompanied by a written calculation of the amount of
the Shared Payment owing to each Senior Lender. Such calculation shall be deemed
correct unless any Senior Lender delivers notice of dispute within thirty days
of such Senior Lender's receipt of the calculation.
Notwithstanding the foregoing, to the extent that any amounts available
for distribution pursuant to this Section 3.3 are attributable to the Senior
Indebtedness that related to outstanding commercial paper under the Credit
Agreement, such amounts shall be held in a reserve or other account unavailable
to the Companies (the "Reserve Account") to be established by the Agent. Amounts
in the Reserve Account shall be used from time to time to the extent allocated
to commercial paper, to pay the applicable loan and reimbursement obligations
for which such amounts were held in reserve as they become due. Any amounts
remaining in the Reserve Account following the expiration or satisfaction in
full of the Senior Indebtedness for which such amounts were held in reserve
shall be applied against any Senior Indebtedness remaining unpaid in accordance
with the then applicable Pro Rata Portions.
3.4. Invalidated Payments. If any amount remitted by any
Receiving Lender to any Senior Lender, in accordance with the provisions of this
Agreement, is subsequently returned or repaid (or required to be returned or
repaid) by such Receiving Lender to any of the Companies or their
representatives or successors in interest, whether by court order, settlement or
otherwise, the Senior Lender receiving a portion of such payment shall, promptly
upon its receipt of notice thereof from such Receiving Lender, pay such
Receiving Lender the portion received by it of such returned or repaid amount.
If any such amounts are subsequently recovered by such Receiving Lender from any
of the Companies or their representatives or successors in interest, such
Receiving Lender shall redistribute such amounts to the Senior Lenders on the
same basis as such amounts were originally distributed. The obligations of the
Senior Lenders under this Section 3.4 shall survive the repayment of the Senior
Indebtedness and termination of the Senior Indebtedness Agreements.
3.5. Receiving Lender to be Subrogated to Rights of Other
Senior Lenders. Any Receiving Lender that has remitted any portion of a Shared
Payment received by it to the other Senior Lenders as provided in Section 3.3
shall, to the extent of such remittance distributable to any other Senior
Lender, be subrogated to the rights of each of such other Senior Lenders to
receive payments from the Companies applicable to the Senior Indebtedness owed
to such other Senior Lenders, until all Senior Indebtedness owed to such
Receiving Lender shall be paid in full, and for purposes of such subrogation, no
payment by such Receiving Lender to such other Senior Lenders shall, as between
the Companies or
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any of them, their respective creditors other than the holders of any Senior
Indebtedness, and the holders of any Senior Indebtedness, be deemed to be a
payment by any of the Companies to such other Senior Lenders or on account of
their Senior Indebtedness, it being understood that the provisions of this
Section 3.3 are, and are intended, solely for the purpose of defining the
relative rights of the holders of the Senior Indebtedness.
3.6. Changes in Senior Indebtedness. If, following any
payments pursuant to Section 3.4, the amount of outstanding Senior Indebtedness
held by any Senior Lender is determined to be different than the amount used to
calculate such distribution (other than as a result of such distribution),
whether due to the invalidation of any payment made to any Senior Lender which
is not addressed in Section 3.4, a mistake in fact or otherwise, (subject to
Section 3.3) then the Senior Lenders shall apply the principles set forth in
Section 3.4 to reallocate any amounts previously distributed pursuant to Section
3.4.
Section 4. MODIFICATIONS OF SENIOR INDEBTEDNESS. No Lender
shall increase the aggregate Commitment (as defined in the Credit Facility)
under the Credit Facility, and B of A shall not increase the Commitment under
the B of A Facility.
Section 5. SENIOR LENDERS' WAIVERS. No waiver shall be deemed
to be made by Senior Lenders of any of their rights hereunder, unless the same
shall be in writing signed on behalf of Senior Lenders, and each waiver, if any,
shall be a waiver only with respect to the specific instance involved and shall
in no way impair the rights of Senior Lenders or the obligations of Subordinated
Creditor to Senior Lenders in any other respect at any other time.
Section 6. PRIORITIES. The priorities specified hereinabove
are applicable irrespective of the time or order of attachment or perfection of
any security interest or other interests referred to herein, the time or order
of filing of financing statements or mortgages, the acquisition of purchase
money or other security interests, or the time of giving or failure to give
notice of the acquisition or expected acquisition of purchase money or other
security interests. The priorities specified herein are not conditioned upon the
nonavoidability or perfection of Senior Lenders' security interests in any
Collateral for the Senior Indebtedness.
Section 7. REPRESENTATIONS AND WARRANTIES.
Each Senior Lender represents and warrants to the other Senior
Lenders that:
7.1. It has full power, authority and legal right to
execute, deliver and perform this Agreement, and the execution, delivery and
performance of this Agreement will not violate any provision of any instrument
or agreement to which it is a party or by which it or any of its properties is
subject or bound;
7.2. No consent, license, approval or authorization of, or
registration or declaration with, any governmental instrumentality, domestic or
foreign, is required in connection with the execution, delivery or performance
by it of this Agreement;
7.3. This Agreement constitutes its legal, valid and
binding obligation and is enforceable against it in accordance with its terms;
7.4. It has not heretofore assigned or transferred any of
the Senior Indebtedness owing to it, or any interest therein; and
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7.5. It has not heretofore entered into an agreement
similar to this Agreement in respect of the Senior Indebtedness owing to it.
Section 8. NOTICES. All notices, requests and demands to or
upon the respective parties hereto shall be in writing delivered by hand
delivery, reputable overnight courier service or certified mail, return receipt
requested, with charges prepaid, addressed as follows:
If to Senior Lenders, to: Bank of America, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxx
Fifth Third Bank, Indiana
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
First National Bank of Omaha
0000 Xxxxx Xxxxxx, Xxxx 0000
Xxxxx, XX 00000
Attention: Xxxxx Xxxxxx
M&I Xxxxxxxx & Ilsley Bank
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
SunTrust Bank
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
or in accordance with the last unrevoked written direction from the applicable
party to the other party hereto. All notices shall be effective when hand
delivered or sent by confirmed telecopy, one business day after sent by
reputable overnight courier or three (3) business days after sent by certified
mail, return receipt requested.
Section 9. SEVERABILITY. The provisions of this Agreement are
independent of and separate from each other. If any provision hereof shall for
any reason be held invalid or unenforceable, it is the intent of the parties
that such invalidity or unenforceability shall not affect the validity or
enforceability of any other provision hereof, and that this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
Section 10. MISCELLANEOUS
10.1. Governing Law and Amendments. THIS AGREEMENT IS BEING
DELIVERED IN THE STATE OF WISCONSIN AND SHALL BE CONSTRUED AND ENFORCED
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IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS
OF SUCH STATE (WITHOUT RESPECT TO CONFLICTS OF LAW PROVISIONS THEREOF WHICH
COULD RESULT IN THIS AGREEMENT BEING GOVERNED BY THE LAWS OF ANY OTHER
JURISDICTION), BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
THIS AGREEMENT MAY NOT BE MODIFIED OR AMENDED ORALLY BUT ONLY BY AN INSTRUMENT
IN WRITING EXECUTED BY THE PARTIES AGAINST WHOM ENFORCEMENT OF ANY WAIVER,
CHANGE, MODIFICATION OR DISCHARGE IS SOUGHT.
10.2. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original but all of which
shall constitute one agreement, and shall constitute a binding agreement when
executed by each of the parties hereto.
10.3. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
parties hereto including any assignees of the Senior Indebtedness and/or the
Senior Indebtedness Agreements. Each Senior Lender agrees that it will not
assign any of the Senior Indebtedness absent an acknowledgment and acceptance by
the assignee thereof of the terms of this Agreement.
10.4. Termination. This Agreement shall terminate upon the
payment in full of all Senior Indebtedness and termination of the Senior
Indebtedness Agreements.
10.5. Cooperation. Each Senior Lender agrees (a) to provide
accurate information to the other Senior Lenders as to the amount of its
outstanding Senior Indebtedness and to promptly provide updated information to
correct any errors of which it becomes aware, (b) to cooperate fully with each
other Senior Lender, in the exercise of its reasonable judgment, to the end that
the terms and provisions of this Agreement may be promptly and fully carried
out, and (c) from time to time, to execute and deliver any and all other
agreements, documents or instruments and to take such other actions, all as may
be reasonably necessary or desirable to effectuate the terms, provisions and the
intent of this Agreement.
10.6. No Third Party Beneficiaries. No Person, including,
without limitation, the Companies and their respective Affiliates, other than
the Senior Lenders, the Agent and their respective successors and assigns, shall
have any rights under this Agreement.
10.7. Contesting Liens or Security Interests; No
Partitioning or Marshalling of Collateral: Contesting Senior Indebtedness.
(i) None of the Senior Lenders shall contest the
validity, perfection, priority or enforceability of or seek to
avoid, have declared fraudulent or have put aside any lien or
security interest granted to the Senior Lenders and each party
hereby agrees to cooperate in the defense of any action
contesting the validity, perfection, priority or
enforceability of such liens or security interests. Each party
shall also use its best efforts to notify the other parties of
any change in the location of any of the Collateral or the
business operations of any Company or of any change in law
which would make it necessary or advisable to file additional
financing statements in another location as against any
Company with respect to the liens and security interests
intended to be created by the Collateral Documents, but the
failure to do so shall not create a cause of action against
the party failing to give such notice or create any claim or
right on behalf of any other party to this Agreement and any
third party.
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(ii) None of the Senior Lenders shall contest the
validity or enforceability of or seek to avoid, have declared
fraudulent or have set aside any Senior Indebtedness
(including, without limitation, any Guaranty Agreement). In
the event any Senior Indebtedness is invalidated, avoided,
declared fraudulent or set aside for the benefit of any
Company, the Senior Lenders agree that such Senior
Indebtedness shall nevertheless be considered to be
outstanding for all purposes of this Agreement.
10.8. Bankruptcy Proceedings. Nothing contained herein
shall limit or restrict the independent right of any Senior Lender to initiate
an action or actions in any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
proceeding in its individual capacity and to appear to be heard on any matter
before the bankruptcy or other applicable court in any such proceeding,
including, without limitation, with respect to any question concerning the
post-petition usage of collateral and post-petition financing arrangements,
provided such initiating Senior Lender provides all other Senior Lenders notice
of the initiation of any such action prior thereto or as soon as practicable
thereafter. This Agreement shall survive the commencement of any such
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar proceeding. Nothing contained herein
shall be deemed to supersede the class voting provisions for confirming a plan
of reorganization in any chapter 11 case of any of the Companies.
10.9. Exercise of Remedies. Nothing contained herein shall
be deemed to require any Senior Lender to exercise any right of set-off or any
other remedy against any Company, whether arising under any Senior Indebtedness
Agreement or otherwise.
10.10. Limitation on Liens. Except with respect to the
$50,000,000 Irrevocable Standby Letter of Credit No. 3056037 dated May 23, 2003,
issued by B of A, (a) neither the Agent nor any Senior Lenders shall take or
receive, nor permit to exist, a security interest in or lien upon any of the
property or assets of any Company as security for the payment of any
indebtedness of any Company other than the Senior Indebtedness, nor (b) shall
the Agent, nor any Senior Lender take or receive, nor permit to exist, a
security interest in or a lien upon any of the property or assets of any Company
as security for payment, other than any Senior Indebtedness. The existence of a
common law lien on deposit accounts shall not be prohibited by the provisions of
this Section 10.10 provided that any realization on such lien and the
application of the proceeds thereof shall be subject to the provisions of this
Agreement.
10.11. Section Titles. The section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement among the parties hereto.
[signature pages to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first written above.
LENDERS:
M & I XXXXXXXX & ILSLEY BANK as
Agent and Lender under the Credit Agreement
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Attest: /s/ Xxxxxxx X. Xxxxx
SUNTRUST BANK, as a Lender under
the Credit Agreement
By: /s/ [ILLEGIBLE]
----------------------------------
Title: BANKING OFFICER
FIRST NATIONAL BANK OF OMAHA, as
a Lender under the Credit Agreement
By: /s/ Xxxxx Xxxxxx
----------------------------------
Title: OFFICER
[Signature Page 1 of 2 to Intercreditor Agreement]
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FIFTH THIRD BANK INDIANA as a Lender
under the Credit Agreement
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Title: VICE PRESIDENT
BANK OF AMERICA, N.A., as a lender under
the B of A Facility
By: /s/ XXXXXX X. XXXXXX
----------------------------------
Title: PRINCIPAL
Acknowledged and Agreed as of this 25th day of September, 2003:
NELNET, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------
Title: Chief Financial Officer
-------------------------------
NATIONAL EDUCATION LOAN NETWORK, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------
Title: Chief Financial Officer
-------------------------------
[Signature Page 2 of 2 to Intercreditor Agreement]
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