EXHIBIT 10.78
GUARANTY
AND WARRANTY AGREEMENT
GUARANTY AND WARRANTY AGREEMENT (hereinafter, this "Guaranty"), dated
as of August 7, 2003 made by UICI, a Delaware corporation (the "Guarantor"), in
favor of Lehman Brothers Bank, FSB, a federal savings bank ("LBB").
PRELIMINARY STATEMENTS:
1. Academic Management Services Corp., (the "Seller"), and LBB have
entered into a Master Repurchase Agreement dated August 7, 2003 (the
"Agreement"). Capitalized terms used herein but not otherwise defined herein,
unless the context otherwise requires, shall have the meanings assigned to them
in the Agreement
2. The Guarantor desires to execute and deliver this Guaranty to LBB.
NOW, THEREFORE, in consideration of the premises and in order to induce
LBB to enter into the Agreement, the Guarantor hereby agrees with LBB as
follows:
Section 1. The Guaranty. The Guarantor hereby absolutely, irrevocably
and unconditionally guarantees to LBB the due and punctual performance and
observance of all agreements, covenants or other obligations of the Seller to
LBB under the Agreement and the due and punctual payment of the following
amounts as and when due pursuant to the Agreement: (a) all Price Differentials
(including all Periodic Payments) and any other amounts accrued on or with
respect to the Purchase Price or Repurchase Price or any incremental interest
added to the Purchase Price or Repurchase Price pursuant to the Agreement; and
(b) all other sums of every kind, nature and character which are or may become
due and owing by the Seller under the terms and provisions of the Agreement,
whether for the Purchase Price component of any Repurchase Price, fees,
expenses, indemnified amounts or otherwise, whether on any Repurchase Date, upon
any payment of the Repurchase Price, or for any other reason whatsoever (all
such covenants, agreements and obligations on the part of the Seller to be paid
or performed and together with all covenants or other obligations in the
Agreement ascribed to the Guarantor (and, in each case, regardless of whether
incurred after the commencement of any bankruptcy proceeding with respect to
Seller) being collectively called the "Obligations"); provided, that, the
aggregate amount for which the Guarantor will be liable with respect to the
Obligations shall not exceed $13,333,333.33 plus any and all amounts for which
Guarantor becomes obligated under clause (a) above or pursuant to the last
paragraph of Section 2 hereof. In the event that the Seller shall fail in any
manner whatsoever to perform or pay, when required in accordance with the terms
of the Agreement, any of the Obligations, then Guarantor will perform and pay,
or cause to be duly and punctually performed or paid, the Obligations (limited
as provided above with respect to the Obligations set forth in clause (b)
above). In no event shall Guarantor be liable for the nonperformance,
nonobservance or nonpayment of any Person, other than nonperformance,
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nonobservance or nonpayment of obligations undertaken by the Seller under the
Agreement. All payments to be made by the Guarantor hereunder shall be made when
due, without set-off or counterclaim, to LBB at its address set forth below or
to such other location or account as LBB shall specify in writing to the
Guarantor in United States dollars and in immediately available funds. Guarantor
hereby represents and warrants that its obligations hereunder do and shall rank
pari passu with all senior unsecured and unsubordinated indebtedness of
Guarantor.
The obligations of the Guarantor hereunder shall not be discharged,
impaired or otherwise affected by, to the maximum extent permitted by law, (a)
the failure of LBB to assert any claim or demand or to enforce any right or
remedy against the Seller (including but not limited to LBB's rights and
remedies with respect to the Purchased Student Loans) under the provisions of
the Agreement or any document related thereto or otherwise; (b) any extension or
renewal of any part of the Obligations; (c) any rescission, waiver, amendment or
modification of any of the terms or provisions of the Agreement or of any
document related thereto; (d) the bankruptcy, insolvency or reorganization of
the Seller; (e) the invalidity or unenforceability of any of the Obligations or
(f) any other event which under law would discharge the obligations of a surety.
The Guarantor acknowledges that LBB has been induced to enter into the Agreement
in reliance on this Guaranty. This Guaranty shall be construed as a continuing,
absolute and unconditional guarantee of payment, and not of collection. This
Guaranty shall remain in full force and effect until the Obligations are paid in
full and the commitment under the Agreement or any document related thereto is
terminated, notwithstanding that from time to time prior thereto the Seller may
be free from any Obligations.
Guarantor hereby specifically agrees that Guarantor shall not, to the
maximum extent permitted by law, be released from liability hereunder by any
action taken or omitted to be taken by LBB, the Seller or any of their
respective Affiliates, employees, agents or representatives, including, without
limitation, a non-judicial sale of property subject to the Agreement that would
afford the Seller or the Guarantor a defense based upon the laws (including the
anti-deficiency laws) of any state. Guarantor expressly waives, to the maximum
extent permitted by law, (i) any defense to the recovery of a deficiency against
the Seller or the Guarantor hereunder after such non-judicial sale and (ii) all
suretyship defenses that it would otherwise have under the laws of any
jurisdiction. The Guarantor expressly agrees that the Guarantor shall be and
remain liable for any deficiency, to the maximum extent permitted by law,
remaining after the sale of the Purchased Student Loans (including foreclosure
of any security interest), whether or not the liability of the Seller for such
deficiency is discharged pursuant to statute or judicial decision.
The Guarantor waives, to the maximum extent permitted by law,
diligence, presentment, protest, demand for payment and notice of default or
nonpayment and all other notices of any kind to or upon the Guarantor with
respect to the Obligations.
The Guarantor agrees that the Obligations may at any time and from time
to time exceed the amount of the liability of such Guarantor hereunder without
impairing this Guaranty or affecting the rights and remedies of LBB hereunder.
No payment or payments made by the Seller, the Guarantor, any other
guarantor or any other Person or received or collected by LBB from the Seller,
the Guarantor, any other
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guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Guarantor hereunder which
shall, notwithstanding any such payment or payments other than payments made by
the Guarantor in respect of the Obligations or payments received or collected
from the Guarantor in respect of the Obligations, remain liable for the
Obligations up to the maximum liability of the Guarantor hereunder until the
Obligations are paid in full and the commitment is terminated.
The Guarantor agrees that whenever, at any time, or from time to time,
it shall make any payment to LBB on account of its liability hereunder, it will
notify LBB in writing that such payment is made under this Guaranty for such
purpose.
Section 2. Representations and Warranties of Guarantor. Guarantor
represents and warrants to LBB as follows:
(a) It has been duly organized and is validly existing as a corporation
in good standing under the laws of the State of Delaware, with corporate power
and authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently conducted.
(b) It is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
businesses shall require such qualifications, licenses or approvals, except
where the failure to obtain such qualifications, licenses or approvals would not
reasonably be expected to have a material adverse effect on the financial
condition, operations, business or prospects of Guarantor.
(c) It has the corporate power and authority to execute and deliver
this Guaranty and to carry out its terms.
(d) The consummation of the transactions contemplated by this Guaranty
and the fulfillment of the terms hereof shall not conflict with, result in any
breach of any of the terms and provisions of, nor constitute (with or without
notice or lapse of time) a default under, the certificate of incorporation or
by-laws of the Guarantor, or any indenture, agreement, or other instrument to
which it is a party or by which it shall be bound; nor result in the creation or
imposition of any lien upon any of its properties pursuant to the terms of any
such indenture, agreement, or other instrument, other than this Guaranty, nor
violate any law or any order, rule, or regulation applicable to it of any court
or of any federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over it or its properties.
(e) There are no proceedings or investigations pending, or, to the
knowledge of the Guarantor, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over it or its properties: (i) asserting the invalidity of this Guaranty; (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Guaranty; or (iii) seeking any determination or ruling that would
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reasonably be expected to have a material adverse effect on the business,
results of operations, financial condition or prospects of the Guarantor, or the
performance by the Guarantor of its obligations under, or the validity or
enforceability of, this Guaranty.
(f) All approvals, authorizations, consents, orders or other actions or
registrations with any person or any governmental body or official required to
be obtained on or prior to the date hereof in connection with the execution and
delivery of this Guaranty, the performance of the transactions contemplated by
this Guaranty and the fulfillment of the terms hereof have been obtained.
In addition, Guarantor represents, warrants and covenants to LBB that
each Purchased Student Loan sold under the Agreement and each pool of Purchased
Student Loans sold in a Transaction under the Agreement, as of the related
Purchase Date will conform to the representations and warranties set forth in
Exhibit III attached to the Agreement and that each Student Loan delivered under
the Agreement as Additional Student Loans or Substituted Student Loans, as of
the date of such delivery, will conform to the representations and warranties
set forth in Exhibit III attached to the Agreement. Guarantor further
represents, warrants and covenants to LBB that (i) the Computer Tape with
respect to each Purchased Student Loan is complete, true and correct as of the
last calendar day of each month, (ii) all Purchased Federal Student Loans will
be serviced in accordance with applicable provisions of the Higher Education Act
and all Purchased Private Student Loans will be serviced in accordance with
applicable requirements of TERI, (iii) it will not create, incur or permit to
exist any lien, encumbrance or security interest in or on any of the Purchased
Student Loans or its beneficial interest therein (other than the security
interest described in Section 6 of the Agreement or permitted under the
Subordination and Intercreditor Agreement) without the prior express written
consent of LBB, (iv) Guarantor shall not permit the Purchased Student Loans to
contain (1) any Federal Student Loan which is more than 120 days delinquent, (2)
any Private Student Loan which is more than 90 days delinquent, (3) more than 5%
by aggregate Purchase Price of Student Loans that are more than 30 days
delinquent, (4) more than 2.5% by aggregate Purchase Price of Student Loans that
are more than 60 days delinquent, (5) any Federal Student Loan as to which the
applicable federal guarantor's obligation to make guaranty payments or the
federal reinsurance with respect thereto has for any reason been forfeited or
qualified, (6) any Private Student Loan as to which the obligation of TERI to
make guaranty payments under the TERI Guaranty Agreement has for any reason been
forfeited or qualified or (7) more than 20% by aggregate Purchase Price of
Student Loans that are Private Student Loans, and (v) Guarantor shall take all
actions necessary to ensure that each Federal Student Loan is subject to a
Guaranty Agreement and that each Private Student Loan is subject to a TERI
Guaranty Agreement. As a further inducement to LBB entering into the Agreement,
Guarantor hereby agrees to purchase any Purchased Student Loans as to which
there has occurred a breach of any of the representations, warranties or
covenants made by it pursuant to this paragraph (or in the case of clause (iv),
above, a sufficient number of Purchased Student Loans to cause compliance with
the applicable provision) at a price equal to the unpaid principal balance of
the applicable Purchased Student Loans (such balance to include, in the case of
Federal Student Loans, accrued interest that is not then payable but is to be
capitalized and added to principal) plus accrued and unpaid interest thereon.
LBB agrees that the purchase price of any loans purchased by Guarantor pursuant
to this paragraph will be counted against the Repurchase Price then outstanding
under the Agreement.
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Section 3. No Subrogation, etc. Guarantor hereby waives all rights of
subrogation, contribution, reimbursement, indemnity or otherwise, whether
arising by contract or operation of law (including, without limitation, any such
right arising under the Federal Bankruptcy Code) or otherwise by reason of any
payment by Guarantor pursuant to the provisions of this Guaranty until such time
as the Obligations have been indefeasibly paid in full. The parties acknowledge
that such waivers shall not apply to payments by Guarantor hereunder that
constitute (x) Permitted Indebtedness or indebtedness of the Seller fully
subject to the Subordination and Intercreditor Agreement or (y) a purchase of
Purchased Student Loans by Guarantor or (z) a purchase of Purchased Student
Loans by Seller or any affiliated third party financed in whole or in part by
Guarantor. In addition, Guarantor agrees that any payment by it hereunder shall
be made in the form of either (x), (y) or (z) as set forth in the preceding
sentence; provided that, no purchase of Purchased Student Loans pursuant to
clauses (y) or (z) shall occur unless, after giving effect to any such purchase,
no Collateral Deficit or Event of Default shall exist under the Agreement. The
parties agree that the Purchased Student Loans subject to any such purchase
shall have been selected by LBB acting reasonably in selecting a portfolio
representative of the entire pool. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time when all of the Obligations
shall not have been paid in full, such amount shall be held by the Guarantor in
trust for LBB, segregated from other funds of the Guarantor, and shall,
forthwith upon receipt by the Guarantor, be turned over to LBB in the exact form
received by the Guarantor (duly indorsed by the Guarantor to LBB, if required),
to be applied against the Obligations, whether matured or unmatured, in such
order as LBB may determine.
Section 4. Obligations Absolute. The Guarantor shall remain obligated
hereunder notwithstanding that, without any reservation of rights against the
Guarantor and without notice to or further assent by the Guarantor, any demand
for payment of any of the Obligations made by LBB may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guaranty therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by LBB, and the Agreement and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as LBB may deem
advisable from time to time, and any collateral security, guaranty or right of
offset at any time held by LBB for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. LBB shall not have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Obligations or for this Guaranty or any property subject thereto. When
making any demand hereunder against the Guarantor, LBB may, but shall be under
no obligation to, make a similar demand on the Seller or any other guarantor,
and any failure by LBB to make any such demand or to collect any payments from
the Seller or any such other guarantor or any release of the Seller or such
other guarantor shall not relieve the Guarantor of its obligations or
liabilities hereunder, and shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of LBB against the Guarantor. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
Section 5. Guaranty Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice
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of or proof of reliance by LBB upon this Guaranty or acceptance of this
Guaranty, the Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended or waived,
in reliance upon this Guaranty; and all dealings between the Seller and the
Guarantor, on the one hand, and LBB, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guaranty. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Seller or the
Guarantor with respect to the Obligations. The Guarantor understands and agrees
that this Guaranty shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of the Agreement or any document related thereto,
any of the Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
LBB, (b) any defense, set-off or counterclaim (other than a defense of payment
or performance) which may at any time be available to or be asserted by the
Seller against LBB, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Seller or the Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the Seller
for the Obligations, or of the Guarantor under this Guaranty, in bankruptcy or
in any other instance. When pursuing its rights and remedies hereunder against
the Guarantor, LBB may, but shall be under no obligation to, pursue such rights
and remedies as it may have against the Seller or any other Person or against
any collateral security or guaranty for the Obligations or any right of setoff
with respect thereto, and any failure by LBB to pursue such other rights or
remedies or to collect any payments from the Seller or any such other Person or
to realize upon any such collateral security or guaranty or to exercise any such
right of offset, or any release of the Seller or any such other Person or any
such collateral security, guaranty or right of setoff, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of LBB
against the Guarantor. This Guaranty shall remain in full force and effect and
be binding in accordance with and to the extent of its terms upon the Guarantor
and the successors and assigns thereof, and shall inure to the benefit of LBB,
and its successors, endorsees, transferees and assigns, until all the
Obligations have been satisfied or the obligations of the Guarantor under this
Guaranty shall have been satisfied by payment in full and the Agreement shall be
terminated, notwithstanding that from time to time during the term of the
Agreement the Seller may be free from any Obligations.
Section 6. Attorney's Fees. In the event that, upon the occurrence of
an Event of Default under the Agreement or a default or other breach by
Guarantor hereunder, LBB for any reason whatsoever shall deem it necessary to
refer this Guaranty to an attorney for the enforcement thereof or of any rights
hereunder or otherwise, there shall be immediately due from Guarantor to LBB,
reasonable attorneys' fees and disbursements, together with all costs and
expenses of such action.
Section 7. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Guaranty may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Guarantor and LBB; provided, that any provision of this Guaranty
may be waived by LBB in a letter or agreement executed by LBB or by telex or
facsimile transmission from LBB.
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(b) LBB shall not by any act (except by a written instrument pursuant
to Section 7(a) hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any default
or Event of Default or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on the part of LBB, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by LBB of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that LBB would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
Section 8. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including facsimile communication)
and mailed or transmitted or delivered at the following addresses:
if to the Guarantor:
UICI
9151 Grapevine Highway
4th Floor
North Richland Hills, TX 76180
Attention: Glenn Reed
Phone: 817-255-5419
Fax: 817-255-5394|
email: greed@uici.net
if to LBB:
Lehman Brothers Bank, FSB
745 Seventh Avenue
New York, New York 10019
Attention: George Janes
Phone Number (212) 526-5129
Fax number (646) 758-2115
Attention: Patrick Healey
Phone (212) 526-4163
Fax Number (646) 758-2254
with a copy to:
Lehman Brothers Bank, FSB
101 Hudson Street, 30th Floor
Jersey City, NJ 07302
Attention: Cris Czako
Telephone: (201) 524-4494
Facsimile: (201) 524-4439
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Any party may change its respective address in a written notice to the
other parties hereto complying as to delivery with the terms of this Section.
All such notices and other communications shall, when mailed, be effective when
deposited in the mails, and, when transmitted by telex or facsimile, when sent,
addressed as aforesaid.
Section 9. Right of Set-off. In addition to any rights and remedies of
LBB provided by law or otherwise, LBB shall have the right, without prior notice
to Guarantor, any such notice being expressly waived by Guarantor to the extent
permitted by applicable law, to set off, appropriate and apply against any
amount becoming due and payable by Guarantor hereunder such amount against any
and all deposits (general or special), credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by LBB or any affiliate thereof
to or for the credit or the account of Guarantor. LBB agrees promptly to notify
Guarantor after any such set-off, appropriation and application made by LBB,
provided that the failure to give such notice shall not affect the validity of
such set-off, appropriation and application.
Section 10. Reinstatement. This Guaranty shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by LBB upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Seller or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
Seller or any substantial part of its property, or otherwise, all as though such
payments had not been made.
Section 11. Successors and Assigns. This Guaranty shall (i) be binding
upon the Guarantor, its successors and assigns, and (ii) inure to the benefit of
LBB and its successors and assigns under the Agreement; provided that the
Guarantor may not assign its obligations hereunder without the consent of LBB
which consent shall not be unreasonably withheld.
Section 12. Acknowledgments. The Guarantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Guaranty and the Agreement and other documents related thereto
to which it is a party;
(b) LBB has no fiduciary relationship with or duty to the Guarantor
arising out of or in connection with this Guaranty, the Agreement or any
document related thereto to which it is a party, and the relationship between
the Guarantor and the Seller, on one hand, and LBB, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and;
(c) no joint venture is created hereby or by the Agreement or any
document related thereto or otherwise exists by virtue of the transactions
contemplated hereby among the Guarantor, the Seller and LBB.
Section 13. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS GUARANTY, THE AGREEMENT OR ANY OTHER DOCUMENT RELATED THERETO AND FOR
ANY COUNTERCLAIM THEREIN.
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Section 14. Miscellaneous. The headings in the Guaranty are for
purposes of reference only and shall not limit or define the meaning hereof.
This Guaranty may be executed in any number of counterparts, each of which shall
be an original, but all of which shall constitute one instrument. In the event
that any provision of this Guaranty shall provide to be invalid or
unenforceable, such provision shall be deemed to be severable from the other
provisions of this Guaranty that shall remain binding on all parties hereto.
Section 15. Governing Law. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be performed in such State. Guarantor hereby waives the
right to impose counterclaims or set-offs of any kind or description unless such
counterclaim or set-off is compulsory or mandatory in nature under the New York
Civic Practice Law and Rules. Guarantor further agrees to submit to personal
jurisdiction in the State of New York in any action or proceeding arising out of
this Guaranty.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed on its behalf as of the date first written above.
UICI
By:
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Name:
Title:
Attest:
By:
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Name:
Title:
Accepted and confirmed as of the date first written above:
LEHMAN BROTHERS BANK, FSB
By:
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Name:
Title: