AMENDED AND RESTATED
CONTRIBUTION, SALE AND SERVICING AGREEMENT
Dated as of March 31, 2000
among
POINT WEST CAPITAL CORPORATION
(formerly known as Dignity Partners, Inc.),
as "Servicer"
DIGNITY PARTNERS FUNDING CORP. I,
as "Issuer"
BANKERS TRUST COMPANY,
A NEW YORK BANKING CORPORATION,
as "Indenture Trustee"
TABLE OF CONTENTS
PRELIMINARY STATEMENT
ARTICLE ONE
DEFINITIONS
Section 1.01 Defined Terms......................................... 1
ARTICLE TWO
ISSUANCE OF COMMON STOCK AND
ACQUISITION OF POLICIES
Section 2.01 Authorization and Issuance of Common Stock by the Issuer;
Contribution and Sale of Original Policies............... 4
Section 2.02 Acquisition of Additional Policies; Origination
Requirements............................................. 4
Section 2.03 Delivery of Policies and Documentation................... 5
Section 2.04 Servicing of Policies.................................... 5
Section 2.05 Review of Policies....................................... 5
Section 2.06 Policies Acquired Subject to Existing Indebtedness....... 5
Section 2.07 Nature of Transfer; Financing Statements................. 6
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of PWCC
as to the Policies....................................... 7
Section 3.02 Representations and Warranties of PWCC................... 7
Section 3.03 Repurchase Required Upon Breach of Certain Representations
and Warranties........................................... 9
ARTICLE FOUR
COVENANTS OF PWCC
Section 4.01 PWCC's Covenants......................................... 10
ARTICLE FIVE
i
ADMINISTRATION AND SERVICING OF POLICIES
Section 5.01 Responsibilities of Servicer............................. 14
Section 5.02 Servicer Standard of Care................................ 15
Section 5.03 Servicer Remittances..................................... 15
Section 5.04 Financing Statements; Title Filings...................... 16
Section 5.05 Filing Claims............................................ 16
Section 5.06 Premium Payments......................................... 16
Section 5.07 Servicing Compensation................................... 17
Section 5.08 Bank-End Sourcing Agent Fees............................. 17
Section 5.09 Monthly Servicing Reports................................ 17
Section 5.10 Financial Statements..................................... 17
Section 5.11 Annual Independent Accountants' Reports.................. 18
Section 5.12 Access to Certain Documentation and Information.......... 18
Section 5.13 Other Necessary Data..................................... 19
Section 5.14 Indenture Trustee to Cooperate........................... 20
ARTICLE SIX
[Reserved]
ARTICLE SEVEN
SERVICER EVENTS OF DEFAULT
Section 7.01 Servicer Events of Default............................... 22
ARTICLE EIGHT
TERM AND TERMINATION
Section 8.01 Termination of this Agreement............................ 23
Section 8.02 The Servicer Not to Resign............................... 23
Section 8.03 Indenture Trustee to Act; Appointment of Successor
Servicer................................................. 23
Section 8.04 Notification to Noteholders.............................. 24
Section 8.05 Waiver of Past Defaults.................................. 24
Section 8.06 Effects of Termination of Servicer....................... 24
Section 8.07 No Effect on Other Parties............................... 24
ARTICLE NINE
MISCELLANEOUS
Section 9.01 Amendments............................................... 26
Section 9.02 Governing Law............................................ 26
ii
Section 9.03 Notices.................................................. 26
Section 9.04 Separability Clause; Conflict with Indenture............. 27
Section 9.05 Assignment............................................... 27
Section 9.06 Further Assurances....................................... 27
Section 9.07 No Waivers; Cumulative Remedies.......................... 27
Section 9.08 Binding Effect; Third Party Beneficiaries................ 28
Section 9.09 Set-Off................................................... 28
Section 9.10 Counterparts.............................................. 28
Section 9.11 Article Headings and Captions............................. 28
Section 9.12 Legal Holidays............................................ 28
Section 9.13 Assignment for Security for the Notes..................... 28
Schedule I Policy Schedule
Exhibit A Form of Dignity Partner's Certificate
Exhibit B Operations Manual
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This AMENDED AND RESTATED CONTRIBUTION, SALE AND SERVICING AGREEMENT
(this "Agreement"), dated as of March 31, 2000, is entered into among Point West
Capital Corporation, formerly known as Dignity Partners, Inc. ("PWCC" or the
"Servicer"), Dignity Partners Funding Corp. I (the "Issuer"), and Bankers Trust
Company, a New York banking corporation (the "Indenture Trustee").
PRELIMINARY STATEMENT
---------------------
PWCC previously contributed and assigned to and serviced on behalf of
the Issuer certain Policy Assets under that certain Contribution, Sale and
Servicing Agreement (the "Original Contribution, Sale and Servicing Agreement"),
dated as of February 1, 1995, among PWCC, the Issuer and the Indenture Trustee,
as amended by Amendment No. 1 to Contribution, Sale and Servicing Agreement,
dated September 29, 1995, and as further amended by Amendment No. 2 to
Contribution, Sale and Servicing Agreement, dated February 13, 1996. PWCC, the
Indenture Trustee and the Issuer are parties to that certain Amended and
Restated Indenture pursuant to which the Issuer previously issued its Notes
secured by the Policy Assets. Pursuant to the Master Agreement referred to
below, the parties are entering into an Amended and Restated Indenture and this
Amended and Restated Contribution, Sale and Servicing Agreement.
ARTICLE ONE
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DEFINITIONS
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Section 1.01 Defined Terms. For purposes of this Agreement the
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following terms shall have the meanings specified herein. Except as otherwise
specified herein, capitalized terms used but not defined herein, shall have the
respective meanings given to them in the Amended and Restated Indenture.
"Additional Policies": Policies that are purchased by the Issuer
pursuant to Section 2.02 hereof.
"Agreement": This Amended and Restated Contribution, Sale and Servicing
Agreement, as amended from time to time.
"Amended and Restated Indenture": The Amended and Restated Indenture,
dated as of March 31, 2000, among PWCC, as Servicer, the Issuer and the
Indenture Trustee.
"Closing Date": February 28, 1995.
"Common Stock": All of the issued and outstanding shares of common
stock of the Issuer, which consists of 1,000 shares having a par value of $.01
per share.
"Cut-Off Date": February 15, 1995.
"ERISA": The Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"Existing Indebtedness": The indebtedness of PWCC existing as of the
Closing Date and on any Acquisition Date that is secured by the Policies being
acquired on such date.
"Indenture Trustee": Bankers Trust Company, until a successor Person
shall have become the Indenture Trustee pursuant to the applicable provisions of
the Amended and Restated Indenture, and thereafter "Indenture Trustee" shall
mean such successor Person.
"Key Employees": The meaning set forth in Section 4.01(a) hereof.
"Majority Noteholders": Noteholders holding Notes evidencing more than
66 2/3% of the Outstanding Principal Balance of the Notes.
"Master Agreement": The Master Agreement, dated as of March 31, 2000,
among PWCC, the Issuer, the Indenture Trustee and the Noteholders.
"Monthly Servicing Fee": For Collection Periods commencing prior to
March 1, 2000, $36,000.00 and, for Collection Periods commencing on or after
March 1, 2000, $18,000.
"Operations Manual": The PWCC procedure manual in the form attached
hereto as Exhibit B, as amended from time to time, subject to the requirements
of Section 5.02 hereof.
"Original Policies": Policies that were purchased by the Issuer
pursuant to Section 2.01 hereof and delivered to the Indenture Trustee on the
Closing Date.
"Policy": A life insurance policy issued by an Obligor on the life of
an Insured, including, without limitation, the right to receive the benefits
payable thereunder and proceeds thereof, which such Policy is conveyed to the
Issuer by PWCC or originated by PWCC on behalf of the Issuer pursuant to this
Agreement.
"Policy Assets": The Policies, the Agency Agreement to the extent that
it relates to the Policies, the Documentation, Policy Proceeds, and any
supplementary contracts and documents executed in connection with the Policies,
and all claims, options, privileges, benefits, refunds, cash values, dividends,
rights, title and interest in the Policies, including, without limitation, all
payments received on or with respect to the Original Policies after the Cut-Off
Date and with respect to the Additional Policies after the related Acquisition
Date, and the right to collect from the related Obligor the net proceeds thereof
upon the death of the Insured or other maturity and the right to surrender any
such Policy for the surrender value thereof, and all proceeds of the foregoing
(including, but not by way of limitation, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every
kind, and other forms of obligations and receivables which at any time
constitute all or part or are included in the proceeds of any of the foregoing).
"Policy Schedule": The list of Policies attached hereto as Schedule I,
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as confirmed by the Indenture Trustee to the extent provided in Section 2.05 of
this Agreement and Section 4.04 of the Amended and Restated Indenture, as such
Policy Schedule shall be amended from time to time as confirmed by the Indenture
Trustee to the extent provided in Section 2.05 of this Agreement and Section
4.04 of the Amended and Restated Indenture, to reflect (i) any Policies deleted
by the Issuer as a result of a repurchase by PWCC or the Owner and (ii) all
Additional Policies acquired by the Issuer and listed on a DP Certificate, which
schedule (a) shall include with respect to each Policy Granted on the Closing
Date or acquired on an Acquisition Date: (i) the DP Policy Number, (ii) the Face
Value, (iii) the Obligor, (iv) the expected Back-End Sourcing Agent Fee that
will be due, if any, and if such fee is contingent, so stating, (v) the amount
of any Withheld Premium or Extended Premium for such Policy as of the Closing
Date or Acquisition Date, the frequency of premium payments, and the date on
which premium payments are due, (vi) the date of acquisition of such Policy,
(vii) a subtotal of the Policy Cost, including the specific amount incurred for
each component of the Policy Cost as set forth in the definition thereof, and
(viii) the Expected Maturity and the Extended Maturity, and (b) shall also
include with respect to each Substitute Policy: (i) the DP Policy number(s) of
the Policy(ies) being replaced and (ii) the Face Value of the Policy(ies) being
replaced. The Policy Schedule maintained by the Indenture Trustee shall be the
definitive Policy Schedule for all purposes
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of this Agreement, absent manifest error (in which case the Policy Schedule
shall be all Policies as to which the Indenture Trustee holds Documentation
hereunder).
"Scheduled Servicer Termination Date": June 30, 2002.
"Servicer": Point West Capital Corporation and its successors and
permitted assigns.
"Servicer Default": Any occurrence or circumstance which with notice or
the lapse of time or both would become a Servicer Event of Default.
"Servicer Event of Default": Each of the occurrences or circumstances
enumerated in Section 7.01 hereof.
"Servicer Termination Notice": The notice described in Section 8.01(b)
hereof.
"Total Servicing Fee": $504,000.00, payable in 28 monthly installments
except as otherwise provided in Section 8.01 hereof.
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ARTICLE TWO
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ISSUANCE OF COMMON STOCK AND
----------------------------
ACQUISITION OF POLICIES
-----------------------
Section 2.01 Authorization and Issuance of Common Stock by the Issuer;
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Contribution and Sale of Original Policies.
------------------------------------------
Subject to all the terms and conditions of this Agreement and in
reliance upon the representations, warranties and covenants set forth herein, as
of the Closing Date, the Issuer issued to PWCC the Common Stock. Such Common
Stock was issued in the name of, and delivered directly to, PWCC and PWCC
obtained directly from the Issuer such Common Stock, all in accordance with the
terms of this Agreement. In return for the Common Stock and other rights created
by this Agreement, PWCC transferred, assigned, sold, granted and contributed to
the Issuer, without recourse, except as provided in Section 3.03 hereof, on the
Closing Date, any and all of PWCC's respective right, title and interest in and
to all of the Policy Assets relating to the Original Policies, whether now
existing or hereafter arising. PWCC hereby acknowledges that its transfer of the
Policy Assets to the Issuer was and is absolute and irrevocable, without
reservation or retention of any interest whatsoever by PWCC.
Section 2.02 Acquisition of Additional Policies; Origination
------------ -----------------------------------------------
Requirements.
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(a) To the extent that Eligible Policies are then available for
acquisition, on each Acquisition Date, PWCC shall assign, sell, to the Issuer or
shall originate on behalf of the Issuer and employ Sourcing Agents to source on
behalf of the Issuer, Additional Policies meeting the representations and
warranties contained in Section 3.01 hereof. Funds to be paid in connection with
the acquisition of such Additional Policies or the discharge of any Existing
Indebtedness related to such Additional Policies shall be disbursed in the
amounts and to such Persons as are specified in Section 3.01 of the Amended and
Restated Indenture. PWCC hereby transfers, assigns, contributes, sells and
grants to the Issuer, without recourse, except as provided in Section 3.03
hereof, as of each Acquisition Date, any and all of PWCC's respective right,
title and interest in and to all of the Policy Assets relating to each
Additional Policy listed on an amendment to the Policy Schedule delivered on
such Acquisition Date, whether now existing or hereafter arising. PWCC hereby
acknowledges that its transfer to the Issuer of the Policy Assets relating to
each Additional Policy is absolute and irrevocable, without reservation or
retention of any interest whatsoever by PWCC.
(b) In connection with the assignment of Policies to the Issuer and the
origination of Policies by PWCC on behalf of the Issuer hereunder, PWCC shall be
responsible for (i) ensuring that all Policies meet the requirements set forth
in Section 3.01 hereof and employing such third parties as are deemed necessary
by PWCC to determine that such Policies are eligible for inclusion in the Series
Pool, (ii) submitting all validly executed Documentation to the Indenture
Trustee in accordance with Article Four of the Amended and Restated Indenture,
and (iii) ensuring that Policies are legally assigned from the Owner to "Bankers
Trust Company as Agent" or as otherwise permitted under Section 4.04 of the
Amended and Restated Indenture, and are free and clear of all encumbrances.
Section 2.03 Delivery of Policies and Documentation.
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In connection with the Issuer's acquisition of the Policy Assets, prior
to the Closing Date and prior to each related Acquisition Date, PWCC, on behalf
of the Issuer, shall deliver the Policies and the related
4
Documentation to the Indenture Trustee (or Bankers Trust, California, as agent
for the Indenture Trustee), whereupon the Indenture Trustee shall retain
possession thereof as agent for the Issuer and as Indenture Trustee. Each Policy
shall be titled in the name of "Bankers Trust Company, as Agent", although a
Policy titled in the name of "Bankers Trust Company" shall be deemed to be owned
by Bankers Trust Company as agent and trustee hereunder and under the Amended
and Restated Indenture. In addition, with respect to each Original Policy and
Additional Policy to be acquired by the Issuer on the Closing Date or an
Acquisition Date, as applicable, PWCC shall execute and deliver to the Issuer,
the Servicer and the Indenture Trustee, the DP Certificate, substantially in the
form of Exhibit A hereto and with an amendment to the Policy Schedule attached
---------
thereto as to each Policy being acquired by the Issuer on such date. Such DP
Certificate shall evidence (i) the contribution or sale by PWCC to the Issuer or
(ii) the origination by PWCC on behalf of the Issuer, of such Policies on such
date. All Policies that are acquired by the Issuer hereunder shall,
contemporaneously with their acquisition by the Issuer, become subject to the
terms and provisions of this Agreement. PWCC shall promptly, upon the Closing
Date and each Acquisition Date, cause any ledger and books and records
maintained by it to be marked to show that the related Policies have been
acquired by the Issuer and pledged to the Indenture Trustee in accordance with
this Agreement and the Amended and Restated Indenture.
Section 2.04 Servicing of Policies.
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PWCC in its capacity as Servicer shall service the Policies for the
benefit of the Issuer, the Indenture Trustee and the Noteholders in accordance
with the terms and conditions of this Agreement. Notwithstanding the foregoing,
PWCC acknowledges and agrees that its obligations under this Agreement as seller
and originator of Policies are independent of any obligations it may have as
Servicer and that its obligations under this Agreement as originator and seller
of the Policies will continue in full force and effect, whether or not it is
acting as Servicer, until termination of this Agreement in accordance with
Article Eight hereof.
Section 2.05 Review of Policies.
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In accordance with Section 4.04 of the Amended and Restated Indenture,
the Indenture Trustee (or Bankers Trust, California, as agent for the Indenture
Trustee) shall have reviewed the Documentation in the Policy File and delivered
the Indenture Trustee's Certificate to the Issuer prior to the Issuer's
acquisition of any Policy. In the event the Indenture Trustee is unable to
confirm that a Policy File satisfies the requirements of Section 4.04 of the
Amended and Restated Indenture, PWCC shall attempt to resolve such issue, and if
PWCC is unable to resolve the issue, the Issuer shall not acquire such Policy
and the Indenture Trustee shall return the Policy File to PWCC or the Issuer, as
applicable, pursuant to Section 4.05(a) of the Amended and Restated Indenture.
Section 2.06 Policies Acquired Subject to Existing Indebtedness.
------------ ---------------------------------------------------
By the execution of this Agreement, subject to all of the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants expressed herein, on the Closing Date and each Acquisition Date,
the Issuer hereby agrees to acquire Policies subject to any Existing
Indebtedness secured by such Policies. The Issuer shall immediately repay the
Existing Indebtedness on the Closing Date with the net proceeds of the sale of
the Notes, after deducting therefrom all costs of issuance of the Notes and the
initial funding of the Premium Accounts and the Liquidity Account. On each
Acquisition Date, the Issuer shall repay any Existing Indebtedness secured by
any Additional Policies being acquired on such date with the portion of the
aggregate Policy Cost allocated therefor, all in accordance with Section 3.01 of
the Amended and Restated Indenture.
5
Section 2.07 Nature of Transfer; Financing Statements.
------------ -----------------------------------------
In the event that the transfer of the Policy Assets from PWCC to the
Issuer is deemed to be a secured financing, PWCC shall be deemed hereunder to
have Granted to the Issuer, and PWCC does hereby Grant to the Issuer, effective
as of date of assignment hereunder, a security interest in all of PWCC's right,
title and interest in, to and under the Policy Assets and the related
Documentation, whether now owned or hereafter acquired. For purposes of such
Grant, this Agreement shall constitute a security agreement under applicable
law. In furtherance of the foregoing, PWCC agrees to record and file on or
before the Closing Date, and otherwise at such times as may be necessary to
maintain or protect the liens created under the Amended and Restated Indenture,
at its own expense, financing statements with the Secretaries of State of
California and Nevada, naming PWCC as debtor, the Issuer as secured party, and
the Indenture Trustee as assignee (and thereafter timely continuation statements
and/or amendments with respect to such financing statements).
6
ARTICLE THREE
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REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01 Representations and Warranties of PWCC as to the Policies.
-----------------------------------------------------------------------
PWCC hereby makes the following representations and warranties to the
Issuer regarding the Policies upon which representations and warranties the
Issuer relies in acquiring the Policy Assets from PWCC and engaging PWCC to
originate Policies on its behalf. Unless expressly stated otherwise, such
representations and warranties speak as of (i) the Closing Date with regard to
Original Policies, and (ii) the related Acquisition Date with regard to
Additional Policies acquired on the related Acquisition Date, and shall survive
the Grant by the Issuer of the Trust Estate to the Indenture Trustee.
(a) On the Closing Date, the Policy Schedule attached hereto as
Schedule I, and on each Acquisition Date, the Policy Schedule as amended, sets
----------
forth a true and accurate listing of the Policies being acquired by the Issuer
hereunder.
(b) Each Policy is an Eligible Policy as defined in the Indenture.
(c) PWCC has not failed to disclose any material adverse information or
fact to the Issuer which is known to PWCC and, if disclosed to the Issuer, would
cause the Issuer to alter its decision to acquire the Policies.
(d) After giving effect to the acquisition by the Issuer of any
Additional Policies, the Policy Cost Limits, the Aggregate Policy Acquisition
Terms and the Obligor Concentration Limits were not exceeded.
Section 3.02 Representations and Warranties of PWCC.
------------ --------------------------------------
(a) PWCC hereby makes the following representations and warranties (i)
as of the Closing Date and (ii) as of the effective date of this Amended and
Restated Contribution, Sale and Servicing Agreement:
(i) Organization and Good Standing. PWCC is a corporation duly
------------------------------
organized, validly existing and in good standing under the law of the
State of Delaware and each other State where the nature of its business
requires it to qualify, except to the extent that the failure to so
qualify would not in the aggregate materially adversely affect the
ability of PWCC to perform its obligations under the Transaction
Documents.
(ii) Authorization. PWCC has the power and authority and all
--------------
governmental licenses, authorizations, consents and approvals to carry
on its business, except where any failure would not have a material
adverse effect on its business or the performance of its obligations
hereunder and under the Amended and Restated Indenture, and the power,
authority and legal right to execute, deliver and perform under this
Agreement and the Amended and Restated Indenture and the execution,
delivery and performance of this Agreement and the Amended and Restated
Indenture have been duly authorized by PWCC by all necessary corporate
action.
(iii) Binding Obligation. This Agreement, assuming due
--------------------
authorization, execution and delivery by the Indenture Trustee and the
Issuer, and the Amended and Restated Indenture, assuming
7
due authorization, execution and delivery by the Issuer and the
Indenture Trustee, each constitutes a legal, valid and binding
obligation of PWCC, enforceable against PWCC in accordance with its
terms except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, rehabilitation, moratorium or other similar
laws (whether statutory, regulatory or decisional) now or hereafter in
effect relating to creditors' rights generally and (B) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to certain equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought, whether
a proceeding at law or in equity.
(iv) No Violation. The consummation of the transactions
-------------
contemplated by the fulfillment of the terms of this Agreement and the
Amended and Restated Indenture will not conflict with, result in any
breach of any of the material terms and provisions of, or constitute
(with or without notice, lapse of time or both) a default under the
organizational documents or bylaws of PWCC, or any material Amended and
Restated Indenture, agreement, mortgage, deed of trust or other
instrument to which PWCC is a party or by which it is bound, or in the
creation or imposition of any lien upon any of its properties pursuant
to the terms of such Amended and Restated Indenture, agreement,
mortgage, deed of trust or other such instrument, other than any lien
created or imposed pursuant to the terms of this Agreement or the
Amended and Restated Indenture, or violate any law or any material
order, rule or regulation applicable to PWCC of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over PWCC or any of
its properties other than any violation which would not have a material
adverse effect on the performance of its obligations hereunder and
under the Amended and Restated Indenture.
(v) No Proceedings. There are no proceedings or investigations
--------------
to which PWCC, or any of PWCC's Affiliates, is a party pending, or, to
the knowledge of PWCC, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality
(A) asserting the invalidity of this Agreement, the Amended and
Restated Indenture or any Policy, (B) seeking to prevent the issuance
of any of the Notes or the consummation of any of the transactions
contemplated by this Agreement or the Amended and Restated Indenture,
or (C) seeking any determination or ruling that would materially and
adversely affect the performance by PWCC of its obligations under, or
the validity or enforceability of, this Agreement, the Amended and
Restated Indenture or any Policy.
(vi) Approvals. All approvals, authorizations, consents,
---------
orders or other actions of any Person, or of any court, governmental
agency or body or official, required in connection with the execution
and delivery of this Agreement and the Amended and Restated Indenture
(except approvals of State securities officials under the Blue Sky
Laws), have been or will be taken or obtained on or prior to the
Closing Date.
(vii) Place of Business. PWCC's chief executive office is
------------------
located in San Francisco, California.
(viii) Taxes. All material tax returns or extensions required
-----
to be filed by PWCC in any jurisdiction have in fact been filed, and
all material taxes, assessments, fees and other governmental charges
upon PWCC, or upon any of its properties, income or franchises, shown
to be due and payable on such returns have been paid, or will be paid
when due. All such tax returns are true and correct in all material
respects and PWCC has no knowledge of any proposed additional tax
assessment against it in any material amount nor of any basis therefor.
The provisions for taxes on
8
the books of PWCC are maintained in accordance with generally accepted
accounting principles.
(ix) Compliance with ERISA. PWCC shall, and shall cause each
---------------------
of its Affiliates to maintain any employee benefit plan (as defined in
Section 3(3) of ERISA) which PWCC sponsors or maintains or to which
PWCC makes, is making, or is obligated to make contributions (each, a
"Plan"), in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law and PWCC
shall not permit any prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan to occur which
would materially adversely affect PWCC, the Issuer or any Policy.
(b) PWCC hereby makes the following representations and warranties to
the Issuer upon which representations and warranties the Issuer relies in
acquiring the Policies and engaging PWCC's services hereunder. Such
representations and warranties speak as of the most recent Acquisition Date, but
shall survive the Grant by the Issuer of the Trust Estate to the Indenture
Trustee.
(i) Security Interest. Upon (A) execution and delivery by the
-----------------
parties hereto of the Original Contribution, Sale and Servicing
Agreement, repayment of any Existing Indebtedness in accordance with
Section 2.06 of this Agreement, and delivery by PWCC to the Issuer of a
DP Certificate with respect to each Additional Policy acquired by the
Issuer from PWCC, (B) filing with the applicable Obligor of an
assignment form in respect of the related Policy assigning ownership of
such Policy in the name of the "Bankers Trust Company, as Agent," (C)
filing the UCC financing statements in accordance with Section 4.02 of
the Amended and Restated Indenture, and (D) obtaining an acknowledgment
by the Obligor of each Policy of the assignment referred to in clause
(B) above, the Issuer shall have obtained ownership of the Policies
free and clear of all interests, liens, pledges, claims, charges and
encumbrances other than liens created pursuant to the Amended and
Restated Indenture; and none of the Policies has been pledged, sold or
assigned by PWCC to any other party other than creditors of PWCC whose
lien is released as of the date of acquisition of such Policy by the
Issuer, and the Indenture Trustee shall have a valid perfected security
interest in the Issuer's right, title and interest in such Policy
Assets and in the proceeds thereof prior and superior to and free and
clear of any other security interest or lien other than those permitted
by Section 11.02(a) of the Amended and Restated Indenture.
(ii) Ownership and control of PWCC.
-----------------------------
(A) The Key Employees (as defined in Section 4.01(a)
hereof) collectively beneficially own a greater percentage of
the aggregate voting power of all of the issued and
outstanding shares of PWCC Voting Stock (as defined herein)
than any other Person not affiliated with such Key Employees.
(B) All of the shares of PWCC Capital Stock (as
defined herein) beneficially owned by the Key Employees have
been validly issued, are fully paid and nonassessable, and,
except as hereinafter provided, are not the subject of any
mortgage, pledge, other security interest or any other option
to purchase; provided, however, that (1) Xxxxxxx X. Xxxxxx may
--------
enter into an underwriting agreement pursuant to which he
would agree to sell up to 350,000 shares of PWCC Common Stock
(as defined herein) in a public offering pursuant to the
Registration Statement on Form S-1 of PWCC (Registration No.
33-98708); and (2) The Echelon Group of Companies, LLC, which
is beneficially owned collectively by the Key Employees, may
grant to its employees options to purchase shares of Common
Stock held by it if, assuming the exercise in full of such
options, the representations set forth
9
in Section 3.02(b)(ii)(A) and Section 3.02(B)(ii)(C) would remain
correct.
(C) Other than the Key Employees or Persons
affiliated with such Key Employees, no Person beneficially
owns twenty percent or more of the aggregate voting power of
all issued and outstanding shares of PWCC Voting Stock.
(D) There are no outstanding securities of PWCC
(including issued and outstanding shares of PWCC Capital Stock) which
are exercisable or exchangeable for, or convertible into, shares of
PWCC Voting Stock which, if exercised, exchanged or converted, as the
case may be, in full would cause the representations contained in
Section 3.02(b)(ii)(A) or Section 3.02(b)(ii)(C) to become incorrect.
(E) The Key Employees and/or their designees
constitute a majority of the Board of Directors of PWCC both in number
and by voting rights with respect to all matters; provided, however,
-------- ------
that this subsection (E) will not apply to any vote of the Board of
Directors required to be made by, or committees of the Board of
Directors of PWCC comprised entirely or in part of "independent" or
"disinterested" directors if such committee is required to be comprised
of "independent" or "disinterested" directors under any applicable
provision of (1) the Delaware General Corporation Law, (2) state or
federal securities laws (including Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), or
(3) the requirements of The Nasdaq Stock Market for companies listed
thereon.
(F) As used in this Agreement, (i) all references to
"beneficial ownership," and all derivations thereof, shall
have the meaning set forth in Rule 13d-3 promulgated under the
Exchange Act, (ii) "PWCC Capital Stock" means any and all
shares of the authorized capital stock of PWCC, and (iii)
"PWCC Common Stock" means the Common Stock, $.01 par value per
share, of PWCC, and (iv) "PWCC Voting Stock" means PWCC
Capital Stock which has voting power (whether generally or
upon the occurrence of an event) with respect to the election
of directors.
(iii) Bulk Transfer Laws. The transfer, assignment and
--------------------
conveyance of the Policy Assets by PWCC to the Issuer pursuant to this
Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
(iv) Performance. PWCC does not believe, nor does it have any
-----------
reasonable cause to believe, that it cannot perform each and every
covenant contained in this Agreement.
(v) Ordinary Business Purpose. The transactions contemplated
-------------------------
by this Agreement are being consummated by PWCC in furtherance of its
ordinary business purposes, with no contemplation of insolvency and
with no intent to hinder, delay or defraud any of its present or future
creditors.
(vi) Consideration. The consideration received by PWCC as set
-------------
forth herein is fair consideration having value reasonably equivalent
to or in excess of the value of the performance of PWCC's obligations
hereunder.
(vii) Insolvency. Neither on the date of the transactions
----------
contemplated by this Agreement or immediately before or after such
transactions, nor as a result of the transactions, will PWCC: (A) be
insolvent such that the sum of its debts is greater than all of its
respective property, at a fair
10
valuation; (B) be engaged in or about to engage in, business or a
transaction for which any property remaining with PWCC will be an
unreasonably small capital or the remaining assets of PWCC will be
unreasonably small in relation to its respective business or the
transaction; and (C) have intended to incur or believed it would incur,
debts that would be beyond its respective ability to pay as such debts
mature or become due. PWCC's assets and cash flow enable it to meet its
present obligations in the ordinary course of business as they become
due.
(viii) Assets Exceed Liabilities. Both immediately before and
-------------------------
after the transactions contemplated by this Agreement (A) the present
fair salable value of PWCC's assets was or will be in excess of the
amount that will be required to pay its probable liabilities as they
then exist and as they become absolute and matured; and (B) the sum of
PWCC's assets was or will be greater than the sum of its debts, valuing
its assets at a fair salable value.
(ix) Transfer to the Issuer. It is the intention of PWCC that
----------------------
complete ownership of the Policy Assets be acquired by the Issuer and
that the beneficial interest in and title to the Policy Assets not be
part of PWCC's estate in the event of the filing of a bankruptcy
petition by or against PWCC under any bankruptcy law.
(x) Common Stock of the Issuer. Upon the issuance of the
----------------------------
Common Stock to PWCC in accordance with the terms hereof, PWCC will be
the registered owner of all of the issued and outstanding common stock
of the Issuer, all of which Common Stock will be validly issued, fully
paid and nonassessable and owned of record, free and clear of all
mortgages, assignments, pledges, security interests, warrants, options
and rights to purchase, other than the lien in favor of Transamerica
Lender Finance, a division of Transamerica Business Credit Corporation,
securing the indebtedness of PWCC pursuant to that certain Loan and
Security Agreement dated December 13, 1993, as amended and as the same
may be amended or amended and restated in the future, and any liens
incurred in connection with any renewals, extensions and refinancings
of the indebtedness secured by such lien.
(xi) Financial Statements. The most recent unaudited financial
--------------------
statements delivered to the Noteholders by PWCC are true and correct in
all material respects.
Section 3.03 Repurchase Required Upon Breach of Certain Representations
------------ ----------------------------------------------------------
and Warranties.
--------------
(a) If PWCC or the Issuer discovers the breach of any representations
or warranties set forth in Section 3.01 hereof, which breach materially and
adversely affects the value of a Policy or the interests of the Holders of the
Notes, then the party discovering such breach or condition shall give prompt
written notice to the other party and PWCC shall, within 30 days from the date
it was notified of, or otherwise discovers, such breach cure such breach. If
PWCC fails to cure such breach within 30 days, it shall repurchase the affected
Policy from the Issuer in accordance with Section 3.03(c) hereof on the 31st day
following the date of receipt of notice (provided such 31st day is a Business
Day, and if not, the following Business Day) at a price equal to the Policy
Cost.
(b) In the case of a Policy with respect to which an Owner exercises
its right to rescind the sale of such Policy to PWCC or the Issuer within the
applicable rescission period, PWCC or the Owner shall repurchase such Policy
from the Issuer at the applicable Repurchase Price. The repurchase shall be
conducted in accordance with the provisions of Section 3.03(c) hereof.
(c) The Policy Cost for a repurchased Policy shall be paid by PWCC or
an Owner, as applicable,
11
to the Indenture Trustee, on behalf of the Issuer, for deposit in the Collection
Account on the date that the repurchase occurs. Any Repurchase Price paid by
PWCC shall be paid to the Indenture Trustee, on behalf of the Issuer in
immediately available funds. Simultaneously with the repurchase of a Policy, the
Indenture Trustee shall execute a release prepared by the Issuer of the
repurchased Policy in accordance with Section 4.08 of the Amended and Restated
Indenture. It is understood and agreed that the obligation of PWCC to cure or
purchase a Policy shall constitute the sole remedy respecting such breach
available to the Issuer, the Holders of the Notes or the Indenture Trustee on
behalf of such Holders (provided that such cure or repurchase occurs in a due
and timely manner and except for any indemnities provided under Section 4.01(b)
hereof) for any losses, claims, damages and liabilities arising from the
Issuer's ownership of such Policy or the inclusion of such Policy in the Trust
Estate.
ARTICLE FOUR
------------
COVENANTS OF PWCC
-----------------
Section 4.01 PWCC's Covenants.
-----------------------------
PWCC hereby covenants to the Issuer and agrees as follows:
(a) Qualification; Successor; Key Employees. (i) Except as hereinafter
----------------------------------------
provided, PWCC will keep in full effect its existence, rights and franchises as
a corporation, and will obtain and preserve its qualification to do business as
a foreign corporation, its licenses to do business as a viatical settlement
company, and such other licenses or permits as shall be necessary to conduct its
business as currently operated, in each jurisdiction in which such qualification
or license is or shall be necessary to protect the validity and enforceability
of this Agreement or any of the Policies and to perform its duties hereunder.
The representations and warranties set forth in Section 3.02(b)(ii) of this
Agreement shall remain true and correct at all times during the terms of this
Agreement. PWCC shall not merge or consolidate with any person or sell all or
substantially all of its assets to any Person, unless either (i) the Majority
Noteholders shall have consented to such action or (ii) following any such
merger or consolidation the Key Employees (as defined below) shall in the
aggregate own more of the issued and outstanding common stock of PWCC than any
other Person not affiliated with such Key Employees. Any Person into which PWCC
may be merged or consolidated, or to whom PWCC has sold substantially all of its
assets, or any corporation resulting from any merger, conversion or
consolidation to which PWCC shall be a party, or any Person succeeding to the
business of PWCC shall be the successor of PWCC hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
-------- -------
(w) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.02 shall have been breached and each of Xxxx
X. Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxx X. Xxxxxx (collectively, the "Key
Employees") shall continue to be employed by PWCC in substantially the same
capacity as that immediately prior to any such transaction, (x) such successor
executes an agreement or assumption, in form reasonably satisfactory to the
Issuer and the Indenture Trustee to perform every obligation under this
Agreement, (y) PWCC shall have delivered to the Issuer and the Indenture Trustee
a certificate of an officer of PWCC stating that such consolidation, merger, or
succession and such agreement of assumption complies with this Section 4.01 and
that all conditions precedent, if any, provided for in this Agreement relating
to such transaction have been complied with, and (z) all financing statements
and continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Indenture
Trustee in the Policies and reciting the details of such filings, or stating
that, no such action shall be necessary to preserve and protect such interest.
(ii) PWCC shall at all times during the terms of this Agreement employ
at least two of the three Key
12
Employees as employees of PWCC in substantially
the same capacity as that immediately prior to the date of this Agreement, or
such other personnel in such capacities reasonably acceptable to the Majority
Noteholders in view of such other personnels' experience in the viatical
settlement industry.
(b) Indemnity. PWCC shall indemnify and hold harmless the Indenture
---------
Trustee (which shall include, for the purposes of this Section 4.01(b), its
directors, officers, employees and agents), the Issuer, and the Trust Estate,
for the benefit of the Noteholders, from and against any loss, liability, claim,
expense (including the fees and expenses of counsel), damage or injury suffered
or sustained to the extent that such loss, liability, claim, expense, damage or
injury arose out of or was imposed by reason of (i) the performance by the
Indenture Trustee of its duties under this Agreement, or (ii) the negligence or
willful misconduct of PWCC in the performance of its duties under this
Agreement. Notwithstanding the forgoing sentence, PWCC shall not indemnify (a)
the Issuer or the Trust Estate to the extent that such loss, liability, claim,
expense, damage or injury results from any risk identified in the Risk Factors
section of the Private Placement Memorandum or from any act or omission of PWCC
which is in accordance with the operational procedures described in the
Operations Manual, provided in each case that such act or omission does not
constitute a violation of law, gross negligence or willful misconduct by PWCC
when committed or omitted, or (b) any party to the extent that such loss,
liability, claim, expense, damage or injury results from acts of fraud, gross
negligence or breach of fiduciary duty by such indemnified party. PWCC shall not
be liable for the fees and expenses of more than one separate firm of attorneys
at any time acting for all indemnified persons unless there exist separate
defenses or cross claims with respect to the indemnified parties or a need for
counsel in a separate jurisdiction. PWCC shall not be liable for any settlement
of any action or claim effected without its consent, provided that PWCC may
withhold its consent to a settlement only if PWCC shall first have provided
reasonable security to the applicable indemnified persons (in the reasonable
determination of such indemnified persons) for its indemnification obligation.
If PWCC has made any indemnity payments to the Indenture Trustee, the Issuer or
the Noteholders pursuant to this Section and such party thereafter collects any
of such amounts from others, such party will promptly repay such amounts
collected to PWCC, without interest. The provisions of this Section 4.01 shall
survive any expiration or termination of this Agreement, and the resignation or
removal of the Indenture Trustee.
(c) Liability. Except as provided in Section 4.01(b) hereof, PWCC shall
---------
have no liability for any action taken or for refraining from the taking of any
action pursuant to this Agreement. No officer, director, employee or agent of
PWCC shall be under any liability for any action taken or for refraining from
the taking of any action pursuant to this Agreement; provided, however, that
this provision shall not protect any such Person against any liability which
would otherwise be imposed by reason of willful misconduct, bad faith or gross
negligence in the performance of such Person's duties hereunder. PWCC and any
officer, director, employee or agent of PWCC may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
-----------
with respect to any matters arising hereunder provided that PWCC or any such
Person has no knowledge to the contrary. No implied covenants or obligations
shall be read into this Agreement against PWCC. In the event PWCC performs any
activities beyond the requirements of this Agreement, PWCC shall have the option
but will not be required to perform such activities in the future.
(d) Preserve Security Interest. PWCC will from time to time execute and
--------------------------
file such additional financing statements (including continuation statements or
amendments) as may be necessary to preserve the security interests and liens
described herein as may be reasonably requested by the Issuer or the Indenture
Trustee and are reasonably satisfactory in form and substance to the Issuer.
(e) Change in Identity. PWCC will not change its name, identity or
-------------------
corporate structure in any manner that would, could, or might make any
assignment of a Policy, or any financing statement or
13
continuation statement misleading within the meaning of section 9-402(7) of the
UCC, unless it shall have given the Issuer and the Indenture Trustee at least 30
days' prior written notice thereof, and unless the necessary amendments and
filings have been completed within 10 days prior to such change.
(f) Change in Location. PWCC will give the Issuer and the Indenture
-------------------
Trustee at least 30 days prior written notice of any relocation of its chief
executive office if, as a result of such relocation, the applicable assignment
of a Policy or any provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement, and PWCC will cause whatever amendments and filings are
necessary in connection therewith to be done.
(g) No Modifications. PWCC will duly fulfill all obligations on its
-----------------
part to be fulfilled under or in connection with each Policy, will not change or
modify the terms of any Policy and will do nothing to impair the rights of the
Issuer or the Indenture Trustee in any Policy.
(h) Compliance. PWCC will comply, in all material respects, with all
----------
material acts, rules, regulations, orders, decrees and directions of any
governmental authority applicable to the Policies or any part thereof; provided,
however, that PWCC may contest any act, regulation, order, decree or direction
in any reasonable manner which shall not materially and adversely affect the
rights of the Issuer or the Indenture Trustee in the Policies.
(i) Notice of Breach. PWCC will advise the Issuer, the Indenture
-----------------
Trustee and the Noteholders in reasonable detail of the occurrence of any breach
by PWCC of any of its material representations, warranties and covenants
contained herein within five Business Days of the discovery by PWCC of such
breach.
(j) Additional Information. PWCC will execute or endorse, acknowledge,
----------------------
and deliver to the Issuer and the Indenture Trustee from time to time such
schedules, confirmatory assignments, conveyances, and other reassurances or
instruments and take such further similar actions relating to the Policies and
the rights covered by this Agreement as the Issuer or the Indenture Trustee may
reasonably request to preserve and maintain title to the Policies and the rights
of the Issuer and the Indenture Trustee against the claims of all persons and
parties with respect to the Policies.
(k) No Disturbance. PWCC will do nothing to disturb or impair the
---------------
ownership of the Policies by the Issuer for the benefit of the Noteholders.
(l) Separateness of Company; No Bankruptcy Petition. PWCC (i) will (A)
-----------------------------------------------
maintain its books and records separate from the books and records of the Issuer
and (B) maintain bank accounts separate from those of the Issuer and (ii) will
not (X) take any action that would cause the dissolution or liquidation of the
Issuer, (Y) guarantee (directly or indirectly), endorse or otherwise become
contingently liable (directly or indirectly) for the obligations of the Issuer,
or (Z) institute against the Issuer, or join any other person in instituting
against the Issuer, any case, proceeding or other action under any existing or
future bankruptcy, insolvency or similar laws. This subsection (l) shall survive
termination of this Agreement and continue in effect until one year and one day
after the termination of the Amended and Restated Indenture pursuant to Section
5.01 thereof.
(m) Notice of Liens. PWCC shall notify the Issuer and its assignees
---------------
promptly after becoming aware of any lien, security interest, pledge or
encumbrance on any Policy.
(n) Financial Statements. The financial statements of the Issuer will
---------------------
reflect that the Policies are
14
owned by the Issuer and have been assigned to the Indenture Trustee, and the
financial statements of PWCC will reflect that the assets of PWCC include the
Common Stock of the Issuer. The financial statements of PWCC and the Issuer will
also reflect that the assets of the Issuer are not available to pay creditors of
PWCC. The resolutions, agreements and other instruments underlying this
Agreement will be continuously maintained by PWCC as official records.
(o) Treatment by Affiliated Group. The affiliated group of which PWCC
------------------------------
is a member within the meaning of section 1504 of the Code shall, unless
otherwise required by a taxing authority, treat the Policies as owned by the
Issuer for Federal, state and local income tax purposes, and shall include in
the computation of the Issuer's gross income for such purposes the Policy
Proceeds and other income from the Policies. Any election by the affiliated
group of which the Issuer is a member to file a consolidated income tax return
shall be made only with the prior consent of the Majority Noteholders, which
consent shall not be withheld so long as PWCC, the Issuer and the other members
of the affiliated group enter into a tax sharing agreement reasonably acceptable
to the Majority Noteholders that provides for the allocation of the consolidated
tax liability among the members of the group based upon the separate income of
such members.
(p) Maintain Ledger. PWCC will (i) retain a ledger as a master record
----------------
of the Policies and copies of all documents relating to each Policy (other than
the original executed Policies) and necessary to service the Policies hereunder
and (ii) indicate on such copies and any ledger that the Policies have been
acquired by the Issuer and assigned to the Indenture Trustee.
ARTICLE FIVE
------------
ADMINISTRATION AND SERVICING OF POLICIES
----------------------------------------
Section 5.01 Responsibilities of Servicer.
------------ ----------------------------
(a) During the term of this Agreement, the Servicer, for the benefit of
the Issuer, the Indenture Trustee and the Noteholders, shall be responsible for,
and shall, in accordance with the servicing standards set forth herein, engage
in the following activities: (i) monitoring the Policies on an ongoing basis to
ensure that the terms of each Policy and all reporting requirements are
observed, (ii) submitting claims for payment to and monitoring Obligors to
ensure timely payment of Policy Proceeds with respect to all Policies that have
reached Maturity, (iii) monitoring the Policies on an ongoing basis to ensure
that all insurance premiums are remitted to Obligors when due and reporting such
payments as provided herein, (iv) maintaining contact with the Insureds on an
ongoing basis to ascertain the Maturity of each Policy and obtaining death
certificates upon the Maturity of Policies, (v) performing monthly compliance
calculations and generating Monthly Servicing Reports, (vi) enforcing the
Indenture Trustee's security interest in the Policies granted pursuant to the
Amended and Restated Indenture, and (vii) acting with full power and authority,
at its sole discretion, to do any and all things in connection with its
responsibilities that it may deem necessary or desirable and in the best
interests of the Issuer and the Indenture Trustee, including the prudent
delegation of such responsibilities to subservicers approved by the Majority
Noteholders, which approval shall not be unreasonably withheld.
(b) Without limiting the generality of the foregoing, the Servicer, in
its own name or in the name of a subservicer, shall, and is hereby authorized
and empowered by the Indenture Trustee, subject to Section 5.02 hereof, to
execute and deliver (on behalf of itself, the Issuer, the Noteholders, the
Indenture Trustee or any of them) any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Policies or the Documentation.
Notwithstanding
15
the foregoing, neither the Servicer, nor any subservicer, shall, except pursuant
to a judicial order from a court of competent jurisdiction, or as otherwise
expressly provided in this Agreement or pursuant to the Master Agreement,
release or waive the right to collect the Policy Proceeds relating to any
Policy. The Indenture Trustee shall, at the expense of the Noteholders, furnish
the Servicer, or at the request of the Servicer, any subservicer, with any
powers of attorney and other documents necessary or appropriate to enable PWCC
or subservicer to carry out its servicing and administrative duties hereunder.
Notwithstanding the appointment by the Servicer of a subservicer hereunder, the
Servicer shall remain primarily liable for the full performance of its
obligations hereunder during the term of this Agreement.
(c) The Servicer and its subservicers shall conduct any management,
servicing, administration, collection or enforcement actions in the following
manner:
(i) The Servicer, as agent for and on behalf of the Issuer and
the Indenture Trustee, shall enforce the payment of all claims by the
Obligors and shall pursue any available claims against state guaranty
insurance funds. All Recoveries and Policy Proceeds in respect of any
Policy that are received by the Servicer shall be remitted to the
Indenture Trustee for deposit in the Collection Account pursuant to
Section 3.03(a) hereof; and
(ii) The Servicer may xxx to enforce or collect upon Policies
as agent for the Issuer and the Indenture Trustee on behalf of the
Noteholders. If the Servicer elects to commence a legal proceeding to
enforce a Policy, the act of commencement shall be deemed to be an
automatic assignment of the Policy to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Policy on the
ground that it is not an owner of the Policy, then the Indenture
Trustee on behalf of the Noteholders shall, at the Servicer's request,
take such steps as the Servicer deems necessary and instructs the
Indenture Trustee in writing to take to enforce the Policy, including
bringing suit in its name or the name of the Issuer, as beneficial
owner of the Policy, or the name of the Indenture Trustee, and the
Indenture Trustee shall be indemnified by the Servicer for any such
action taken.
Section 5.02 Servicer Standard of Care.
------------ -------------------------
In managing, administering, servicing and enforcing collections on the
Policies pursuant to this Agreement, the Servicer will exercise that degree of
skill and care consistent with industry standards for servicing of insurance
policy portfolios, and that which the Servicer customarily exercises (or did
exercise) with respect to similar life insurance policies owned by it and as
described in the Operations Manual, and in any event, in a prudent and
commercially reasonable manner. The Servicer shall punctually perform all of its
obligations and agreements under this Agreement and shall comply with all
applicable federal and state laws and regulations, shall maintain all state and
federal licenses and franchises necessary for it to perform its servicing
responsibilities hereunder, and shall not materially impair the rights of the
Issuer, the Indenture Trustee, or the Noteholders in any Policy or payments of
Policy Proceeds thereunder. Notwithstanding the foregoing, any written
instructions from the Majority Noteholders to discontinue payment of premiums on
a Policy shall be deemed a waiver of any further obligations of the Servicer
hereunder with respect to such Policy. The Servicer shall deliver copies of any
material amendments or modifications of the Operations Manual to the Indenture
Trustee upon adoption, and shall not implement any material amendment or
modification to the Operations Manual with respect to the Policies without the
prior written approval of the Majority Noteholders.
16
Section 5.03 Servicer Remittances.
------------ --------------------
The Servicer shall, to the extent feasible, notify each Obligor to
remit all Policy Proceeds to the Indenture Trustee at such address provided in
writing by the Indenture Trustee to the Servicer. If any Policy Proceeds are
inadvertently remitted to the Servicer, the Servicer shall forward such Policy
Proceeds, including any Recoveries, in the same form in which received (which
may be by check, properly endorsed as required for the Indenture Trustee to
collect them) to the Indenture Trustee within one Business Day of receipt
thereof for deposit in the Collection Account (if by check, when such check
clears, and which shall be deemed to have cleared no later than the second
Business Day after receipt by the Indenture Trustee). Prior to or simultaneous
with such remittance, the Servicer shall telecopy notice to the Indenture
Trustee describing such deposit. Until so forwarded to the Indenture Trustee,
any Policy Proceeds held by the Servicer shall be held in trust for the benefit
of the Holders of the Notes. Nothing contained herein shall be interpreted to
require the Indenture Trustee to advance funds for deposit of Policy Proceeds in
the Collection Account.
Section 5.04 Financing Statements; Title Filings.
------------ -----------------------------------
The Servicer has made all Uniform Commercial Code filings on behalf of
the Issuer as were required pursuant to the terms of the original Amended and
Restated Indenture and the Amended and Restated Indenture. The Servicer shall,
at the expense of the Issuer, be responsible for taking such steps as are
necessary to maintain perfection of such security interests. The Indenture
Trustee hereby authorizes the Servicer to re-perfect or to cause the
re-perfection of such security interest on its behalf as Indenture Trustee, as
necessary.
Section 5.05 Filing Claims.
------------ -------------
Upon the Servicer's knowledge of a Policy's Maturity, the Servicer
shall obtain the death certificate concerning the related Insured and shall
promptly file a claim with the related Obligor for the payment of Policy
Proceeds. In order to ensure prompt knowledge of a Policy's maturity, the
Servicer shall monitor the health and status of each Insured, in accordance with
the Operations Manual.
Section 5.06 Premium Payments.
------------ ----------------
(a) All premiums due with respect to any Policy shall be payable at the
sole discretion of the Noteholders out of funds made available by the
Noteholders in accordance with the Amended and Restated Indenture and the Master
Agreement.
(b) In order to ensure the prompt and timely payment of premiums, the
Servicer shall maintain a checking account to be used for the payment of
premiums and shall keep detailed records for each Policy specifying (i) the date
premiums are due, (ii) the frequency of premium payments, (iii) the amount of
each premium payment, (iv) the cumulative amount of premiums that have been paid
since each Policy was acquired by PWCC or the Issuer, (v) the check number of
each premium payment, (vi) the date premiums were paid, and (vii) whether a
confirmation of receipt of payment from the related Obligor was received or
whether the check for such premium payment cleared the bank account on which
such check was drawn. The Servicer shall update such information daily and, upon
reasonable request, shall provide the Noteholders with electronic access to such
updated information. In addition, each month the Servicer shall provide written
summaries and diskettes of such information to the Indenture Trustee and the
Noteholders and shall upon request forward, or caused to be forwarded, to the
Indenture Trustee or Noteholders a copy of any cancelled checks received during
the prior month from the payment of premiums on the Policies.
17
(c) Notwithstanding the foregoing, the Servicer shall have no
obligation to make advances to cover the payment of any premium with respect to
any Policy and shall have no obligation or liability for any adverse
consequences caused by the lapse of any Policy either at the written direction
of the Majority Noteholders in accordance with the Amended and Restated
Indenture or otherwise due solely to the failure by the Noteholders to timely
advance funds for the payment of any premium pursuant to Section 8.01 of the
Amended and Restated Indenture.
Section 5.07 Servicing Compensation.
------------ ----------------------
As compensation for agreeing to perform servicing obligations under
this Agreement, the Servicer shall be entitled to receive the Total Servicing
Fee. Except as otherwise provided in Section 8.01 hereof or in the Master
Agreement, the Total Servicing Fee shall be paid monthly pursuant to Section
12.02 of the Amended and Restated Indenture in an amount not less than the
Monthly Servicing Fee, commencing on April 12, 2000 and ending on the July 12,
2002. So long as no Servicer Event of Default has occurred and is continuing,
the Servicer shall be entitled to receive the Total Servicing Fee whether or not
the Servicer's obligations hereunder are terminated prior to the Scheduled
Servicer Termination Date. Subject to the written approval of the Noteholders in
accordance with Section 12.02(d)(i) of the Amended and Restated Indenture, the
Servicer shall also be reimbursed for all out-of-pocket expenses incurred by it
in connection with its servicing activities hereunder, under the Amended and
Restated Indenture and the Master Agreement, including, without limitation, the
payment of fees and expenses incurred in connection with hiring subservicers and
other independent contractors, providing reports to the Indenture Trustee, the
Issuer and Noteholders and for reasonable costs and expenses incurred by it
(including reasonable attorney's fees and expenses) in connection with the
realization, attempted realization or enforcement of rights and remedies upon
Defaulted Policies. In the event of a termination of the Servicer resulting from
the discharge of the Amended and Restated Indenture pursuant to the terms of
Section 5.02 of the Amended and Restated Indenture prior to the Scheduled
Servicer Termination Date, the Servicer shall be due the remainder of the Total
Servicing Fee then unpaid for each Payment Date through and including the
Payment Date in June, 2002 as if the Amended and Restated Indenture continued in
force through that date, with such compensation being payable by the application
of proceeds from the Trust Estate in the order provided for in Section 5.02 of
the Amended and Restated Indenture.
Section 5.08 Back-End Sourcing Agent Fees.
------------ ----------------------------
Upon receipt of any amounts payable under the Amended and Restated
Indenture for Back-End Sourcing Agent Fees, the Servicer shall remit payment of
such Back-End Sourcing Agent Fee to the applicable Back-End Sourcing Agent.
Section 5.09 Monthly Servicing Reports.
------------ -------------------------
No later than 3:00 P.M., New York time, on each Submission Date, the
Servicer shall deliver the Monthly Servicing Report to the Indenture Trustee,
who shall verify (to the extent it has been furnished the information necessary
to perform such function) the information contained therein in accordance with
Section 12.06 of the Amended and Restated Indenture. Upon verification of the
Monthly Servicing Report by the Indenture Trustee, the Servicer shall deliver
the Monthly Servicing Report to the Issuer and the Noteholders.
Section 5.10 Financial Statements; Certification as to Compliance;
------------ -----------------------------------------------------
Notice of Default.
-----------------
(a) The Servicer will deliver to the Indenture Trustee, the Issuer and
to each Noteholder:
18
(i) within 90 days after the end of each fiscal year of the
Servicer, commencing with the fiscal year ending December 31, 1995, a
copy of the Servicer's financial statements, all in reasonable detail
and accompanied by an opinion of the Independent Accountants stating
that such financial statements present fairly the financial condition
of the Servicer and have been prepared in accordance with generally
accepted accounting principles consistently applied (except for changes
in application in which such accountants concur), and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting
records and such other auditing procedures as were considered necessary
in the circumstances;
(ii) with each set of financial statements delivered pursuant
to subsection (a)(i) above, the Servicer will deliver an Officer's
Certificate stating that such officer has reviewed the relevant terms
of the Indenture and this Agreement and has made, or caused to be made,
under such officer's supervision, a review of the transactions and
condition of the Servicer during the period covered by the financial
statements then being furnished, that the review has not disclosed the
existence of any Servicer Default or Servicer Event of Default or, if a
Servicer Default or a Servicer Event of Default exists, describing its
nature and what action the Servicer has taken and is taking with
respect thereto, and that on the basis of such review the officer
signing such certificate is of the opinion that during such period the
Servicer has serviced the Policies in compliance with the procedures
hereof except as disclosed in such certificate.
(iii) immediately upon becoming aware of the existence of any
condition or event which constitutes a Servicer Default or a Servicer
Event of Default, a written notice describing its nature and period of
existence and what action the Servicer is taking or proposes to take
with respect thereto;
(iv) promptly upon the Servicer's becoming aware of:
(A) any proposed or pending investigation of
it, the Issuer or any Key Employee by any governmental
authority or agency, or
(B) any pending or proposed court or administrative
proceeding which involves or may involve the possibility of
materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of
the Servicer or Issuer,
a written notice specifying the nature of such investigation or
proceeding and what action the Servicer is taking or proposes to take
with respect thereto and evaluating its merits;
(v) with reasonable promptness any other data and information
with respect to the Servicer or the Policies which may be reasonably
requested from time to time, including without limitation any
information required to be made available at any time to any
prospective transferee of any Notes in order to satisfy the
requirements of Rule 144A under the Securities Act of 1933, as amended;
and
(vi) quarterly, within 30 days of the end of each fiscal
quarter, commencing with the quarter ended March 31, 1995, unaudited
versions of the Servicer's balance sheet and income statement and
statement of sources and uses of cash.
19
(b) On or before April 15 of each year commencing April 15, 2000, so
long as any of the Notes are outstanding, the Servicer shall furnish to the
Indenture Trustee an Officer's Certificate either stating that action has been
taken with respect to the recording, filing, and rerecording and refiling of any
financing statements and continuation statements as necessary to maintain the
interest of the Indenture Trustee created by the Indenture with respect to the
Trust Estate and reciting the details of such action or stating that no such
action is necessary to maintain such interest. Such Officer's Certificate shall
also describe the recording, filing, rerecording and refiling of any financing
statements and continuation statements that will be required to maintain the
interest of the Indenture Trustee in the Trust Estate until the date such next
Officer's Certificate is due.
Section 5.11 Annual Independent Accountants' Reports.
------------ ---------------------------------------
(a) With respect to each fiscal year of the Servicer ending on or
before the Scheduled Servicer Termination Date, the Servicer shall cause the
Independent Accountants (who may also render and deliver other services to the
Servicer and its Affiliates) to prepare a statement to the Indenture Trustee,
the Issuer and the Noteholders, dated as of the close of such fiscal year, to
the effect that such firm has examined the accounts and records of the Servicer
and the Issuer relating to the servicing of the Policies as of the previous
December 31 and that, on the basis of such examination, nothing has come to the
Independent Accountant's attention to indicate that the Servicer has not
maintained such information or performed its obligations in accordance with the
requirements of this Agreement , except for (a) such exceptions as the
Independent Accountants shall believe to be immaterial and (b) such other
exceptions as shall be set forth in such statement. The Servicer shall deliver
to the Indenture Trustee, the Issuer and the Noteholders a copy of any such
statement within 90 days of the close of the relevant fiscal year.
Section 5.12 Access to Certain Documentation and Information.
------------ -----------------------------------------------
(a) The Servicer shall provide to each Noteholder copies of any report,
document, correspondence or other information concerning the Trust Estate, the
Issuer or the Servicer that is contemporaneously being provided to the Indenture
Trustee. The Indenture Trustee shall provide to each Noteholder copies of any
report, document, correspondence or other information concerning the Trust
Estate, the Issuer or the Servicer that is contemporaneously being provided to
the Servicer. Furthermore, each Noteholder and its representatives may upon
reasonable advance notice to the Servicer or the Issuer have access to the
Servicer's or the Issuer's premises, respectively, and have access to any
information recorded in any form (including without limitation computer data and
software) concerning the Trust Estate or the Issuer that is in the possession or
under the control of the Servicer or the Issuer, including the ability to make
copies of all such information. The Servicer will also provide any other
non-proprietary, non-confidential information or documents reasonably requested
and will cooperate to obtain any records or documents that are not within its
possession or control relating to the Trust Estate.
(b) At all times during the term hereof, the Servicer shall keep
available at its principal executive office for inspection by Noteholders, the
Indenture Trustee and the Issuer copies of all Documentation and copies of the
Policy Schedule. Notwithstanding the foregoing, for all purposes of this
Agreement and the Amended and Restated Indenture, the Policy Schedule maintained
by the Indenture Trustee shall be the definitive Policy Schedule, absent
manifest error.
(c) The Servicer will maintain accounts and records as to each
respective Policy serviced by the Servicer that are accurate and sufficiently
detailed as to permit (i) the reader thereof to know as of the most recent
Calculation Date the status of such Policy, including the payment of any Policy
Proceeds and Recoveries received or owing (and the nature of each) thereon and
(ii) the reconciliation between payments of Policy Proceeds or Recoveries on (or
with respect to) each Policy and the amounts from time to time
20
deposited in the Collection Account in respect of such Policy.
(d) The Servicer will maintain all of its accounts and records
(including any back-up computer archives) such that, from and after the Closing
Date and each Acquisition Date and the grant of the security interest in the
related Policy to the Indenture Trustee, any reference therein to any such
Policy indicates clearly that the Policy and the related Documentation are owned
by the Issuer and pledged to the Indenture Trustee for the benefit of the
Noteholders. Indication of the Indenture Trustee's interest in a Policy will be
deleted from or modified on the Servicer's accounts and records and the Monthly
Servicing Report when, and only when, the Policy Proceeds thereon have been paid
in full, the Policy is replaced with a Substitute Policy or the Policy is
repurchased by PWCC or the Owner.
(e) Nothing in this Section 5.12 shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Insureds, the Obligors or the Policies and the failure to provide
information otherwise required by this Section 5.12 as a result of such
observance by the Servicer, shall not constitute a breach of this Section 5.12.
(f) All information obtained by the Indenture Trustee or any Noteholder
regarding the Insureds, the Obligors or the Policies, whether upon exercise of
its rights under this Section 5.12 or otherwise, shall be maintained by the
Indenture Trustee or the Noteholder, as applicable, in confidence and shall not
be disclosed to any other Person, unless and to the extent that such disclosure:
(i) is required by regulation, law or court order or requested by appropriate
governmental or regulatory authorities; (ii) is made by the Indenture Trustee or
a Noteholder to its respective officers, directors, auditors, attorneys,
employees, professional consultants or agents who would have access to such
information in the normal course of the performance of such Person's duties;
(iii) is made to Noteholders, prospective Noteholders, or other parties to the
Transaction Documents; (iv) is required or requested by the NAIC Securities
Valuation Office from a Noteholder; (v) is necessary to enforce any of the
provision of the Transaction Documents; or (vii) with respect to the Indenture
Trustee, shall, in the sole opinion of the Indenture Trustee, be required to
exercise any of its rights or perform any of its obligations under the Amended
and Restated Indenture, provided that the Indenture Trustee will use its best
efforts to provide prior notice of such disclosure to the Issuer.
Section 5.13 Other Necessary Data.
------------ --------------------
The Servicer shall, on request of the Indenture Trustee or any
Noteholder, on reasonable notice, (i) furnish the Indenture Trustee and the
Noteholders with such additional data as is necessary for the administration of
the Trust Estate as can be reasonably generated by the Servicer's existing data
processing systems, and (ii) on and after termination of the Servicer as
servicer hereunder, immediately provide the Indenture Trustee and such
Noteholders with access to the Servicer's existing data processing systems and
any files or records with respect to the Policies that it may have.
Section 5.14 Indenture Trustee to Cooperate.
------------ ------------------------------
Upon payment in full of any Policy Proceeds, the Servicer will notify
the Indenture Trustee thereof on the next succeeding Submission Date, which
notification may be in the Monthly Servicing Report, and shall include a
statement to the effect that all amounts received in connection with such Policy
which are required to be deposited in the Collection Account pursuant to Section
3.03 hereof have been so deposited. The Servicer is authorized to execute an
instrument in satisfaction of such Policy and to do such other acts and execute
such other documents as it deems necessary to discharge the Obligor thereunder.
The Servicer shall determine when Policy Proceeds with regard to a Policy have
been paid in full. Upon the written request of the Servicer and subject to the
Indenture Trustee's rights to indemnity contained herein and in the
21
Amended and Restated Indenture, the Indenture Trustee shall perform such other
acts as reasonably requested in writing by the Servicer and otherwise cooperate
with the Servicer in enforcement of the Noteholders' rights and remedies with
respect to Policies.
22
ARTICLE SIX
-----------
[Reserved]
----------
ARTICLE SEVEN
-------------
SERVICER EVENTS OF DEFAULT
--------------------------
Section 7.01 Servicer Events of Default.
------------ --------------------------
(a) Any of the following acts or occurrences shall constitute a
Servicer Event of Default:
(i) Any failure by the Servicer to deliver to the Indenture
Trustee for payment to Noteholders any Policy Proceeds in respect of
the Trust Estate required to be so delivered under the terms of the
Amended and Restated Indenture and this Agreement that continues
unremedied until 1:00 P.M., New York time, on the second Business Day
following the Payment Date; provided, however, that the Indenture
Trustee, upon receiving actual knowledge of such failure, shall give
the Servicer prompt written, telecopied or telephonic notice of such
failure. Notwithstanding the foregoing, any failure by the Indenture
Trustee to deliver such notice to the Servicer shall not prevent the
occurrence of a Servicer Event of Default; or
(ii) Any failure by the Servicer to deliver a Monthly
Servicing Report pursuant to Section 6.01 hereof that continues
unremedied until 1:00 P.M., New York time, the following Business Day;
provided, however, that if the Servicer has not delivered the Monthly
Servicing Report by 5:00 P.M., New York time, on the Submission Date,
the Indenture Trustee shall give the Servicer prompt written,
telecopied or telephonic notice of such failure. Notwithstanding the
foregoing, any failure by the Indenture Trustee to deliver such notice
to the Servicer shall not prevent the occurrence of a Servicer Event of
Default; or
(iii) Any failure on the part of the Servicer duly to observe
or perform in any material respect any other covenants or agreements of
the Servicer set forth in this Agreement or the Amended and Restated
Indenture, as the case may be, or if any representation or warranty of
the Servicer set forth in Section 3.02 hereof shall prove to be
incorrect, which failure or breach (A) is likely to have or has had a
material adverse effect on the interests or rights of the Indenture
Trustee or the Noteholders and (B) continues unremedied for a period of
30 days after the date on which (x) the Servicer becomes aware of such
failure or breach or (y) written notice of such failure or breach
requiring the situation giving rise to such breach or non-conformity to
be remedied, shall have been given to the Servicer by the Indenture
Trustee or the Issuer, or to the Servicer and the Indenture Trustee by
Holders of Notes representing not less than 25% of the Outstanding
Principal Balance; or
(iv) Any assignment by the Servicer to a delegate of its
duties or rights under this Agreement, except as specifically permitted
hereunder, or any attempt to make such an assignment; or
(v) The entry of a decree or order for relief by a court
having jurisdiction in respect of the Servicer or a petition against
the Servicer in an involuntary case under any federal bankruptcy laws,
as now or hereafter in effect, or any other present or future federal
or state bankruptcy insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official for the Servicer or for any substantial part of
its property, or ordering the winding up or liquidation of the affairs
of the Servicer and the continuance of any such decree or order
24
unstayed and in effect for a period of 60 consecutive days; or
(vi) The commencement by the Servicer of a voluntary case
under any federal bankruptcy laws, as now or hereafter in effect, or
any other present or future federal or state bankruptcy, insolvency,
reorganization or similar law, or the consent by the Servicer to the
appointment of or taking possession by a conservator, receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official in any insolvency, readjustment of debt, marshalling of assets
and liabilities, bankruptcy or similar proceedings of or relating to
the Servicer or relating to a substantial part of its property, or the
making by the Servicer of an assignment for the benefit of creditors,
or the failure by the Servicer generally to pay its debts as such debts
become due or if the Servicer shall admit in writing its inability to
pay its debts as they become due, or the taking of corporate action by
the Servicer in furtherance of any of the foregoing; or
(vii) The Servicer (if PWCC is then the Servicer) fails,
within 45 days after entry, to pay, bond, or otherwise discharge any
judgment in excess of $250,000, unless such judgment is then stayed on
appeal; or
(viii) The Servicer (if PWCC is then the Servicer) defaults in
the payment of any principal or interest due in excess of $250,000 in
the aggregate and such default is not waived or cured within any
applicable grace period; or
(ix) Any Event of Default under the Indenture occurs that is
not waived and that is not attributable solely to an act or omission of
the Indenture Trustee in its capacity as Indenture Trustee under the
Indenture.
(b) So long as a Servicer Event of Default shall not have been remedied
within the period set forth in (i), (ii) or (iii) above, as applicable, or if a
Servicer Event of Default described in (iv), (vii) or (viii) above occurs, the
Issuer may, or the Indenture Trustee shall upon instruction by the Majority
Noteholders, or if a Servicer Event of Default described in (v) or (vi) above
occurs, the Indenture Trustee shall upon receiving written notice thereof, by
notice (the "Servicer Default Notice") then given in writing to the Servicer
terminate all, but not less than all, of the rights and obligations of the
Servicer under this Agreement.
(c) On or after the receipt by the Servicer of a Servicer Default Notice
and the assumption of duties by the successor Servicer, all authority and power
of the Servicer under this Agreement, whether with respect to the Notes or the
Policies or otherwise, shall pass to and be vested in the successor Servicer
appointed pursuant to Section 8.03 hereof. The Indenture Trustee shall not be
deemed to have actual knowledge of a Servicer Event of Default (other than under
paragraphs (i) and (ii) above), until a Responsible Officer of the Indenture
Trustee shall have received written notice or actual knowledge thereof. In
addition to any other amounts that are then payable to the Servicer under this
Agreement, the Servicer shall be entitled to receive reimbursements for any
unreimbursed payments of premiums made during the period or any other expenses
previously approved by the Noteholders prior to the delivery of a Servicer
Termination Notice pursuant to this Section 7.01 which terminates the
obligations and rights of the Servicer hereunder.
25
ARTICLE EIGHT
-------------
TERM AND TERMINATION
--------------------
Section 8.01 Termination of this Agreement.
------------ -----------------------------
(a) Except with respect to a particular party under Sections 4.01(b),
4.01(1), 8.02 or 9.05 hereof, the respective duties and obligations of the
Servicer, PWCC and the Indenture Trustee created by this Agreement shall
terminate upon the earlier of (i) the discharge of the Amended and Restated
Indenture in accordance with Sections 5.01 or 5.02 thereof, and (ii) the
Scheduled Servicer Termination Date.
(b) Prior to the termination of this Agreement pursuant to paragraph
(a) of this Section 8.01, the Majority Noteholders may, upon 30 days advance
written notice to the Servicer and the Indenture Trustee (the "Servicer
Termination Notice"), terminate the duties and obligations of the Servicer
hereunder, in which case the Servicer shall be paid in full any remaining unpaid
portion of the Total Servicing Fee on or before the effective date of such
termination.
Section 8.02 The Servicer Not to Resign.
------------ --------------------------
The Servicer shall not resign from the duties and obligations hereby
imposed on it except upon breach by the Issuer, Indenture Trustee and/or the
Noteholders of their obligation to pay the Servicer the Servicing Fee and
reimburse its expenses hereunder and under the Amended and Restated Indenture.
Section 8.03 Indenture Trustee to Act; Appointment of Successor
------------ --------------------------------------------------
Servicer
--------
(a) On and after the time the Servicer receives a Servicer Termination
Notice pursuant to Section 8.01(b) hereof or a Servicer Default Notice pursuant
to Section 7.01(b) hereof, the Indenture Trustee shall, unless it is prevented
by law, automatically and without further action become and assume the duties of
the successor Servicer. If the Indenture Trustee cannot serve as successor
Servicer, within 60 days, the Issuer shall appoint another firm acceptable to
the Majority Noteholders, as evidenced by their written consent. The outgoing
Servicer shall indemnify such successor Servicer for any and all acts and
omissions of such outgoing Servicer that occurred prior to the date the
successor Servicer assumed its duties and the outgoing Servicer shall continue
to serve in such capacity until the successor Servicer assumes its duties.
(b) The successor Servicer shall be the successor in all respects to
the Servicer in its capacity as Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof other than with respect to the origination
and sourcing of new policies; provided, however, that the successor Servicer
-------- -------
shall not be liable for any acts or omissions of the outgoing Servicer or for
any breach by the outgoing Servicer of any of its representations and warranties
contained herein or in any related document or agreement. With the prior written
consent of the Issuer and Majority Noteholders, the successor Servicer may
subcontract with another firm to act as subservicer so long as the successor
Servicer remains fully responsible and accountable for the performance of all
obligations of the Servicer on and after the time the Servicer receives the
Servicer Termination Notice or Servicer Default Notice. The successor Servicer
shall be entitled to the Servicing Fee as provided herein.
(c) The Servicer, the Issuer, the Indenture Trustee and such successor
Servicer shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. The Servicer
26
agrees to fully, completely and unequivocally cooperate with the Indenture
Trustee and any successor Servicer in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing hereunder,
including the transfer to such Successor Servicer of all authority of the
Servicer to service the Policies provided for under this Agreement and the
Amended and Restated Indenture and all authority over Policy Proceeds, Premium
Account, and other portions of the Trust Estate within the possession or the
control of the Servicer, or which shall thereafter be received with respect to
the Trust Estate, and in assisting the Successor Servicer. The Servicer shall
within five Business Days transfer its records relating to the Trust Estate
(maintained through electronic, optical or any other means of data storage) to
the successor Servicer in such form as the successor Servicer may reasonably
request and shall promptly transfer to the successor Servicer all the records,
correspondence and documents necessary for the continued servicing of the
Policies in the manner and at such times as the successor Servicer shall
reasonably request. The Indenture Trustee (or the Noteholders if such
Noteholders have previously reimbursed the Indenture Trustee therefor) shall be
reimbursed by the outgoing Servicer for costs and expenses, if any, incurred in
connection with the assumption of responsibilities of the successor Servicer,
upon receipt of documentation of such costs and expenses.
Section 8.04 Notification to Noteholders.
------------ ---------------------------
Upon any termination of, or appointment of a successor to, the Servicer
pursuant to Article Seven hereof or this Article Eight, the Indenture Trustee
shall give prompt written notice thereof to the Noteholders at their respective
addresses appearing in the Note Register.
Section 8.05 Waiver of Past Defaults.
------------ -----------------------
The Indenture Trustee shall, at the written direction of the Majority
Noteholders, on behalf of all Noteholders, waive any default by the Servicer in
the performance of its obligations hereunder and its consequences, other than a
default that results in an Event of Default under clauses (i) or (ii) of Section
6.01 of the Indenture or a default of the type set forth in clause (v) or (vi)
of Section 7.01(a) hereof, which waiver shall require the consent of each
Noteholder. Upon any such waiver of a past default, such default shall cease to
exist to the extent expressly waived, and any Servicer Event of Default arising
therefrom shall be deemed to have been remedied to extent expressly waived. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly waived.
Section 8.06 Effects of Termination of Servicer.
------------ ----------------------------------
(a) Upon the termination of this Agreement or the Servicer pursuant to
Sections 7.01 or 8.01 hereof, the Servicer shall pay all monies with respect to
the Policies held by the Servicer, to which the Servicer is not otherwise
entitled, to the Issuer or upon the Issuer's order.
(b) After the assumption of servicing duties by the successor Servicer,
the outgoing Servicer shall have no further obligations with respect to the
management, administration, servicing, enforcement, custody or collection of the
Policies and the successor Servicer shall have all of such obligations, except
that the outgoing Servicer will transmit or cause to be transmitted directly to
the successor Servicer, promptly on receipt and in the same form in which
received, any amounts held by the outgoing Servicer (properly endorsed where
required for the successor Servicer to collect them) received as payments upon
or otherwise in connection with the Policies and diligently assist in the
transition to the successor. The outgoing Servicer's indemnification obligations
pursuant to Section 4.01(b) hereof will survive the termination of the Servicer
but will not extend to any acts or omissions of a successor Servicer.
27
Section 8.07 No Effect on Other Parties.
------------ --------------------------
Upon any termination of the rights and powers of the Servicer pursuant
to Sections 7.01 or 8.01(b) hereof, or upon any appointment of a successor
Servicer, all the rights, powers, duties and obligations of the other parties
under this Agreement and the Amended and Restated Indenture shall remain
unaffected by such termination or appointment and shall remain in full force and
effect.
28
ARTICLE NINE
------------
MISCELLANEOUS
-------------
Section 9.01 Amendments.
------------ ----------
(a) This Agreement may be amended from time to time in writing signed
by each of the Issuer, the Servicer, PWCC and the Indenture Trustee, with the
consent of the Majority Noteholders, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Agreement; provided, however, that no such amendment shall, without the consent
-------- -------
of each Noteholder, (i) alter the priorities with which any allocation of funds
shall be made hereunder; (ii) permit the creation of any lien on the Trust
Estate (other than the lien of the Amended and Restated Indenture) or any
portion thereof or deprive any such Noteholder of the benefit of this Agreement
with respect to the Trust Estate or any portion thereof; or (iii) modify this
Section 9.01.
(b) Promptly after the execution of any amendment, the Servicer shall
send to the Indenture Trustee and each Holder of the Notes a conformed copy of
each such amendment.
(c) It shall not be necessary, in any consent of Noteholders under this
Section 9.01, to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consent and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable regulations
as the Indenture Trustee may prescribe.
(d) Any amendment or modification effected contrary to the provisions
of this Section 9.01 shall be void.
(e) The Indenture Trustee shall be entitled to obtain upon request an
Officer's Certificate and/or Opinion of Counsel covering such matters as it may
require in connection with entering into any such amendments.
Section 9.02 Governing Law.
------------ -------------
This Agreement shall be construed in accordance with the internal laws
of the State of New York, without regard to choice of law principals.
Section 9.03 Notices.
------------ -------
Unless otherwise specifically provided herein, all demands, notices,
directions, and all other communications hereunder shall be in writing and shall
be delivered or mailed by registered or certified United States mail, postage
prepaid, and addressed: (i) in the case of PWCC, to 0000 Xxxxxxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxxxx, XX 00000, Tel. (000) 000-0000, Fax (000) 000-0000
Attention: Xxxx Xxxxxx; (ii) in the case of the Indenture Trustee, to Bankers
Trust Company, Xxxx Xxxxxx Xxxxxx, Xxx Xxxx, X.X. 00000, (000) 000-0000, Fax
(000) 000-0000, Attention: Xx. Xxx Xxxxx, Corporate Trust and Agency
Group/Structured Finance Group; (iii) in the case of the Issuer, to 0000
Xxxxxxxxxx Xxxxxx, Xxxxx 000X, Xxx Xxxxxxxxx, XX 00000, Attention: Xxxx Xxxxxx;
and (iv) in the case of the Noteholders, to the address for each Noteholder
specified in the Note Register. All notices and demands shall be deemed to have
been given either at the time of the delivery thereof to any officer of the
Person entitled to receive such notices and demands at the address of such
Person for notices hereunder, or on the third day after the mailing thereof to
29
such address, as the case may be. Any Person may change the address for notices
hereunder by giving notice of such change to the other Person.
Section 9.04 Separability Clause; Conflict with Amended and Restated
------------ -------------------------------------------------------
Indenture.
---------
Any provisions of this Agreement which are prohibited or unenforceable
in any jurisdiction shall, 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 shall not invalidate or render unenforceable such provision in any
other jurisdiction. If any term or provision of this Agreement conflicts with
any term or provision of the Amended and Restated Indenture, the Amended and
Restated Indenture shall control for all purposes of this Agreement.
Section 9.05 Assignment.
------------ ----------
This Agreement may not be assigned or delegated by the Issuer to anyone
other than the Indenture Trustee, for the benefit of the Noteholders. PWCC and
any successor Servicer may assign this Agreement only with the approval of the
Majority Noteholders.
Section 9.06 Further Assurances.
------------ ------------------
Each of the Servicer, PWCC, the Indenture Trustee and the Issuer agrees
to do such further acts and things and to execute and deliver to the other such
additional assignments, agreements, powers and instruments as are required by
any party to carry into effect the purposes of this Agreement or to better
assure and confirm unto the other party its rights, powers or remedies
hereunder. If PWCC is no longer the Servicer and any Obligor shall be in default
under any Policy, upon reasonable request from the Servicer, PWCC will take all
reasonable steps to assist in enforcing such Policy and preserving and
maintaining title to the Policies against the claims of all persons and parties
to the extent PWCC is capable of performing such requested steps and the
Servicer reasonably determines that the assistance of PWCC is necessary to
effect the intent and purposes hereof.
Section 9.07 No Waivers; Cumulative Remedies.
------------ --------------------------------
No failure to exercise and no delay in exercising, on the part of the
Issuer, PWCC or the Indenture Trustee, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise of any right, remedy, or privilege hereunder preclude any other or
further exercise hereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies, powers and privilege
provided by law.
Section 9.08 Binding Effect; Third Party Beneficiaries.
------------ ------------------------------------------
This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. All
servicing provisions hereof shall inure to the benefit of the Noteholders.
Section 9.09 Set-Off.
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(a) PWCC and any successor Servicer hereby irrevocably and
unconditionally waive all right of set-off that it may have under contract
(including this Agreement), applicable law or otherwise with
30
respect to any funds or monies of the Issuer at any time held by or in the
possession of such party.
(b) The Issuer shall have the right to set-off against PWCC any amounts
to which PWCC may be entitled and to apply such amounts to any claims the Issuer
may have against PWCC from time to time under this Agreement. Upon any such
set-off the Issuer shall give notice of the amount thereof and the reasons
therefor.
Section 9.10 Counterparts.
------------ ------------
This Agreement may be executed in one or more counterparts all of which
together shall constitute one original document.
Section 9.11 Article Headings and Captions.
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The article headings and captions herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
Section 9.12 Legal Holidays.
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In the case where the date on which any action required to be taken,
document required to be delivered or payment required to be made is not a
Business Day, such action, delivery or payment need not be made on such date,
but may be made on the next succeeding Business Day.
Section 9.13 Assignment for Security for the Notes.
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PWCC understands that the Issuer will assign to and grant to the
Indenture Trustee a security interest in all its right, title and interest to
this Agreement. PWCC consents to such assignment and grant and further agree
that all representations, warranties, covenants and agreements of PWCC made
herein shall also be for the benefit of and inure to the Indenture Trustee and
all Holders from time to time of the Notes.
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IN WITNESS WHEREOF, PWCC, the Indenture Trustee and the Issuer
have caused this Amended and Restated Contribution, Sale and Servicing Agreement
to be duly executed by their respective officers thereunto duly authorized as of
the date and year first above written.
POINT WEST CAPITAL
CORPORATION
==================
By /s/ Xxxx X. Xxxxxx
-------------------------
President
DIGNITY PARTNERS FUNDING
CORP 1.
-------------------------
By /s/ Xxxx X. Xxxxxx
-------------------------
President
BANKERS TRUST COMPANY,
as Indenture Trustee
By /s/ Xxxxxx X. Xxxxxxxx
-------------------------
AVP
SCHEDULE I
POLICY SCHEDULE
EXHIBIT A
FORM OF DIGNITY PARTNER'S CERTIFICATE
TO: Dignity Partners Funding Corp. I
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000X
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Bankers Trust Company
0 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust and Agency Group
Structured Finance Team
The Amended and Restated Contribution, Sale and
Servicing Agreement, dated as of April 1, 2000 (the
"Amended and Restated Contribution, Sale and Servicing
Agreement"), by and among Point West Capital
Corporation, formerly known as Dignity Partners, Inc.
("PWCC" or the "Servicer"), Dignity Partners Funding
Corp. I (the "Issuer") and Bankers Trust Company (the
"Indenture Trustee")
Ladies and Gentlemen:
1. This Certificate is delivered pursuant to the Amended and Restated
Contribution, Sale and Servicing Agreement. Capitalized terms used herein shall
have the meanings assigned to such terms in the Amended and Restated
Contribution, Sale and Servicing Agreement.
2. PWCC hereby :
(a) transfers, assigns, sells and grants to the Issuer, without
recourse, except as provided in Section 3.03 of the Amended and
Restated Contribution, Sale and Servicing Agreement, as of the date
specified below, any and all of PWCC's right, title and interest in and
to all of the Policy Assets relating to each Policy identified on
Schedule I attached hereto (the "Subject Policies"), whether now
existing or hereafter arising;
(b) submits to the Indenture Trustee a Policy File for each of the
Subject Policies, together with each item listed in the definition of
"Documentation" in Section 1.01 of the Amended and Restated Indenture;
and
(c) represents and warrants to the Issuer and the Indenture Trustee as
secured party for the benefit of the Noteholders that (i) each item
listed in clauses (b), (e), (g) and (h) of the definition of
"Documentation" in Section 1.01 of the Amended and Restated Indenture
is an original, (ii) each Policy and each assignment referred to in
clause (d) of said definition has been executed, (iii) the Policy
Schedule correctly states the DP Policy Number, the Face Value, the
Obligor's name and the Insured's name for each of the Subject Policies,
(iv) the Subject Policies have been validly transferred and assigned to
the Issuer and are subject to a prior perfected security interest in
favor of the Indenture Trustee for the benefit of the Noteholders and (
v ) the Subject Policies constitute Eligible Policies.
POINT WEST CAPITAL CORPORATION
Date: By /s/ Xxxx X. Xxxxxx
--------------------- -------------------------
President
EXHIBIT B
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OPERATIONS MANUAL
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