===============================================================================
AMENDED AND RESTATED INDENTURE
among
POINT WEST CAPITAL CORPORATION
(formerly known as Dignity Partners, Inc.),
(the "Servicer"),
DIGNITY PARTNERS FUNDING CORP. I,
(the "Issuer"),
and
BANKERS TRUST COMPANY,
(the "Indenture Trustee")
SENIOR VIATICAL SETTLEMENT NOTES,
SERIES 1995-A
===============================================================================
Dated as of March 31, 2000
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS
Section 1.01 Definitions........................................ 2
ARTICLE TWO
THE NOTES
Section 2.01 Form Generally..................................... 19
Section 2.02 Form of Note....................................... 19
Section 2.03 Denomination....................................... 19
Section 2.04 Execution, Authentication, Delivery and Dating..... 19
Section 2.05 Temporary Notes.................................... 20
Section 2.06 Registration, Registration of Transfer and Exchange. 20
Section 2.07 Limitation on Transfer and Exchange................. 21
Section 2.08 Mutilated, Destroyed, Lost or Stolen Note........... 22
Section 2.09 Payment of Principal and Interest; Rights Preserved. 22
Section 2.10 Persons Deemed Owner................................ 23
Section 2.11 Cancellation........................................ 24
ARTICLE THREE
[INTENTIONALLY DELETED]
ARTICLE FOUR
ISSUANCE OF NOTES; COLLATERAL
Section 4.01 Conditions to Issuance of Notes..................... 29
Section 4.02 Security for Notes.................................. 29
Section 4.03 Acceptance of Appointment as Agent.................. 30
Section 4.04 Review of Documentation............................. 30
Section 4.05 Return and/or Repurchase of Policies................ 31
Section 4.06 Administration of the Policies...................... 31
Section 4.07 Substitution of Policies............................ 32
Section 4.08 Releases............................................ 32
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01 Satisfaction and Discharge of Indenture............. 33
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.01 Events of Default................................... 34
Section 6.02 Acceleration of Maturity; Rescission and Annulment.. 34
Section 6.03 [INTENTIONALLY DELETED]
Section 6.04 Remedies............................................ 36
Section 6.05 Optional Preservation of Trust Estate............... 37
Section 6.06 Indenture Trustee May File Proofs of Claim.......... 37
Section 6.07 Indenture Trustee May Enforce Claims Without
Possession of Notes................................. 38
Section 6.08 Application of Money Collected...................... 38
Section 6.09 Limitation on Suits................................. 39
Section 6.10 Unconditional Right of Noteholders to Receive
Principal and Interest.............................. 39
Section 6.11 Restoration of Rights and Remedies.................. 40
Section 6.12 Rights and Remedies Cumulative...................... 40
Section 6.13 Delay or Omission; Not Waiver....................... 40
Section 6.14 Control by Noteholders.............................. 40
Section 6.15 Waiver of Past Defaults............................. 41
Section 6.16 Undertaking for Costs............................... 41
Section 6.17 Waiver of Stay or Extension Laws.................... 42
Section 6.18 Sale of Trust Estate................................ 42
Section 6.19 Action on Notes..................................... 43
ARTICLE SEVEN
THE INDENTURE TRUSTEE
Section 7.01 Certain Duties and Responsibilities................. 44
Section 7.02 Notice of Default................................... 46
Section 7.03 Certain Rights of Indenture Trustee................. 46
Section 7.04 Not Responsible for Recitals or Issuance of Notes... 47
Section 7.05 May Hold Notes...................................... 48
Section 7.06 Money Held in Trust................................. 48
Section 7.07 Compensation and Reimbursement...................... 48
Section 7.08 Corporate Trustee Required; Eligibility............. 49
Section 7.09 Resignation and Removal; Appointment of Successor... 49
Section 7.10 Acceptance of Appointment by Successor.............. 50
Section 7.11 Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee....................... 51
Section 7.12 Co-Indenture Trustees and Separate Indenture
Trustees............................................ 51
Section 7.13 Maintenance of Office or Agency..................... 53
Section 7.14 Appointment of Authenticating Agent................. 53
Section 7.15 Money for Note Payments to be Held in Trust......... 54
ARTICLE EIGHT
[INTENTIONALLY DELETED]
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures with Consent of Noteholders. 58
Section 9.02 Execution of Supplement Indentures.................. 59
Section 9.03 Effect of Supplemental Indentures................... 59
Section 9.04 Reference in Notes to Supplemental Indentures....... 59
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01 Redemption at the Option of the Issuer; Election
to Redeem........................................... 60
Section 10.02 Notice to Indenture Trustee......................... 60
Section 10.03 Notice of Redemption by the Issuer.................. 60
Section 10.04 Notes Payable on Redemption Date.................... 61
ARTICLE ELEVEN
REPRESENTATIONS WARRANTIES AND COVENANTS
Section 11.01 Representations and Warranties...................... 61
Section 11.02 Covenants........................................... 64
Section 11.03 Other Matters as to the Issuer...................... 70
Section 11.04 Tax Treatment....................................... 70
ARTICLE TWELVE
ACCOUNTS AND ACCOUNTINGS
Section 12.01 Collection of Money................................. 71
Section 12.02 Collection Account; Redemption Account;
Tax Account......................................... 71
Section 12.03 Liquidity Account................................... 74
Section 12.04 Premium Account..................................... 76
Section 12.05 Reports by Indenture Trustee to Noteholders......... 78
Section 12.06 Monthly Servicing Reports........................... 78
ARTICLE THIRTEEN
PROVISION OF GENERAL APPLICATION
Section 13.01 General Provisions.................................. 80
Section 13.02 Acts of Noteholders................................. 80
Section 13.03 Notices; etc., to Indenture Trustee and Issuer...... 80
Section 13.04 Notices to Noteholders; Waiver...................... 81
Section 13.05 Effect of Headings and Table of Contents............ 82
Section 13.06 Successors and Assigns.............................. 82
Section 13.07 Separability........................................ 82
Section 13.08 Benefits of Indenture............................... 82
Section 13.09 Legal Holidays...................................... 82
Section 13.10 Governing Law....................................... 82
Section 13.11 Counterparts........................................ 82
Section 13.12 Corporate Obligation................................ 83
AMENDED AND RESTATED INDENTURE
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This AMENDED AND RESTATED INDENTURE (the "Indenture"), dated as of
March 31, 2000 (herein, as amended or supplemented from time to time as
permitted hereby, called this AIndenture@), is entered into among Point West
Capital Corporation , a Delaware corporation (formerly known as Dignity
Partners, Inc., together with its permitted successors and assigns, called the
"Servicer"), Dignity Partners Funding Corp. I, a Delaware corporation (the
"Issuer") and Bankers Trust Company, a New York banking corporation, as trustee
(herein, together with its permitted successors in the trusts hereunder, called
the AIndenture Trustee@).
PRELIMINARY STATEMENT
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The Issuer duly authorized the execution and delivery of the Indenture,
dated as of February 1, 1995 (the "Original Indenture"), among the Issuer, the
Servicer and the Indenture Trustee to provide for the issuance of the Issuer's
Senior Viatical Settlement Notes, Series 1995-A, Stated Maturity March 10, 2005
(the ANotes@), which Original Indenture was amended by Amendment No.1 to
Indenture, dated September 29, 1995, Amendment No.2 to Indenture, dated August
5, 1996, Amendment No.3 to Indenture, dated July 2, 1997 and Amendment No.4 to
Indenture, dated November 4, 1997. All covenants and agreements made by the
Issuer herein are for the benefit and security of the Noteholders. The Issuer is
entering into this Amended and Restated Indenture to amend and delete certain
provisions of the Original Indenture and modify the rights and obligations of
the parties therein as further provided herein.
All things necessary to make the Indenture a valid agreement of the
Issuer and the Indenture Trustee in accordance with its terms have been done.
GRANTING CLAUSE
To secure the payment of principal of and interest on the Notes in
accordance with their terms, the payment of all of the sums payable under this
Indenture and the performance of the covenants contained in this Indenture, the
Issuer hereby Grants to the Indenture Trustee, solely in trust and as collateral
security as provided in this Indenture, for the ratable benefit of the
Noteholders, all of the Issuer's rights, title and interest in and to the
following and any and all benefits accruing to the Issuer from, whether now
owned or existing or hereafter acquired, owned, existing or arising (whether
acquired by contract or operation of law) and wherever located: (a) the
Policies, the Documentation, the Policy Proceeds and any supplementary contracts
and documents executed in connection with the Policies, and all claims, options,
privileges, benefits, refunds, cash value, 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, all payments received
on or 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; (b) all amounts from time to time
on deposit in the Collection Account, the Premium Account, the Tax Account and
the Liquidity Account (including any such funds therein invested in Eligible
Investments, and other property in such accounts); (c) the Agency Agreement to
the extent that it relates to the Policies and the Contribution, Sale and
Servicing Agreement; and (d) 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) (all of the
foregoing being hereinafter referred to as the Collateral or Trust Estate).
The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions hereof and agrees to perform the
duties herein required to the best of its ability to the end that the interests
of the Noteholders may be adequately and effectively protected.
ARTICLE ONE
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DEFINITIONS
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Section 1.01 Definitions.
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Except as otherwise expressly provided herein or unless the context
otherwise requires, the following terms have the respective meanings set forth
below for all purposes of this Indenture, and the definitions of such terms are
equally applicable both to the singular and plural forms of such terms.
Capitalized terms used in this Indenture, but not defined herein shall have the
meaning set forth in the Contribution, Sale and Servicing Agreement.
"Act": With respect to any Noteholder, the meaning specified in Section
13.02.
"Actual Maturity": With respect to a Seasoned Policy, the lesser of (a)
the time elapsed, in months, from the date of purchase of a Policy by PWCC or
the Issuer, as the case may be, to the date of Maturity of such Policy, and (b)
the time elapsed, in months, from the date of purchase of such Policy by PWCC or
the Issuer, as the case may be, to the most recent Calculation Date.
"Additional Policies": Policies that are purchased by the Issuer for
inclusion in the Series Pool pursuant to Section 3.01 hereof or Substitute
Policies that became part of the Series Pool pursuant to Section 4.07 hereof.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, Acontrol,@ when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms Acontrolling@ and
Acontrolled@ have meanings correlative to the foregoing.
"Agency Agreement": The agreement between PWCC and Bankers Trust
Company, as Agent, dated November 19, 1993, as amended by the First Amendment to
Agency Agreement, dated as of March [31], 2000.
"Aggregate Face Value": As of any day of determination, the total Face
Values of the Policies in the Series Pool.
"Amortization Date": The date after which payment of the Principal
Distribution Amount to Noteholders commences, which shall be the first Payment
Date occurring 18 months after the Closing Date.
"Amortization Period": The period commencing on the Amortization Date
and ending on the Final Payment Date.
"Authenticating Agent": Any entity appointed by the Indenture Trustee
pursuant to Section 7.14
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hereof.
"Available Funds": On any date of determination during a Collection
Period, the amount, if any, by which the funds then held in the Collection
Account exceed the Monthly Required Payments to be paid on the next Payment
Date.
"Back-End Sourcing Agent Fee": With respect to any Policy, the fee, if
any, to be paid to the Sourcing Agent from Policy Proceeds.
"Board of Directors": The board of directors of the Issuer or any duly
authorized committee of such Board appointed to act on its behalf.
"Board Resolution": A copy of a resolution certified by the Secretary
or an Assistant Secretary of the Issuer to have been duly adopted by its Board
of Directors and to be in full force and effect on the date of such
certification and delivered to the Indenture Trustee.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in San Francisco, California, New York, New York or
in the city in which the corporate trust office of the Indenture Trustee under
this Indenture is located are authorized or obligated by law or executive order
to close.
"Calculation Date": The last Business Day of each month.
"Closing Date": February 28, 1995.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral": The meaning specified in the Granting Clause of this
Indenture.
"Collection Account": The trust account created and maintained pursuant
to Section 12.02 hereof.
"Collection Period": The period commencing on the first day of a
calendar month and ending on the last day of such calendar month.
"Commitment Amount": $50,000,000.
"Contribution, Sale and Servicing Agreement": The Amended and Restated
Contribution, Sale and Servicing Agreement, dated as of March 31, 2000 among the
Issuer, PWCC and the Indenture Trustee pursuant to which the Policies were
originally acquired by the Issuer from PWCC and pursuant to which PWCC has
agreed to continue servicing the Policies.
"Corporate Trust Office": The principal corporate trust office of the
Indenture Trustee located at the time of the execution of this Indenture at the
Corporate Trust and Agency Group at 4 Albany Street, New York, New York 10006,
Attn: Structured Finance Group, or at such other address as the Indenture
Trustee may designate from time to time by notice to the Noteholders and the
Issuer, or the principal corporate trust office of any successor Indenture
Trustee.
"Cut-Off Date": February 15, 1995.
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"Default": Any occurrence or circumstance which with notice or the
lapse of time or both would become an Event of Default.
"Defaulted Policy": Any Policy as to which the related Obligor has not
paid any Policy Proceeds within 60 days of the filing of a claim for the payment
of Policy Proceeds.
"Dignity Partners": All references herein or in any other Transaction
Document to Dignity Partners shall be deemed to be a reference to Point West
Capital Corporation.
"Disbursement Date": With respect to a Policy, the day on which the
Policy Proceeds are disbursed to the Indenture Trustee as agent for the Issuer,
by an Obligor or Obligors, upon the Maturity of a Policy or the payment of
Policy Proceeds by a state guaranty fund.
"Documentation": With respect to each Policy the following
documentation: (a) original or a copy of written evidence of the life expectancy
of the Insured provided by an Eligible Physician; (b) the original Viator
Statement substantially in the form of Exhibit G to the Original Indenture; (c)
---------
the original or copy of a written statement from a licensed medical practitioner
that the Owner is of sound mind and under no constraint or undue influence; (d)
the original or copy of an assignment form related to the Policy naming the
assignee as "Bankers Trust Company, as Agent" or "Bankers Trust Company", duly
executed by the Owner thereof, together with the original or a copy of an
executed acknowledgment of the assignment and change of beneficiary, duly
executed by the Obligor under such Policy; (e) an original of an executed sale
agreement conveying the Policy from the Owner to PWCC or the Issuer, as
applicable; (f) the original or copy of an executed Policy or the original or a
copy of a published handbook of group term life insurance policy benefits and an
original or copy of an insurance certificate or a statement executed by PWCC to
the effect that none of the foregoing is available; (g) an original executed
release by the related beneficiary with respect to all present or future claims
it may have regarding the Policy, and if the Insured is resident in South
Dakota, an original executed release from the Insured's spouse, if any; and (h)
an originally executed questionnaire or other statement with respect to a
Policy, duly completed and executed by the Obligor issuing such Policy or, in
the case of a group life Policy, the group policy holder or administrator, which
sets forth all of the following with respect to such Policy: (i) the Obligor's
number identifying such Policy, (ii) the name of the Insured covered by such
Policy, (iii) the Owner of such Policy, (iv) the Face Value of such Policy
(including any accrued dividends and paid up additions contributing to the Face
Value), (v) liens or loans against such Policy, and (vi) that the Policy is
beyond the contestability and suicide periods. In each case where an original or
copy of an above item may be provided, a copy shall only be provided if PWCC
does not have available to it the original and PWCC shall endeavor to obtain and
provide to the Indenture Trustee an original within thirty days of the
Acquisition Date except in the case of clause (a) above in which case PWCC must
deliver the original within thirty days of the Acquisition Date.
"DP Certificate": The certificate delivered by PWCC to the Issuer and
the Indenture Trustee as secured party, identifying the Policies and related
Documentation then being transferred to the Issuer and the Indenture Trustee as
secured party, substantially in the form of Exhibit A to the Contribution, Sale
---------
and Servicing Agreement, with any required amendments to the Policy Schedule
attached thereto.
"DP Policy Number": The number assigned to a Policy File by PWCC, which
number is used to identify Policies on the DP Certificate, the Issuer's
Certificate, the Indenture Trustee's Certificate and the Policy Schedule.
"Eligible Investments": Any and all of the following:
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(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association, the Federal Home Loan Banks or any agency
or instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by or federal funds sold by any depository
institution or trust company (including the Indenture Trustee, any affiliate
thereof, or their respective agents acting in their respective commercial
capacities) incorporated under the laws of the United States of America or any
State thereof and subject to supervision and examination by federal and/or state
authorities, so long as at the time of such investment or contractual commitment
providing for such investment, such depository institution or trust company has
a short term unsecured debt rating at least equal to the Required Rating and
provided that each such investment has an original maturity of no more than 365
days, and (B) any other demand or time deposit or deposit which is fully insured
by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (i) above and entered into with a
depository institution or trust company (acting as a principal) having a rating
at least equal to the Required Rating; provided, however, that collateral
transferred pursuant to such repurchase obligation must (A) be valued weekly at
current market price plus accrued interest, (B) pursuant to such valuation,
equal, at all times, 105% of the cash transferred by the Indenture Trustee in
exchange for such collateral and (C) be delivered to the Indenture Trustee or,
if the Indenture Trustee is supplying the collateral, an agent for the Indenture
Trustee, in such a manner as to accomplish perfection of a security interest in
the collateral by possession of certificated securities;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
State thereof which has a long term unsecured debt rating at least equal to the
Required Rating at the time of such investment;
(v) commercial paper having an original maturity of less than 365 days
and issued by an institution having a short term unsecured debt rating at least
equal to the Required Rating at the time of such investment;
(vi) a guaranteed investment contract approved by Majority Noteholders
and issued by an insurance company or other corporation having a long term
unsecured debt rating at least equal to the Required Rating at the time of such
investment;
(vii) money market mutual funds having ratings at least equal to the
Required Rating at the time of such investment which invest only in other
Eligible Investments; any such money market mutual funds which provide for
demand withdrawals being conclusively deemed to satisfy any maturity requirement
for Eligible Investments set forth in this Indenture; and
(viii) any other investment provided that the Majority Noteholders
consent thereto.
The Indenture Trustee may purchase from or sell to itself or an affiliate, as
principal or agent, the Eligible Investments listed above.
"Eligible Physician": Any physician who has been pre-approved by the
Rating Agency. As of the Closing Date, the Eligible Physicians are those
identified in the letter from PWCC to the Rating Agency, dated February 23,
1995.
5
"Eligible Policy": Any life insurance policy that conforms to the
representations and warranties set forth in Section 11.01(l) hereof.
"Estimated Tax Due Date": Every January 15, April 15, July 15 and
October 15 during the term of this Indenture.
"Event of Default": The meaning specified in Section 6.01 hereof.
"Expected Maturity": With respect to any Policy, the date such Policy
is expected to mature, based on the most recent predicted life expectancy of the
Insured determined at the time or immediately prior to the acquisition of a
Policy by PWCC or the Issuer from an Owner, and certified by an Eligible
Physician.
"Extended Maturity": With respect to any Policy having an Expected
Maturity of less than 19 months from the date of acquisition from the Owner, the
date occurring the number of months after the Expected Maturity equal to 23.25%
of the number of months occurring from the date of acquisition from the Owner,
to the Expected Maturity of the related Policy. With respect to any Policy
having an Expected Maturity of 19 months or more from the date of acquisition
from the Owner, the date occurring the number of months after the Expected
Maturity equal to 87.5% of the number of months occurring from the date of
acquisition from the Owner to the Expected Maturity of such Policy.
"Extended Premium": With respect to a Policy that has not Matured by
the Extended Maturity, (a) the premium or premiums for the period commencing
with the premium due date that immediately follows the Extended Maturity and
ending on the day prior to the premium due date next following the one year
anniversary of the Extended Maturity, or (b) if on any premium due date next
following any annual anniversary of the Extended Maturity, the Policy has still
not reached Maturity, the premium or premiums for the period commencing on such
premium due date and ending on the day prior to the premium due date immediately
following the next year's anniversary of the Extended Maturity.
"Face Value": With respect to each Policy, as of any date of
determination, the stated dollar amount on the face of such Policy and any paid
up additions and accrued dividends, which shall be payable upon the Maturity of
the Policy. Upon payment by an Obligor following the Maturity of a Policy or
upon any Policy becoming a Defaulted Policy, the Face Value shall equal zero.
"Final Payment Date": The date on which the final principal and
interest payment on the Notes becomes due and payable as therein provided,
whether at the Stated Maturity, or by acceleration or redemption.
"Front-End Sourcing Agent Fee": The fee, if any, paid to a Sourcing
Agent upon acquisition of a Policy by PWCC or by the Issuer through an
origination by PWCC on behalf of the Issuer.
"Grant": To grant, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of set-off against, deposit, set over and confirm. A Grant of the
Collateral or of any instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including,
without limitation, the immediate and continuing right to claim, collect,
receive and receipt for payments in respect of the Policies, or any other
payment due thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the granting party or otherwise, and
6
generally to do and receive anything which the granting party is or may be
entitled to do or receive thereunder or with respect thereto.
"Indenture": This instrument as originally executed and, if from time
to time supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, as so supplemented or
amended. All references in this instrument to designated AArticles,@ ASections,@
ASubsections@ and other subdivisions are to the designated Articles, Sections,
Subsections and other subdivisions of this instrument as originally executed or
if amended or supplemented as so amended and supplemented. The words Aherein,@
Ahereof,@ Ahereunder@ and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section, Subsection or other
subdivision.
"Indenture Trustee": Bankers Trust Company, until a successor Person
shall have become the Indenture Trustee pursuant to the applicable provisions of
this Indenture, and thereafter AIndenture Trustee@ shall mean such successor
Person.
"Indenture Trustee's Certificate": The certificate substantially in the
form of Exhibit D to the Original Indenture, delivered by the Indenture Trustee
to the Issuer on or prior to the Closing Date or the related Acquisition Date
pursuant to Section 4.04 hereof.
"Independent": When used with respect to any specified Person means
such a Person, who (a) is in fact independent of the Issuer, PWCC and The
Echelon Group, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, PWCC or The Echelon Group or in any
Affiliate thereof and (c) is not connected with the Issuer, PWCC or The Echelon
Group as an officer, employee, promoter, underwriter, Indenture Trustee,
partner, director, or person performing similar functions.
"Independent Accountants": Arthur Bell & Associates, or any other
independent certified public accountants of recognized national standing.
"Initial Extended Premium Account Deposit: $ 1,881.
"Initial Liquidity Account Deposit": $ 2,146,161.
"Initial Payment Date": March 10, 1995.
"Initial Withheld Premium Account Deposit": $ 242,802.
"Insured": With respect to a Policy, the individual whose life is
insured under such Policy.
"Interest Accrual Period": With respect to each Payment Date, the
period commencing on and including the preceding Payment Date and ending on and
including the day prior to the applicable Payment Date; except, however, with
respect to the Initial Payment Date, the period commencing on and including the
Closing Date and ending on and including the day prior to the Initial Payment
Date.
"Issuer": Dignity Partners Funding Corp. I, a Delaware corporation,
until a successor Person shall have become the Issuer pursuant to the applicable
provisions of this Indenture, and thereafter Issuer shall mean such successor
Person.
"Issuer Order" and "Issuer Request": A written order or request signed
in the name of the Issuer by
7
its President or any Vice President, and delivered to the Indenture Trustee.
"Issuer's Certificate": A certificate substantially in the form of
Exhibit E to the Original Indenture, delivered by the Issuer to the Indenture
- ---------
Trustee, identifying the Policies then being Granted to the Indenture Trustee as
secured party, with any required amendments to the Policy Schedule attached
thereto.
"Lien": Any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property.
"Liquidity Account": An account established for the benefit of the
Noteholders in accordance with Section 12.03 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 each of the Noteholders.
"Maturity": With respect to any Policy, the date of the Insured's
death. The verb form of "Maturity" is "Matured".
"Minimum Rating": A long-term rating of "A" from the Rating Agency.
"Monthly Required Payments": means, for each Payment Date, the sum of
the following: (a) the fees and other items described in clauses (i) and (ii) of
Section 12.02(d) hereof and accrued as of such Payment Date and (b) an amount
equal to the excess of the amount of premiums estimated to be due on any
Policies prior to the next Payment Date (unless the Majority Noteholders have
directed in writing that the related Policy should be permitted to lapse) over
the Required Premium Amount.
"Monthly Servicing Fee": the meaning set forth in the Contribution,
Sale and Servicing Agreement.
"Monthly Servicing Report": The report prepared by the Servicer
pursuant to Section 12.06 hereof, substantially in the form of Exhibit C hereto.
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"Noteholder" or "Holder": The Person in whose name a Note is registered
in the Note Register.
"Note Interest Rate": 9.17 % per annum.
"Note Register" and "Note Registrar": The respective meanings specified
in Section 2.06 hereof.
"Notes": The meaning specified in the Preliminary Statement hereof.
"Obligor": Each payor on a Policy, which is a shareholder-owned or
mutual life insurance company.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the President, a Vice President, the Treasurer, the Controller, an
Assistant Controller or the Secretary of the company on whose
8
behalf the certificate is delivered, and delivered to the Indenture Trustee.
Unless otherwise specified, any reference in this Indenture to an Officer's
Certificate shall be to an Officer's Certificate of the Issuer.
"Opinion of Counsel": A written opinion of outside counsel who may,
except as otherwise expressly provided in this Indenture, be counsel for PWCC or
the Issuer, as applicable, and who shall be either Giancarlo & Gnazzo, Katten,
Muchin & Zavis, White & Case, or such other firm reasonably satisfactory to the
Indenture Trustee and the Majority Noteholders.
"Original Policy": Any Policy Granted to the Indenture Trustee on the
Closing Date.
"Outstanding": With respect to Notes, as of any date of determination,
all Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes for whose payment money in the necessary amount has been
theretofore irrevocably deposited with the Indenture Trustee or any Paying
Agent (other than the Issuer) in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to the Indenture or any provision
therefor, satisfactory to the Indenture Trustee); and
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to the Indenture, unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that for purposes of determining whether the Holders of the
requisite principal amount of the Outstanding Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Notes
beneficially owned, directly or indirectly, by the Issuer, any other obligor
upon the Notes, PWCC, any Affiliate of the Issuer or such other obligor shall be
disregarded and deemed not to be outstanding. For purposes of this definition,
beneficial ownership shall be determined in accordance with Rule 13d-3 of the
Securities and Exchange Commission, promulgated pursuant to the Securities
Exchange Act of 1934, as amended.
"Outstanding Principal Balance": The sum of all fundings made under all
Outstanding Notes, less the amount of all principal payments previously made
with respect to such Notes.
"Owner": The owner (who may also be the Insured) of a Policy
immediately prior to the acquisition of such Policy by PWCC or the Issuer, as
the case may be, and from whom PWCC or the Issuer acquired such Policy.
"Paying Agent": The Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 7.08
hereof and is authorized by the Issuer pursuant to Section 7.13 hereof to pay
the principal of or interest on, any Notes on behalf of the Issuer.
"Payment Date": The eighth Business Day of each month.
"Person": Any individual, corporation, partnership, association,
limited liability company, limited
9
liability partnership, joint-stock company, trust (including any beneficiary
thereof), unincorporated organization or government (or any agency or political
subdivision thereof) or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended).
"PWCC": Point West Capital Corporation, a Delaware corporation, and its
permitted successors and assigns.
"Policy": A life insurance policy issued by an Obligor on the life of
an Insured, which such Policy was originated by PWCC on behalf of, or assigned
by PWCC to, the Issuer pursuant to the Contribution, Sale and Servicing
Agreement, including, without limitation, the right to receive the benefits
payable thereunder and proceeds thereof.
"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 Policies 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 Cost": The sum of (a) any monetary payment made by PWCC or the
Issuer to an Owner as consideration for the purchase of the Policy, including
any monetary payment made to discharge or release any security interest, lien,
claim or encumbrance incurred by the Owner against the Policy plus (b) any
Front-End Sourcing Agent Fee, plus (c) the cost paid by PWCC for any medical
examination, report, medical records or insurance questionnaire, plus (d) the
amount of any premiums paid by PWCC on or before the Closing Date or Acquisition
Date, as applicable, plus (e) the amount of any premiums paid by the Issuer on
or after the Closing Date or Acquisition Date, as applicable, less (f) the
amount of any premiums rebated or refunded to the Issuer.
"Policy File": With respect to each Policy, a file folder containing
the related Documentation.
"Policy Proceeds": With respect to, and in accordance with the terms of
any Policy, the proceeds that are paid by the Obligor upon the Maturity of such
Policy, including but not limited to, any accrued dividends, paid up additions
thereon and interest, and any Recoveries related to such Policy.
"Policy Schedule": The list of Policies attached hereto as Schedule I,
----------
as confirmed by the Indenture Trustee to the extent provided in Section 2.05 of
the Contribution, Sale and Servicing Agreement and Section 4.04 of this
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 the
Contribution, Sale and Servicing Agreement and Section 4.04 of this 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
10
premium to be deposited on 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 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).
"Premium Account": The account maintained by the Indenture Trustee for
the payment of Policy premiums as set forth in Section 12.04 hereof.
"Principal Distribution Amount": With respect to each Payment Date,
commencing with the first Payment Date in the Amortization Period, an amount
equal to the sum of the Policy Proceeds received during the related Collection
Period minus the Monthly Required Payments to be paid on such Payment Date, and
with respect to the Payment Date at the Stated Maturity, an amount equal to the
remaining Outstanding Principal Balance; provided that the Principal
Distribution Amount shall not exceed the amount necessary to pay the principal
amount of the Notes in full and such amount shall not be less than zero.
"Private Placement Memorandum" or "Final Private Placement Memorandum":
The Private Placement Memorandum related to the Notes and dated February 28,
1995.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Purchase Agreement": The purchase agreement between the Noteholders
and the Issuer pursuant to which the Noteholders agree to purchase Notes and
make Fundings in accordance with the terms hereof.
"Rating Agency": Standard & Poor's Ratings Group, a division of McGraw
Hill.
"Record Date": The close of business on the twentieth day of the month
preceding the month in which the applicable Payment Date occurs, except with
respect to the Initial Payment Date, the Record Date shall be the Closing Date.
"Recoveries": With respect to Defaulted Policies, all amounts recovered
by the Servicer (less its reasonable out-of-pocket expenses), including amounts
paid from a state guaranty fund in the event of an Obligor's insolvency.
"Redemption Account": The trust account opened and maintained by the
Indenture Trustee pursuant to Section 12.02(f) hereof.
"Redemption Date": A date fixed pursuant to Section 10.01 hereof.
"Redemption Price": With respect to any Note, and as of any Redemption
Date, the Outstanding Principal Balance of such Note, together with interest
accrued thereon to the Redemption Date at the Note Interest Rate (exclusive of
installments of interest and principal maturing on or prior to such date,
payment of which shall have been made or duly provided for to the Holder of such
Note on the applicable Record Date or as otherwise provided here).
11
"Redemption Record Date": With respect to any redemption of Notes, a
date fixed pursuant to Section 10.01 hereof.
"Registered Holder": The Person whose name appears on the Note Register
on the applicable Record Date or Redemption Record Date.
"Reinvestment Income": Any interest or other earnings earned on all or
part of the Trust Estate.
"Repurchase Price": With respect to any Policy repurchased by PWCC due
to a breach of a representation or warranty in accordance with Section 4.05
hereof, the Repurchase Price shall be the Policy Cost. With respect to any
Policy repurchased by the related Owner due to a rescission by the Owner in
accordance with Section 4.05 hereof, the Repurchase Price shall be equal to the
monetary payment made by the Issuer or PWCC to such Owner as consideration for
the purchase of the Policy, including any monetary payment made to discharge or
release any security interest, lien, claim or encumbrance incurred by the Owner
against the Policy.
"Required Liquidity Amount": $ 0.0, unless the Noteholders otherwise
specify in writing that an amount is to be retained in the Liquidity Account to
be used to pay anticipated expenses, in which case the Required Liquidity Amount
is as specified until such expenses are paid.
"Required Premium Amount": $25,000.00, unless otherwise specified in
writing by the Noteholders.
"Required Rating": A long-term rating of at least "AA" from the Rating
Agency, a short-term rating of at least "A1+" from the Rating Agency, and with
respect to money market investments, a rating of at least "AAm" from the Rating
Agency.
"Responsible Officer": When used with respect to the Indenture Trustee,
any officer assigned to the Corporate Trust Office (or any successor thereto),
including any Managing Director, any Vice President, Assistant Vice President,
any Assistant Treasurer, any Assistant Secretary, any trust officer or any other
officer of the Indenture Trustee customarily performing functions similar to
those performed by any of the above designated officers and having direct
responsibility for the administration of the Indenture, and also, with respect
to a particular matter, any other officer, to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Sale": The meaning specified in Section 6.18 hereof.
"Series Pool": The Policies set forth on the Policy Schedule as amended
from time to time.
"Servicer": PWCC, as Servicer under the Contribution, Sale and
Servicing Agreement, provided that if such Contribution, Sale and Servicing
Agreement is terminated, then the successor servicer appointed by the Issuer
with the consent of the Majority Noteholders.
"Sourcing Agent": An agent who sourced Policies for PWCC and the
Issuer, including employees and independent contractors retained by PWCC and the
Issuer who are paid on a commission basis.
"State": Any state of the United States of America and, in addition,
the District of Columbia and Puerto Rico.
12
"Stated Maturity": March 10, 2005.
"Submission Date": The third Business Day following the Calculation
Date, by which the Servicer must submit the Monthly Servicing Report to the
Indenture Trustee.
"Substitute Policy": The meaning specified in Section 4.07 hereof.
"Tax Account": The trust account opened and maintained by the Indenture
Trustee pursuant to Section 12.02(g) hereof.
"Taxes": Any federal, state or local income, franchise or other taxes
measured by or imposed on income, gross receipts or payroll of the Issuer,
computed as if the Issuer is not and never has been included in a consolidated
or combined group with PWCC for federal or state income or franchise tax
purposes.
"Terminal Illness": A diagnosis that an Insured is suffering from (i)
Acquired Immune Deficiency Syndrome ("AIDS") or (ii) an advanced stage of the
Human Immunodeficiency Virus ("HIV").
"Total Servicing Fee": The meaning set forth in the Contribution, Sale
and Servicing Agreement.
"Transaction Documents": The Indenture, the Contribution, Sale and
Servicing Agreement, the Master Agreement, the Notes, and prior to their
termination, each of the Agency Agreement and the Purchase Agreements.
Transaction Termination Date": The meaning set forth in the Master
Agreement.
"Trustee Fee": The fee payable to the Indenture Trustee on the Closing
Date and each anniversary of the Closing Date prior to the Stated Maturity in
consideration for the Indenture Trustee's performance of its duties pursuant to
this Indenture as Indenture Trustee during the succeeding year, in the amount
specified in the letter from Bankers Trust Company, dated February 24, 1995.
"Trust Estate": The meaning specified in the Granting Clause hereof.
"Verification Date": The third Business Day occurring after the
Submission Date by which the Indenture Trustee must verify the information
contained in the Monthly Servicing Report; provided, however, with respect to
the delivery of the Monthly Servicing Report for the Payment Date occurring on
April 12, 2000, the Verification Date shall be the third Business Day occurring
after such Payment Date.
"Vice President": With respect to the Issuer, PWCC or the Servicer, any
vice president, whether or not designated by a number or a word or words added
before or after the title "vice president."
13
ARTICLE TWO
-----------
NOTE FORM
---------
Section 2.01 Form Generally.
---------------------------
The Notes and the certificates of authentication shall be in
substantially the form set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by the Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon, as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes.
The definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any manner acceptable to the Indenture Trustee and
the initial purchasers of the Notes, all as determined by the officers executing
such Notes, as evidenced by their execution of such Notes.
Section 2.02 Form of Note.
-------------------------
Each Note shall be in the form attached as Exhibit A to the Original
---------
Indenture.
Section 2.03 Denomination.
--------------------------
The aggregate principal amount of Notes which may be authenticated and
delivered under the Indenture is specified in the Preliminary Statement of this
Indenture except for Notes authenticated and delivered upon registration of
transfer, or in exchange for, or in lieu of, other Notes pursuant to Sections
2.05, 2.06, 2.08 or 9.04 hereof. The Notes shall be issuable only as registered
Notes without coupons in the denominations of at least $1,000,000; provided,
--------
however, that, the foregoing shall not restrict or prevent the transfer in
- -------
accordance with Sections 2.06 and 2.07 hereof of any Note with a remaining
Outstanding Principal Balance of less than $1,000,000.
Section 2.04 Execution, Authentication, Delivery and Dating.
------------------------------------------------------------
The Notes shall be executed on behalf of the Issuer by its President or
one of its Vice Presidents under its corporate seal imprinted or otherwise
reproduced thereon. The signature of these officers on the Notes must be manual.
Notes bearing the manual signatures of individuals who were at any time
the proper officers of the Issuer shall bind the Issuer, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication or delivery of such Notes or did not hold offices at the date of
authentication or delivery of such Notes.
Each Note shall be dated as of the date of its authentication.
No Note shall be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee or by any Authenticating Agent by the manual
signature of one of its authorized officers, and such certificate upon any Note
shall be conclusive evidence, and the only evidence,
14
that such Note has been duly authenticated and delivered hereunder.
Section 2.05 Temporary Notes.
------------ ----------------
Pending the preparation of definitive Notes, the Issuer may execute,
and upon Issuer Order, the Indenture Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such variations as
the officers executing such Notes may determine, as evidenced by their execution
of such Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 7.13 hereof, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Notes, the Issuer
shall execute and the Indenture Trustee shall authenticate and deliver in
exchange therefor one or more definitive Notes of any authorized denominations
and of a like initial aggregate principal amount and Stated Maturity. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under the Indenture as definitive Notes.
Section 2.06 Registration, Registration of Transfer and Exchange.
------------ ----------------------------------------------------
(a) The Issuer shall cause to be kept at an office or agency to be
maintained by the Issuer in accordance with Section 7.13 hereof a register (the
ANote Register@), in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. Bankers Trust Company, 4 Albany Street, 10th
Floor, New York, New York 10006, is hereby appointed ANote Registrar@ for the
purpose of registering Notes and transfers of Notes as herein provided at its
office at 123 Washington Street, New York, New York. If the Note Registrar is
someone other than the Indenture Trustee, then the Indenture Trustee shall have
the right to examine the Note Register at all reasonable times and to rely
conclusively upon an Officer's Certificate of the Note Registrar as to the names
and addresses of the holders of the Notes and the principal amounts and numbers
of such Notes as held.
(b) Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 7.13
hereof and subject to the conditions set forth in Section 2.07 hereof, the
Issuer shall execute, and the Indenture Trustee or its agent shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Notes of any authorized denominations, and of a like aggregate
principal amount and Stated Maturity.
(c) At the option of the Holder, Notes may be exchanged for other Notes
of any authorized denominations and of a like aggregate principal amount and
Stated Maturity, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, the Issuer shall
execute, and the Indenture Trustee or its agent shall authenticate and deliver,
the Notes which the Noteholder making the exchange is entitled to receive.
(d) All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt and
entitled to the same benefits under the Indenture, as the Notes surrendered upon
such registration of such transfer or exchange.
15
Every Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Issuer or the Note Registrar) be duly
endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Note Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.05 or 9.04 hereof not involving any registration
of transfer.
Section 2.07 Limitation on Transfer and Exchange.
------------ -----------------------------------
The Notes have not been registered or qualified under the Securities
Act of 1933 (the A1933 Act@) or the securities laws of any state. No transfer of
any Note shall be made unless that transfer is made in a transaction which does
not require registration or qualification under the 1933 Act or under applicable
state securities laws. In the event that a transfer of a Note is to be made,
such Noteholder's prospective transferee shall deliver to the Indenture Trustee
(i) an investment letter substantially in the form set forth on Exhibit B to the
Original Indenture (the AInvestment Letter@), (ii) such other applicable
document together with an opinion of counsel to the effect that such document is
in proper form or (iii) an opinion of counsel (which can be either outside
counsel or in-house counsel) that the transfer is exempt from the Act. Neither
the Issuer nor the Indenture Trustee is obligated to register or qualify the
Notes under the 1933 Act or any other securities law. Any such Holder desiring
to effect such transfer shall, and does hereby agree to, indemnify the Indenture
Trustee (which shall include its officers, directors, employees and agents) and
the Issuer against any liability, cost or expense (including attorneys' fees and
expenses) that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
The Indenture Trustee shall have no liability to the Trust
Estate or any Noteholder arising from a transfer of any such Note in reliance
upon a certification described in this Section 2.07.
Section 2.08 Mutilated, Destroyed, Lost or Stolen Note.
------------ ------------------------------------------
If (i) any mutilated Note is surrendered to the Note Registrar, or the
Indenture Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, and (ii) there is delivered to the Indenture Trustee such
security or indemnity as may be required by the Indenture Trustee to save the
Issuer, the Indenture Trustee or any agent of any of them harmless, then, in the
absence of notice to the Issuer or the Note Registrar that such Note has been
acquired by a bona fide purchaser, the Issuer shall execute and, upon its
request, the Indenture Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of
the same tenor, initial principal amount and Stated Maturity, bearing a number
not contemporaneously outstanding. If after the delivery of such new Note, a
bona fide purchaser of the original Note in lieu of which such new Note was
issued presents for payment such original Note, the Issuer and the Indenture
Trustee shall be entitled to recover such new Note from the person to whom it
was delivered or any person taking therefrom, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expenses incurred by the Issuer or the
Indenture Trustee or any agent of any of them in connection therewith. If any
such mutilated, destroyed, lost or stolen Note shall have become or shall be
about to become due and payable, or shall have become subject to redemption in
full, instead of issuing a new Note, the Issuer may pay such Note without
surrender thereof, except that any mutilated Note shall be surrendered.
16
Upon the issuance of any new Note under this Section, the Issuer or
Note Registrar may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Indenture Trustee) connected
therewith.
Every new Note issued pursuant to this Section 2.08, in lieu of any
destroyed, lost or stolen Note, shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of the Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.09 Payment of Principal and Interest; Rights Preserved.
------------ ----------------------------------------------------
(a) The Notes shall bear interest on the average daily unpaid principal
amount thereof during the Interest Accrual Periods through the last day
preceding the Final Payment Date at the Note Interest Rate (calculated on the
basis of a 360-day year consisting of 12 months of 30 days each). Interest shall
be due and payable in arrears on each Payment Date only to the extent that funds
on deposit in the Collection Account are available after making the payments set
forth in clauses (i) through (v) of Section 12.02(d) hereof. Each payment of
interest shall be calculated as described above on the average daily Outstanding
Principal Balance since the preceding Payment Date, or on the Closing Date with
respect to the first Payment Date; provided, however, that in making any
interest payment, if the interest calculation with respect to a Note shall
result in a portion of such payment being less than $.01, then such payment
shall be decreased to the nearest whole cent, and no subsequent adjustment shall
be made in respect thereof. Any interest either (i) not paid when due or (ii)
not paid due to the unavailability of funds therefor shall accrue interest at
the Note Interest Rate.
(b) The principal of each Note shall be payable in installments ending
no later than the Stated Maturity thereof unless such Note becomes due and
payable at an earlier date by declaration of acceleration, call for redemption
in accordance with Article Ten hereof, or otherwise. All reductions in the
principal amount of a Note effected by payments of installments of principal
made on any Payment Date shall be binding upon all future Holders of such Note
and of any Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, whether or not such payment is noted on such Note.
Each installment of principal payable on the Notes shall be in an amount equal
to the Principal Distribution Amount. The principal payable on the Notes shall
be paid beginning on the Payment Date occurring in the month following the
Collection Period in which the Amortization Date occurs, and ending on the Final
Payment Date on a pro rata basis based upon the relative face amount of each
Note; provided, however, that if as a result of such proration a portion of such
principal would be less than $.01, then such payment shall be decreased to the
nearest whole cent, and such portion shall be applied to the next succeeding
principal payment.
(c) The principal and interest on the Notes are payable, through the
Paying Agent on behalf of the Issuer, by check mailed by first-class mail to the
Person whose name appears as the Registered Holder of such Note on the Note
Register at the address of such Person as it appears on the Note Register or, at
the option of any Holder of Notes, by wire transfer in immediately available
funds (at the expense of the Issuer) to the account specified in writing to the
Indenture Trustee by such Registered Holder at least five Business Days prior to
the Record Date for the Payment Date on which wire transfers will commence, in
such coin or currency of the United States of America as at the time of payment
is legal tender for the payment of
17
public and private debts. Except as set forth in the final sentence of this
Section 2.09(c), all payments on the Notes shall be paid without any requirement
of presentment. The Issuer shall notify the Person in whose name a Note is
registered at the close of business on the Record Date next preceding the
Payment Date on which the Issuer expects that the final installment of principal
of such Note will be paid. Such notice shall be mailed no later than the tenth
day prior to such Payment Date and shall specify the place where such Note may
be surrendered. Funds representing any such checks returned undeliverable shall
be held in accordance with Section 7.15. Each Noteholder shall surrender its
Note to the Indenture Trustee prior to payment of the final installment of
principal of such Note.
(d) If the Noteholders make advances of Monthly Required Payments
pursuant to Section 8.01 hereof or otherwise make advance to cover expenses of
the Issuer, each such advance shall be treated as a funding of principal in the
amount of such advance, shall be added to the Outstanding Principal Balance of
such Noteholder's Note, shall bear interest at the Note Interest Rate and be
repayable in accordance with the terms hereof generally applicable to payments
of interest and principal on the Notes.
(e) THE NOTES ARE PAYABLE ONLY OUT OF THE TRUST ESTATE AND DO NOT
REPRESENT RECOURSE OBLIGATIONS OF THE ISSUER, THE SERVICER OR ANY AFFILIATE
THEREOF OR ANY SUCCESSOR THERETO.
Section 2.10 Persons Deemed Owner.
------------ ---------------------
Prior to due presentment for registration of transfer of any Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee shall treat the Person in whose name any Note is registered as the owner
of such Note for the purpose of receiving payments of principal and interest on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and neither the Issuer, the Indenture Trustee nor any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 2.11 Cancellation.
------------ -------------
All Notes surrendered to the Indenture Trustee for payment,
registration of transfer or exchange (including Notes surrendered to any Person
other than the Indenture Trustee which shall be delivered to the Indenture
Trustee) shall be promptly canceled by the Indenture Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 2.11, except as expressly permitted by the Indenture. All canceled
Notes held by the Indenture Trustee shall be disposed of by the Indenture
Trustee as is customary with its standard practice.
18
ARTICLE THREE
-------------
[INTENTIONALLY DELETED]
------------------------
19
ARTICLE FOUR
------------
ISSUANCE OF NOTES; COLLATERAL
-----------------------------
Section 4.01 Conditions to Issuance of Notes.
------------ --------------------------------
The Notes originally may be executed by the Issuer and delivered to the
Indenture Trustee for authentication, and thereupon, the same shall be
authenticated and delivered by the Indenture Trustee upon Issuer Order and upon
receipt by the Indenture Trustee of the following:
(a) the Policy Schedule;
(b) the Policy File containing the Documentation related to each
Original Policy;
(c) a copy of an officially certified document, dated not more than 30
days prior to the Closing Date, evidencing the due organization and good
standing of each of the Issuer and PWCC;
(d) copies of the Certificate of Incorporation and By-Laws of the
Issuer and PWCC, resolutions of the Board of Directors of each of the Issuer and
PWCC, each authorizing the execution, delivery and performance of the
Transaction Documents and the transactions contemplated by the Transaction
Documents, and each certified by the Secretary or an Assistant Secretary of the
Issuer and PWCC, as applicable;
(e) an executed copy of the Contribution, Sale and Servicing Agreement
and an executed copy of a Purchase Agreement with respect to each Noteholder;
(f) evidence of establishment of the Collection Account, the Premium
Account, the Liquidity Account, and any other account established and maintained
hereunder;
(g) an Officer's Certificate of the Issuer to the effect that attached
thereto is a true and correct copy of a letter signed by the Rating Agency and
confirming that the Notes have been rated "A";
(h) an executed copy of the DP Certificate, the Issuer's Certificate,
and the Indenture Trustee's Certificate, each with respect to the Original
Policies; and
(i) such other documents as the Indenture Trustee may reasonably
require.
Section 4.02 Security for Notes.
------------ -------------------
With respect to each Policy acquired by the Issuer pursuant to the
Contribution, Sale and Servicing Agreement the Issuer shall file, on or before
the Closing Date, UCC 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 the assignee of the secured party. Additionally, UCC
financing statements describing the Collateral granted and to be granted
hereunder shall be filed by the Issuer, on or before the Closing Date, with the
Secretaries of State of California and Nevada, naming the Issuer as debtor and
the Indenture Trustee as secured party.
26
Section 4.03 Acceptance of Appointment as Agent.
------------ -----------------------------------
Bankers Trust Company acknowledges that it has been appointed to act as
agent for the Issuer in connection with its acquisition of Policies pursuant to
the Contribution, Sale and Servicing Agreement, and to act as trustee for the
Noteholders with respect to each Policy Granted hereunder. Subject to the review
provided for below, the Indenture Trustee (or Bankers Trust, California, as
agent for the Indenture Trustee) acknowledges receipt of each Original Policy
and declares that it holds and will hold the Documentation related to the
Original Policies and all Additional Policies hereafter Granted to it in trust
for the use and benefit of all present and future Noteholders. Notwithstanding
the titling instructions concerning Additional Policies set forth in Section
3.01 hereof, Bankers Trust Company (or Bankers Trust, California, as agent for
the Indenture Trustee) acknowledges that it shall act as agent and trustee as
described in this Section 4.03 with respect to all Policies under the lien of
this Indenture, including, without limitation, those Policies titled in the name
of "Bankers Trust Company".
Section 4.04 Review of Documentation.
------------ ------------------------
(a) Prior to the Closing Date and at least three Business Days prior to
any Grant of any Additional Policies, for each Policy Granted to the Indenture
Trustee by the Issuer hereunder, the Issuer shall deliver a Policy File
containing the related Documentation, clearly marked with a DP Policy Number,
which shall be used by the Issuer and the Indenture Trustee to identify such
Policy on the Policy Schedule attached to the Issuer's Certificate. The Issuer's
Certificate shall be delivered by the Issuer to the Indenture Trustee along with
the related Documentation.
(b) Prior to the Closing Date or the related Acquisition Date, as
applicable, the Indenture Trustee (or Bankers Trust, California, as agent for
the Indenture Trustee) will review the Documentation related to each Original
Policy and each Additional Policy. With respect to each Policy File delivered to
the Indenture Trustee, the Indenture Trustee shall confirm, by execution and
delivery of the Indenture Trustee's Certificate to the Issuer and the
Noteholders, that: (1) the Indenture Trustee has received each item listed in
the definition of "Documentation" in Section 1.01 hereof; (2) the Indenture
Trustee has received originals of each document described in clauses (a), (b),
(e), (g) and (h) of the definition of "Documentation"; (3) each Policy and each
assignment referred to in clause (d) of the definition of "Documentation" has
been executed; and (4) the DP Policy Number, the Face Value, the Obligor's name
and the Insured's name are as set forth in the Policy Schedule. The Indenture
Trustee shall not be responsible for determining whether any signatory to any
item of Documentation is genuine.
Section 4.05 Return and/or Repurchase of Policies.
------------ -------------------------------------
If the Issuer discovers or is notified of any breach of a
representation or warranty with respect to a Policy that entitles the Issuer to
cause PWCC to cure or repurchase such Policy in accordance with Section 3.03 of
the Contribution, Sale and Servicing Agreement, or in the event an Owner
exercises its right to rescind the sale of a Policy to PWCC or the Issuer, as
applicable, the Issuer shall notify the Indenture Trustee thereof and the Issuer
shall within five Business Days of discovery or notice enforce PWCC's or the
Owner's obligation to cure or repurchase such Policy at the Repurchase Price. If
a Policy is repurchased by PWCC or the related Owner, the Indenture Trustee
shall return the related Documentation to PWCC or the related Owner, release its
interest therein and such Policy shall no longer constitute a Policy hereunder.
If the Issuer does not demand performance under Section 3.03 of the
Contribution, Sale and Servicing Agreement against PWCC within five Business
Days of discovery or notice, the Indenture Trustee shall do so.
27
Section 4.06 Administration of the Policies.
------------ -------------------------------
(a) The Policies shall be serviced by the Servicer until the
Transaction Termination Date in accordance with the terms of the Contribution,
Sale and Servicing Agreement and the Master Agreement. The Servicer retains all
rights to provide any notices and instructions to Obligors in connection with
the Policies. In the event that the Indenture Trustee obtains any notices,
requests for information or other communication from an Obligor, including
without limitation, notices regarding the payment of insurance premiums, it
shall immediately forward such communication to the Servicer. The Indenture
Trustee shall deposit all Policy Proceeds received by it with respect to any
Policy in the Collection Account, in accordance with Section 12.02 hereof, and
in the event the Servicer receives any payments with respect to a Policy, it
shall notify the Indenture Trustee of such receipt and anticipated remittance
and shall remit (in the form received, and properly endorsed) such amounts to
the Indenture Trustee within one Business Day of receipt thereof for deposit
(when such amounts have cleared) in the Collection Account. The Indenture
Trustee shall have no obligation to advance funds to the Collection Account. In
the absence of an Event of Default, the Indenture Trustee shall not take any
action with respect to any Policy without the express written authorization of
the Servicer or the Issuer. Notwithstanding that the Indenture Trustee is the
assignee of the Policies, the Indenture Trustee shall have no duties or
responsibilities under the terms of the Policies except as specifically set
forth herein.
(b) Notwithstanding anything to the contrary herein and subject to
Section 8.01 of the Contribution, Sale and Servicing Agreement, all rights and
obligations of PWCC, in its capacity as servicer, pursuant to this Indenture and
the Contribution, Sale and Servicing Agreement and reference herein to such
rights and obligations shall not apply with respect to PWCC, in its capacity as
servicer, upon and after the Transaction Termination Date.
Section 4.07 Releases.
------------ ---------
The Indenture Trustee (i) upon written request and receipt of the
documentation necessary to enable the Indenture Trustee to do so; or (ii) when
required by the provisions of the Master Agreement or Articles Four, Five, Six
and Twelve hereof, shall execute instruments to release property from the lien
of this Indenture, or convey the Indenture Trustee's interest in the same. No
party relying upon an instrument executed by the Indenture Trustee as provided
in this Article Four shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any monies.
28
ARTICLE FIVE
------------
SATISFACTION AND DISCHARGE
--------------------------
Section 5.01 Satisfaction and Discharge of Indenture.
------------ ----------------------------------------
(a) Following (i) the earlier to occur of (A) payment in full of the
Notes and (B) liquidation of the Trust Estate pursuant to Section 4.02 of the
Master Agreement and distribution of the proceeds as provided herein; and (ii)
the release by the Indenture Trustee of the Trust Estate in accordance with
Section 5.01(b) hereof, the Indenture shall be discharged.
(b) Upon the occurrence of the events referred to in clauses (i) or
(ii) of Section 5.01(a) above, the Issuer may submit to the Indenture Trustee an
Officer's Certificate requesting the release to the Issuer or its designee of
some or all of the Trust Estate. In connection with the discharge of the
Indenture and the release of the Trust Estate, the Issuer (or its designee)
shall prepare and submit to the Indenture Trustee the documentation necessary to
enable the Indenture Trustee to release from the lien of the Indenture and
deliver to or upon the order of the Issuer all property remaining in the Trust
Estate.
Section 5.02 Elective Sale of Trust Estate
------------ ------------------------------
Unless the provisions of Section 6.08 are applicable, in which event
the provisions of Article 6 shall apply, the Majority Noteholders may at any
time by written notice to the Issuer, the Servicer and the Indenture Trustee
direct the Indenture Trustee to sell the Trust Estate at a public or private
sale, notwithstanding that the amount of money collected from such sale may be
insufficient to repay in full the Outstanding Principal Balance and any interest
then owing to the Noteholders. The monies received shall be applied in
accordance with clauses First through Sixth of Section 6.08, provided that any
remaining Total Servicing Fee payable to PWCC shall be payable under clause
Second, so long as no Servicer Event of Default has occurred and is continuing.
A sale of the Trust Estate in this manner and the application of monies received
in the foregoing manner shall also discharge this Indenture.
29
ARTICLE SIX
-----------
DEFAULTS AND REMEDIES
---------------------
Section 6.01 Events of Default.
------------ ------------------
"Event of Default" wherever used herein means any one of the following
events"
(l) default in the payment of any principal of any Note when the
same becomes due and payable; or
(2) default in the payment of any interest upon any Note when the same
becomes due and payable pursuant to Section 2.09(a) hereof; or
(3) default in the performance of any material covenant of the Issuer,
or material breach of any representation or warranty of the Issuer in the
Indenture and continuance of such default or breach for a period of 30 days
after the earlier of the date that the Issuer has actual knowledge thereof or
notice thereof delivered in accordance with this Indenture; or
(4) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer under the Federal
Bankruptcy Code or any other applicable Federal or state bankruptcy, insolvency,
reorganization, liquidation, rehabilitation or other similar law now or
hereafter in effect or any arrangement with creditors or appointing a receiver,
liquidator, assignee, trustee, rehabilitator or sequestrator (or other similar
official) for the Issuer or for any substantial part of its property, or
ordering the winding up or liquidation of the Issuer's affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; or
(5) the institution by the Issuer of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by the Issuer to the institution of
bankruptcy or insolvency proceedings against the Issuer, or the filing by the
Issuer of a petition or answer or consent seeking reorganization or relief under
the Federal Bankruptcy Code or any other applicable Federal or state bankruptcy
insolvency, reorganization, liquidation, rehabilitation or other similar law now
or hereafter in effect, or the consent by the Issuer to the filing of any such
petition or to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, rehabilitator, or sequestrator (or
other similar official) of the Issuer or of any substantial part of the Issuer's
respective property, or the making by the Issuer of any assignment for the
benefit of creditors, or the admission by it in writing of its inability, or the
failure by it generally, to pay its debts as they become due, or the taking of
corporate action by the Issuer in furtherance of any such action.
Section 6.02 Acceleration of Maturity; Rescission and Annulment.
------------ ---------------------------------------------------
If an Event of Default with respect to the Notes occurs and is
continuing, the Indenture Trustee shall, at the written direction of the
Majority Noteholders, declare the principal of all the Notes to be immediately
due and payable, by notice given in writing to the Issuer and to the
Noteholders, and upon any such declaration, such principal shall become
immediately due and payable without any presentment, demand, protest or other
notice of any kind (except such notices as shall be expressly required by the
provisions of the Indenture), all of which are hereby expressly waived.
At any time after such a declaration of acceleration has been made, but
before any Sale of the Trust
30
Estate has been made as hereinafter in this Article provided, (a) with respect
to an Event of Default set forth in Section 6.01(1), (2), (4) or (5) hereof, the
consent of each Noteholder shall be required to rescind and annul such a
declaration and its consequences, and (b) with respect to an Event of Default
set forth in Section 6.01(3) hereof, the Majority Noteholders, by written notice
to the Issuer and the Indenture Trustee, shall be required to rescind and annul
such declaration and its consequences,
if: (1) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay
(A) the principal of any Notes which has become due otherwise
than by such declaration of acceleration and interest thereon at the
rate borne by such Notes from the time such principal first became due
until the date when paid, and
(B) all sums paid or advanced, together with interest thereon,
by the Indenture Trustee or any Noteholder hereunder, and the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and the Noteholders, their agents and counsel
incurred in connection with the enforcement of the Indenture to the
date of such payment or deposit; and
(2) all Events of Default, other than the nonpayment of the principal
of the Notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.15
hereof.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 6.03 [Intentionally Deleted].
------------ ------------------------
Section 6.04 Remedies.
------------ ---------
If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall, at the written direction of the Majority Noteholders,
do one or more of the following:
(a) take possession of and sell the Trust Estate securing the
Notes or any portion thereof or rights or interest therein, at one or
more Sales called and conducted in any manner permitted by law;
(b) institute any Proceedings from time to time for the
complete or partial foreclosure of the lien created by the Indenture
with respect to the Trust Estate securing the Notes; and
(c) exercise any of the rights of the owner of a Policy in
accordance with its terms and exercise any other remedies of a secured
party under the Uniform Commercial Code or any applicable law and take
any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee or the Holders of the Notes
hereunder;
provided, however, that without the consent of all the Holders of Outstanding
Notes, the Indenture Trustee may not sell or otherwise liquidate any portion of
the Trust Estate unless (i) the Sale is a public Sale and (ii)
31
the proceeds of such Sale or liquidation distributable to the Noteholders are
sufficient to discharge in full the amounts then due and unpaid upon the Notes
for principal and interest.
Section 6.05 Optional Preservation of Trust Estate.
------------ --------------------------------------
If (i) an Event of Default shall have occurred and be continuing with
respect to the Notes, and (ii) no Notes have been declared due and payable, or
such declaration of the Notes being due and payable and its consequences have
been annulled and rescinded, then the Indenture Trustee shall, upon request from
the Majority Noteholders, elect, by giving written notice of such election to
the Issuer, to take possession of and retain the Trust Estate securing the Notes
intact, collect or cause the collection of the proceeds thereof and make and
apply all payments and deposits and maintain all accounts in respect of such
Notes in accordance with the provisions of Article Twelve of the Indenture. If
the Indenture Trustee is unable to or is stayed from giving such notice to the
Issuer for any reason whatsoever but the Issuer has notice of the Event of
Default, such election shall be effective as of the time of such determination
or request, as the case may be, notwithstanding any failure to give such notice,
and the Indenture Trustee shall give such notice upon the removal or cure of
such inability or stay (but shall have no obligation to effect such removal or
cure). Any such election may be rescinded with respect to any portion of the
Trust Estate securing the Notes remaining at the time of such rescission by
written notice to the Indenture Trustee and the Issuer from the Majority
Noteholders.
Section 6.06 Indenture Trustee May File Proofs of Claim.
------------ -------------------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, rehabilitation, or other judicial Proceeding
relating to the Issuer or any other obligor upon any of the Notes or the
property of the Issuer or of such other obligor or their creditors, the
Indenture Trustee (irrespective of whether the principal of the Notes shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand on the
Issuer for the payment of overdue principal or interest) shall be entitled and
empowered, with the written consent of the Majority Noteholders, to intervene in
such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Notes issued
hereunder and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and
counsel and any other amounts due the Indenture Trustee under Section
7.07 hereof) and of the Noteholders allowed in such judicial
Proceeding, and
(ii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by each
Noteholder to make such payments to the Indenture Trustee, and in the event that
the Indenture Trustee shall consent to the making of such payments directly to
the Noteholders, to pay to the Indenture Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel, and any other amounts due the Indenture Trustee
under Section 7.07 hereof.
32
Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, rehabilitation or similar arrangement,
affecting the Notes or the rights of any Holder thereof, or to authorize the
Indenture Trustee to vote in respect of the claim of any Noteholder in any such
Proceeding.
Section 6.07 Indenture Trustee May Enforce Claims Without Possession
------------ -------------------------------------------------------
of Notes.
- ---------
(a) In all Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all of the Noteholders, and it shall not be necessary to make
any Noteholder a party to any such Proceedings.
(b) All rights of actions and claims under the Indenture or the Notes
may be prosecuted and enforced by the Indenture Trustee without the possession
of any of the Notes or the production thereof in any Proceeding relating
thereto, and any such Proceedings instituted by the Indenture Trustee shall be
brought in its own name as Indenture Trustee of an express trust, and any
recovery whether by judgment, settlement or otherwise shall, after provision for
the payment of the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes .
Section 6.08 Application of Money Collected.
------------ -------------------------------
If the Notes have been declared due and payable following an Event of
Default and such declaration has not been rescinded or annulled, any money
collected by the Indenture Trustee with respect to the Notes pursuant to this
Article Six or otherwise and any other money that may be held thereafter by the
Indenture Trustee as security for the Notes shall be applied in the following
order, at the date or dates fixed by the Indenture Trustee and, in case of the
distribution of such money on account of principal or interest, upon
presentation of the Notes and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment to the Indenture Trustee of any Trustee Fee then
due, along with any costs, indemnities or expenses incurred by it in connection
with enforcing the remedies provided for in this Article Six, and any other
amount due and owing to the Indenture Trustee under Section 7.07 of this
Indenture or the Transaction Documents;
SECOND: To the payment to PWCC of the Total Servicing Fee then due,
along with reimbursement of any expenses or costs otherwise reimburseable to it
pursuant to the Transaction Documents;
THIRD: To the payment of the amounts then due and unpaid upon the Notes
for interest first and overdue interest second, according to the amounts due and
payable on the Notes for interest;
FOURTH: To the payment of the remaining outstanding principal balance
of the Notes;
FIFTH: To reimburse the Noteholders for any costs or expenses incurred
in connection with any enforcement action with respect to the Indenture or the
Notes;
SIXTH: To the payment of any surplus to or at the written direction of
the Issuer or any other person legally entitled thereto.
33
Section 6.09 Limitation on Suits.
------------ --------------------
No Holder of any Note shall have any right to institute any Proceeding,
judicial or otherwise, with respect to the Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(l) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(2) the Majority Noteholders shall have made written request to
the Indenture Trustee to institute Proceedings in respect of such Event
of Default in its own name as Indenture Trustee hereunder;
(3) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of security or indemnity has failed to
institute any such Proceedings; and
(5) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the
Majority Noteholders; it being understood and intended that no one or
more Holders of Notes shall have any right in any manner whatever by
virtue of, or by availing of, any provision of the Indenture to affect,
disturb or prejudice the rights of any other Holders of Notes, or to
obtain or to seek to obtain priority or preference over any other
Holders or to enforce any right under the Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Holders of Notes.
Section 6.10 Unconditional Right of Noteholders to Receive Principal
------------ -------------------------------------------------------
and Interest.
- -------------
Notwithstanding any other provision in the Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal and interest on such Note as such amounts becomes due
and payable and to institute any Proceeding for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
Section 6.11 Restoration of Rights and Remedies.
------------ -----------------------------------
If the Issuer, the Indenture Trustee or any Noteholder has instituted
any Proceeding to enforce any right or remedy under the Indenture and such
Proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Issuer, the Indenture Trustee or to such Noteholder,
then, and in every case, the Issuer, the Indenture Trustee and the Noteholders
shall, subject to any determination in such Proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Issuer, the Indenture Trustee and the Noteholders shall
continue as though no such Proceeding had been instituted.
Section 6.12 Rights and Remedies Cumulative.
------------ -------------------------------
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed,
34
lost or stolen Notes in the last paragraph of Section 2.08 hereof, no right or
remedy herein conferred upon or reserved to the Indenture Trustee or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.13 Delay or Omission; Not Waiver.
------------ ------------------------------
No delay or omission of the Indenture Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or any acquiescence therein. Every right and remedy given by this
Article Six or by law to the Indenture Trustee or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Noteholders, as the case may be.
Section 6.14 Control by Noteholders.
------------ -----------------------
The Majority Noteholders shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Indenture Trustee or exercising any trust or power conferred on the Indenture
Trustee; provided that:
(l) such direction shall not be in conflict with any rule of law
or with the Indenture including, without limitation, any provision
hereof which expressly provides for a greater percentage of the
Outstanding Principal Balance;
(2) any direction to the Indenture Trustee by the Noteholders to
undertake a private sale of the Trust Estate shall be by the Holders of
all Outstanding Notes, unless the condition set forth in Section
6.18(b)(ii) hereof is met;
(3) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee which is not inconsistent with such direction;
provided, however, that, subject to Section 7.01 hereof, the Indenture
Trustee need not take any action which a Responsible Officer or
Officers of the Indenture Trustee in good faith determines might
involve it in personal liability or be unjustly prejudicial to the
Noteholders not consenting; and
(4) the Indenture Trustee has been furnished reasonable indemnity
against costs, expenses and liabilities which it might incur in
connection therewith as provided in Section 7.01(f) hereof.
In addition, the Noteholders shall have the right at any time to
advance funds to pay Servicer and Trustee fees and expenses, to pay premiums due
to an Obligor with respect to any Policies, and to cover other expenses of the
Issuer, as provided in Section 8.01 hereof and in the Master Agreement.
Section 6.15 Waiver of Past Defaults.
------------ ------------------------
(a) The Majority Noteholders may on behalf of the Holders of all the
Notes waive any past Default hereunder and its consequences, except Default:
35
(1) in the payment of the principal or interest of any Note, or a
Default described in Sections 6.01(4) and (5) hereof, or
(2) in respect of a covenant or provision hereof which under
Article Nine hereof cannot be modified or amended without the consent
of the Holder of each Outstanding Note affected.
Any past Default specified in clause (1) or (2) above, and the consequences
thereof, may be waived by the unanimous approval of the Noteholders.
(b) Upon any waiver of a past Default, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of the Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section 6.16 Undertaking for Costs.
------------ ----------------------
All parties to the Indenture agree, and each Holder of any Note by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
the Indenture, or in any suit against the Indenture Trustee for any action
taken, suffered or omitted by it as Indenture Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 6.16 shall not apply to any suit instituted
by the Indenture Trustee, or to any suit instituted by the Majority Noteholders,
or to any suit instituted by any Noteholder for the enforcement of the payment
of principal or interest on any Note.
Section 6.17 Waiver of Stay or Extension Laws.
------------ ---------------------------------
The Issuer covenants (to the extent that it may lawfully do so) that it
will not, at any time, insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of the Indenture; and the Issuer (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 6.18 Sale of Trust Estate.
------------ ---------------------
(a) The power to effect any sale (a ASale@) of any portion of the Trust
Estate pursuant to Section 6.04 hereof shall not be exhausted by any one or more
Sales as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate securing the Notes shall have been sold
or all amounts payable on the Notes and under the Indenture with respect thereto
shall have been paid. The Indenture Trustee may from time to time postpone any
Sale by public announcement made at the time and place of such Sale.
(b) To the extent permitted by applicable law, the Indenture Trustee
shall not, in any private Sale, sell to a third party the Trust Estate, or any
portion thereof unless:
36
(i) the Holders of all Outstanding Notes, consent to or direct the
Indenture Trustee to make such Sale; or
(ii)the proceeds of such Sale would not be less than the sum of
all amounts due to the Indenture Trustee hereunder and the entire
unpaid principal amount of the Notes, and interest due or to become due
thereon on the Payment Date next succeeding such Sale;
provided, however, that the proceeds of such Sale must reflect the fair market
value of the Trust Estate at the time of such Sale.
(c) The Indenture Trustee or the Noteholders may bid for and acquire
any portion of the Trust Estate in connection with a public Sale thereof, and in
lieu of paying cash therefor, any Noteholder may make settlement for the
purchase price by crediting against amounts owing on the Notes of such Holder or
other amounts owing to such Holder secured by the Indenture, that portion of the
net proceeds of such Sale to which such Holder would be entitled, after
deducting the reasonable costs, charges and expenses incurred by the Indenture
Trustee or the Noteholders in connection with such Sale. The Notes need not be
produced in order to complete any such Sale, or in order for the net proceeds of
such Sale to be credited against the Notes. The Indenture Trustee or the
Noteholders may hold, lease, operate, manage or otherwise deal with any property
so acquired in any manner permitted by law.
(d) The Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the Trust
Estate in connection with a Sale thereof. In addition, the Indenture Trustee is
hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of the Trust Estate in
connection with a Sale thereof, and to take all action necessary to effect such
Sale. No purchaser or transferee at such a sale shall be bound to ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any monies.
(e) The method, manner, time, place and terms of any Sale of all or any
portion of the Trust Estate shall be commercially reasonable. Notwithstanding
the foregoing, the Indenture Trustee must obtain the written consent of the
Majority Noteholders to the form in which a public sale is to be conducted
pursuant to this Section 6.18.
Section 6.19 Action on Notes.
------------ ----------------
The Indenture Trustee's right to seek and recover judgment on the Notes
or under the Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to the Indenture. Neither
the lien of the Indenture nor any rights or remedies of the Indenture Trustee or
the Noteholders shall be impaired by the recovery of any judgment by the
Indenture Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer.
37
ARTICLE SEVEN
--------------
THE INDENTURE TRUSTEE
---------------------
Section 7.01 Certain Duties and Responsibilities.
------------ ------------------------------------
(a) Except during the continuance of an Event of Default known to the
Indenture Trustee as provided in subsection (e) below:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in the Indenture, and no
implied covenants or obligations shall be read into the Indenture
against the Indenture Trustee; and
(ii)in the absence of bad faith or negligence on its part, the
Indenture Trustee may conclusively rely as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of the Indenture; but in the case of any
such certificates or opinions, which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, such
certificate or opinion shall cite the applicable provision and the
Indenture Trustee shall be under a duty to examine the same and to
determine whether or not they conform to the requirements of the
Indenture.
(b) The Indenture Trustee shall exercise such of the rights and powers
vested in it by the Indenture, and shall use the same degree of care and skill
in its exercise, as a reasonable person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(c) No provision of the Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct or bad faith, except that:
(i) this subsection (c) shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Indenture
Trustee, unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Indenture Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Majority Noteholders (or other
such percentage as may be required by the terms hereof) in principal
amount of the Outstanding Notes in accordance with Section 6.14 hereof
relating to the time, method and place of conducting any Proceeding for
any remedy available to the Indenture Trustee, or exercising any trust
or power conferred upon the Indenture Trustee, under the Indenture; and
(iv) no provision of the Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk
38
or liability is not reasonably assured to it, provided that nothing
herein contained shall excuse the Indenture Trustee for failure to
perform its duties as Indenture Trustee under the Indenture.
(d) Whether or not therein expressly so provided, every provision of
the Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to the provisions of this
Section 7.01.
(e) For all purposes under the Indenture, the Indenture Trustee shall
not be deemed to have notice of any Event of Default described in Section
6.01(4) or 6.01(5) hereof or any Default described in Section 6.01(3) hereof
unless a Responsible Officer assigned to and working in the Indenture Trustee's
Corporate Trust Office has actual knowledge or has received written notice of
any event which is in fact such an Event of Default or Default, and such notice
references the Notes generally, the Issuer, the Trust Estate or the Indenture.
(f) The Indenture Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under the Indenture, or to enter any
appearance or in any way defend in any suit in which it may be made defendant,
or to take any steps in the execution of the trusts hereby created or in the
enforcement of any rights and powers hereunder until it shall be indemnified to
its satisfaction against any and all costs and expenses, outlays and counsel
fees and other reasonable disbursements and against all liability, except
liability that is adjudicated, in connection with any action so taken.
(g) Notwithstanding any extinguishment of all right, title and interest
of the Issuer in and to the Trust Estate following an Event of Default and a
consequent declaration of acceleration of the maturity of the Notes, whether
such extinguishment occurs through a Sale of the Trust Estate to another person,
the acquisition of the Trust Estate by the Indenture Trustee with respect to the
Trust Estate (or the proceeds thereof) and the Noteholders and the rights of the
Noteholders shall continue to be governed by the terms of the Indenture.
(h) Notwithstanding anything to the contrary contained herein, the
provisions of subsections (e) through (g), inclusive, of this Section 7.01 shall
be subject to the provisions of subsections (a) through (c), inclusive, of this
Section 7.01.
(j) At all times during the term of this Indenture, the Indenture
Trustee shall keep at its Corporate Trust Office for inspection by Noteholders
the Policy Schedule and all amendments thereto delivered to it.
Section 7.02 Notice of Default.
------------ ------------------
Promptly after the occurrence of any Default or Event of Default known
to the Indenture Trustee (within the meaning of Section 7.01(e) hereof) which is
continuing, the Indenture Trustee shall transmit by telephonic or telecopy
communication confirmed by mail to all Holders of Notes, as their names and
addresses appear on the Note Register, notice of such Default hereunder known to
the Indenture Trustee, unless such Default shall have been promptly cured or
waived prior to the Indenture Trustee's delivery of such notice.
Section 7.03 Certain Rights of Indenture Trustee.
------------ ------------------------------------
Except as otherwise provided in Section 7.01,
39
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
obligation, paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by a Issuer Request or Issuer Order and any resolution of
the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of the Indenture the Indenture
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Indenture Trustee
(unless other evidence be herein specifically prescribed) may, in the absence of
bad faith, negligence or willful misconduct on its part, rely upon an Officer's
Certificate;
(d) the Indenture Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Indenture Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by the Indenture at the request or
direction of any of the Noteholders pursuant to the Indenture, unless such
Noteholders shall have offered to the Indenture Trustee reasonable security or
indemnity (satisfactory to the Indenture Trustee in its sole discretion) against
the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Indenture Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Indenture Trustee shall reasonably determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuer, upon reasonable notice and at
reasonable times personally or by agent or attorney;
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys; and
(h) except as expressly provided in this Indenture and in the
Contribution, Sale and Servicing Agreement, the Indenture Trustee shall have no
duty to monitor the performance of the Servicer, and shall have no liability in
connection therewith.
Notwithstanding the foregoing, nothing in this Indenture shall limit
the Indenture Trustee's obligations under the Contribution, Sale and Servicing
Agreement, which shall be governed by such agreement.
Section 7.04 Not Responsible for Recitals or Issuance of Notes.
------------ --------------------------------------------------
(a) The recitals contained herein and in the Notes, except the
certificates of authentication on the Notes, shall be taken as the statements of
the Issuer, and the Indenture Trustee assumes no responsibility for their
correctness. The Indenture Trustee makes no representations as to the validity
or condition of the Trust
40
Estate or any part thereof, or as to the title of the Issuer thereto or as to
the security afforded thereby or hereby, or as to the validity or genuineness of
any securities at any time pledged and deposited with the Indenture Trustee
hereunder or as to the validity or sufficiency of the Indenture or of the Notes.
The Indenture Trustee shall not be accountable for the use or application by the
Issuer of Notes or the proceeds thereof or of any money paid to the Issuer or
upon Issuer Order under any provisions hereof.
(b) Except as otherwise expressly provided herein and without limiting
the generality of the foregoing, the Indenture Trustee shall have no
responsibility or liability for or with respect to the existence or validity of
any Policy, the perfection of any security interest (whether as of the date
hereof or at any future time), the filing of any financing statements,
amendments thereto, or continuation statements, the maintenance of or the taking
of any action to maintain such perfection, the validity of the assignment of any
portion of the Trust Estate to the Indenture Trustee or of any intervening
assignment, the review of any Policy (it being understood that the Indenture
Trustee has not reviewed and does not intend to review the substance or form of
any such Policy except as required by Section 4.04), the performance or
enforcement of any Policy, the compliance by the Issuer with any covenant or the
breach by the Issuer of any warranty or representation made hereunder or in any
related document or the accuracy of any such warranty or representation, any
investment of monies in the Collection Account, the Liquidity Account or the
Premium Account, or any loss resulting therefrom (other than losses from
nonpayment of investments in obligations of Bankers Trust Company issued in its
capacity other than as Indenture Trustee), the acts or omissions of the Issuer,
any Obligor, or any Insured, or any action of the Issuer taken in the name of
the Indenture Trustee.
(c) The Indenture Trustee shall not have any obligation or liability
under any Policy by reason of or arising out of the Indenture or the granting of
a security interest in such Policy hereunder or the receipt by the Indenture
Trustee of any payment relating to any Policy pursuant hereto, nor shall the
Indenture Trustee be required or obligated in any manner to perform or fulfill
any of the obligations of the Issuer under or pursuant to any Policy, or to make
any payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it, or the sufficiency of any performance by any party,
under any Policy.
Section 7.05 May Hold Notes.
------------ ---------------
The Indenture Trustee, any Paying Agent, the Note Registrar, any
Authenticating Agent or any other agent of the Issuer, in its individual or any
other capacity, may become the owner or pledgee of Notes, and if operative, may
otherwise deal with the Issuer with the same rights it would have if it were not
Indenture Trustee, Paying Agent, Note Registrar, Authenticating Agent or such
other agent.
Section 7.06 Money Held in Trust.
------------ --------------------
Money and investments held in trust by the Indenture Trustee or any
Paying Agent hereunder shall be held in one or more trust accounts hereunder.
The Indenture Trustee or any Paying Agent shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed with
the Issuer or otherwise specifically provided herein.
Section 7.07 Compensation and Reimbursement.
------------ -------------------------------
The Issuer agrees:
(i) to pay the Indenture Trustee annually in advance, the fee for
all services rendered
41
by it hereunder as Indenture Trustee, Authenticating Agent, Note
Registrar and Paying Agent, in the amount of the Trustee Fee (the
Trustee's Fee shall not otherwise be limited by any provision of law in
regard to the compensation of a trustee of an express trust).
(ii)to reimburse the Indenture Trustee upon its request for all
reasonable out-of-pocket expenses, disbursements and advances incurred
or made by the Indenture Trustee, in its capacity as Indenture Trustee,
in accordance with the provisions of this Indenture (including the
reasonable costs and expenses of enforcing the remedies under Section
6.04 hereof and the reasonable compensation and the expenses and
disbursements of the Indenture Trustee's agents and counsel), except
any such expense, disbursement or advance as may be attributable to its
negligence, bad faith or willful misconduct. Prior to an Event of
Default, expenses, disbursements and advances reimbursed hereunder,
other than those set forth on the list of standard charges attached to
the fee letter referred to in the definition of Trustee Fee, shall not
exceed 20% of the Trustee Fee in any year; and
(iii) to indemnify and hold harmless the Trust Estate and the
Indenture Trustee from and against any loss, liability, expense, damage
or injury (other than those attributable to a Noteholder in its
capacity as an investor in the Notes) sustained or suffered pursuant to
this Indenture by reason of any acts, omissions or alleged acts or
omissions arising out of activities of the Trust or the Indenture
Trustee (including without limitation any violation of any applicable
laws by the Issuer as a result of the transactions contemplated by the
Indenture), including, but not limited to, any judgment, award,
settlement, reasonable attorneys' fees and other reasonable expenses
incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided that the Issuer shall not
indemnify the Indenture Trustee if such loss, liability, expense,
damage or injury is due to the Indenture Trustee's negligence or
willful misconduct, willful misfeasance or bad faith in the performance
of duties. Any indemnification pursuant to this Section shall only be
payable from the assets of the Issuer and shall not be payable from the
assets of the Trust Estate except to the extent that funds are
permitted to be paid to the Indenture Trustee pursuant to Section
12.02(d)(xii). The provisions of this indemnity shall run directly to
and be enforceable by an injured person subject to the limitations
hereof and this indemnification agreement shall survive the termination
of the Indenture and the resignation or removal of the Indenture
Trustee (which shall include for purposes of this Section 7.07(iii),
its directors, officers, employees and agents).
Section 7.08 Corporate Trustee Required; Eligibility
------------ ----------------------------------------
There shall at all times be a trustee hereunder which shall be a
banking corporation or association organized and doing business under the laws
of the United States of America or of any state, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, subject to supervision or examination by Federal or state
authority and having an office within the United States of America, and which
shall have a commercial paper or other short-term rating of the highest short
term rating by the Rating Agency, or otherwise acceptable to the Majority
Noteholders. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Indenture Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter
42
specified in this Article.
Section 7.09 Resignation and Removal; Appointment of Successor.
------------ --------------------------------------------------
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 7.10 hereof. The Indenture Trustee may resign at any time
by giving 30 days' written notice thereof to the Issuer and to each Noteholder.
The Indenture Trustee may be removed at any time by the Issuer or the Majority
Noteholders provided that no Event of Default has occurred and is continuing, if
one of the following events have occurred:
(i) the Indenture Trustee shall cease to be eligible under Section
7.08 hereof and shall fail to resign after written request therefor by
the Issuer or by any Noteholder, or
(ii)the Indenture Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Indenture Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or
(iii) the Indenture Trustee has failed to perform its duties
hereunder or has breached any representation of warranty made
hereunder.
(b) The Issuer shall also be permitted to remove the Indenture Trustee
without cause provided that no Event of Default has occurred and is continuing,
subject to the written approval by the Majority Noteholders of any successor
Indenture Trustee.
(c) If the Indenture Trustee is removed under clause (a) above or,
provided that no Event of Default has occurred and is continuing, if the
Indenture Trustee resigns or becomes incapable of acting, or if a vacancy shall
occur in the office of the Indenture Trustee for any other cause, the Issuer by
a Board Resolution, shall promptly appoint a successor Indenture Trustee
reasonably satisfactory to the Majority Noteholders, as evidenced by written
consent.
(d) If an Event of Default has occurred and is continuing, (i) the
Majority Noteholders (and not the Issuer) shall be permitted to remove the
Indenture Trustee with or without cause and (ii) if the Indenture Trustee
resigns, becomes incapable of acting or a vacancy occurs in the office of the
Indenture Trustee for any other cause, the Majority Noteholder (and not the
Issuer) shall promptly appoint a successor Indenture Trustee. Any transition
costs associated with a removal or resignation of the Indenture Trustee after an
Event of Default has occurred and is continuing shall be an expense of the Trust
Estate.
(e) The Issuer shall give notice in the manner provided in Section
13.04 hereof of each resignation and each removal of the Indenture Trustee and
each appointment of a successor Indenture Trustee with respect to the Notes.
Each notice shall include the name of the successor Indenture Trustee and the
address of its Corporate Trust Office.
Section 7.10 Acceptance of Appointment by Successor.
------------ --------------------------------------
Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective and such successor
Indenture
43
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Indenture Trustee but,
on request of the Issuer or the successor Indenture Trustee, such retiring
Indenture Trustee shall, upon payment of its reasonable out-of-pocket costs and
expenses, execute and deliver an instrument transferring to such successor
Indenture Trustee all the rights, powers and trusts of the retiring Indenture
Trustee, and shall duly assign, transfer and deliver to such successor Indenture
Trustee all property and money held by such retiring Indenture Trustee
hereunder. Upon request of any such successor Indenture Trustee, the Issuer
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Indenture Trustee all such rights, powers and
trusts.
No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be eligible
under this Article.
Section 7.11 Merger, Conversion, Consolidation or Succession to
------------ -----------------------------------------------------
Business of Indenture Trustee.
- ------------------------------
Any Person into which the Indenture Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Indenture Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Indenture Trustee, shall be the successor of the Indenture
Trustee hereunder, provided such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes have
been authenticated, but not delivered, by the Indenture Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Indenture Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Indenture Trustee had
itself authenticated such Notes.
Section 7.12 Co-Indenture Trustees and Separate Indenture Trustees.
------------ -----------------------------------------------------
At any time or times, for the purpose of meeting the legal requirements
of any jurisdiction in which any of the Trust Estate may at the time be located,
the Issuer and the Indenture Trustee shall have power to appoint, and, upon the
written request of the Indenture Trustee or of the Holders of Notes representing
at least 25% of the Outstanding Principal Balance, the Issuer shall for such
purpose join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint,
one or more Persons approved by the Indenture Trustee and meeting the
eligibility standards for the Indenture Trustee specified in Section 7.08
hereof, either to act as co-Indenture Trustee, jointly with the Indenture
Trustee of all or any part of such Trust Estate, or to act as separate Indenture
Trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such Person or persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section. If the Issuer does
not join in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default has occurred and is continuing, the
Indenture Trustee alone shall have power to make such appointment.
Should any written instrument from the Issuer be reasonably required by
any co-Indenture Trustee or separate Indenture Trustee so appointed for more
fully confirming to such co-Indenture Trustee or separate Indenture Trustee such
property, title, right or power, any and all such instruments shall, on request,
be executed, acknowledged and delivered by the Issuer.
44
Every co-Indenture Trustee or separate Indenture Trustee shall, to the
extent permitted by law, but to such extent only, be appointed subject to the
following terms:
(i) the Notes shall be authenticated and delivered by, and all
rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Indenture Trustee
hereunder, shall be exercised solely by the Indenture Trustee;
(ii)the rights, powers, duties and obligations hereby conferred or
imposed upon the Indenture Trustee in respect of any property covered
by such appointment shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee or by the Indenture Trustee and such
co-Indenture Trustee or separate Indenture Trustee jointly, as shall be
provided in the instrument appointing such co-Indenture Trustee or
separate Indenture Trustee, except to the extent that under any law of
any jurisdiction in which any particular act is to be performed, the
Indenture Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and obligations shall
be exercised and performed by such co-Indenture Trustee or separate
Indenture Trustee at the direction or with the consent of the Indenture
Trustee;
(iii) the Indenture Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Issuer evidenced by
a Board Resolution, may accept the resignation of or remove any
co-Indenture Trustee or separate Indenture Trustee, appointed under
this Section, and, in case an Event of Default has occurred and is
continuing, the Indenture Trustee shall have power to accept the
resignation of, or remove, any such co-Indenture Trustee or separate
Indenture Trustee without the concurrence of the Issuer. Upon the
written request of the Indenture Trustee, the Issuer shall join with
the Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-Indenture Trustee or
separate Indenture Trustee that has so resigned or been removed may be
appointed in the manner provided in this Section;
(iv) no co-Indenture Trustee or separate Indenture Trustee
hereunder shall be personally liable by reason of any act or omission
of the Indenture Trustee or any other such Indenture Trustee hereunder
nor shall the Indenture Trustee be liable by reason of any act or
omission of any co-Indenture Trustee or separate Indenture Trustee
selected by the Indenture Trustee with due care or appointed in
accordance with directions to the Indenture Trustee pursuant to Section
6.14; and
(v) any Act of Noteholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-Indenture
Trustee and separate Indenture Trustee.
Section 7.13 Maintenance of Office or Agency.
------------ --------------------------------
The Issuer will maintain an office or agency within the United States
of America where Notes may be presented or surrendered for payment, where Notes
may be surrendered for registration of transfer or exchange and where notices
and demand to or upon the Issuer in respect of the Notes and the Indenture may
be served. The Issuer hereby initially appoints the Indenture Trustee as the
Paying Agent and its Corporate Trust Office as the office for each of said
purposes. The Issuer will give 30 days prior written notice to the
45
Indenture Trustee and the Noteholders of any change in the identity of the
Paying Agent or the location, of any such office or agency. If at any time the
Issuer shall fail to maintain any such office or agency or shall fail to furnish
the Indenture Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Indenture Trustee, and the
Issuer hereby appoints the Indenture Trustee its agent to receive all such
presentations, surrenders, notices and demands.
Section 7.14 Appointment of Authenticating Agent.
------------ ------------------------------------
The Indenture Trustee may appoint an Authenticating Agent or Agents
with respect to the Notes which shall be authorized to act on behalf of the
Indenture Trustee to authenticate Notes issued upon original issue or upon
exchange, registration of transfer or pursuant to Section 2.08 hereof, and Notes
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Indenture
Trustee hereunder. Wherever reference is made in the Indenture to the
authentication and delivery of Notes by the Indenture Trustee or the Indenture
Trustee's certificate of authentication or the delivery of Notes to the
Indenture Trustee for authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Indenture Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Indenture Trustee by an Authenticating Agent and delivery of the Notes to
the Authenticating Agent on behalf of the Indenture Trustee. Each Authenticating
Agent shall be acceptable to the Issuer and the Noteholders and shall at all
times be a corporation having a combined capital and surplus of not less than
the equivalent of $50,000,000 and subject to supervision or examination by
Federal or state authority or the equivalent foreign authority, in the case of
an Authenticating Agent who is not organized and doing business under the laws
of the United States of America, any state thereof or the District of Columbia.
If such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of such Authenticating Agent, shall continue to be an
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Indenture Trustee or such Authenticating Agent; provided,
such corporation shall be otherwise eligible under this Section.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Indenture Trustee and to the Issuer. The Indenture Trustee may at
any time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent and to the Issuer. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Indenture Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders of Notes, if any, with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Note Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
46
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Indenture Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Notes described in the within-mentioned Indenture.
BANKERS TRUST COMPANY
As Indenture Trustee
By:_____________________________
As Authenticating Agent
By:_____________________________
Authorized Officer
Section 7.15 Money for Note Payments to be Held in Trust.
------------ --------------------------------------------
The Indenture Trustee shall execute and deliver, and if there is any
Paying Agent other than the Indenture Trustee, the Issuer will cause each Paying
Agent other than the Indenture Trustee to execute and deliver to the Indenture
Trustee an instrument in which such Paying Agent shall agree with the Indenture
Trustee that, subject to the provisions of this Section, such Paying Agent will:
(i) hold all sums held by it for the payment of principal or
interest on Notes in trust for the benefit of the Noteholders entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(ii)give the Indenture Trustee and the Noteholders notice of any
Default by the Issuer (or any other obligor upon the Notes) in the
making of any payment of principal or interest; and
(iii) at any time during the continuance of any such Default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of the Indenture or for any other purpose, pay, or by
Issuer Order direct any Paying Agent to pay, to the Indenture Trustee all sums
held in trust by such Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which such sums were held by such
Paying Agent; and, upon such payment by any Paying Agent to the Indenture
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Indenture Trustee or any Paying Agent in
trust for the payment of the principal or interest on any Note and remaining
unclaimed for two years after such principal or interest has become due and
payable shall be paid to the Issuer on Issuer Request; and the Holder of such
Note shall thereafter, as an unsecured general creditor, and subject to any
applicable statute of limitations, look only to the Issuer for payment thereof,
and all liability of the Indenture Trustee, such Paying Agent with respect
47
to such trust money or the related Note, shall thereupon cease; provided,
however, that the Indenture Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Issuer cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the city in which
the Corporate Trust Office is located, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and
employ, at the expense of the Issuer, any other reasonable means of notification
of such repayment (including, but not limited to, mailing notice of such
repayment to Noteholders whose right to or interest in monies due and payable
but not claimed is determinable from the records of any Paying Agent, at the
last address as shown on the Note Register for each such Noteholder).
48
ARTICLE EIGHT
-------------
FUNDINGS
--------
Section 8.01 Mandatory and Discretionary Fundings.
------------ -------------------------------------
If, as of the close of any Collection Period, the balances in the
Collection Account, the Liquidity Account, and the Premium Account are zero:
the Servicer shall provide written notice on each Submission Date
(i) to the Noteholders of the inability of the Issuer to pay Monthly
Required Payments scheduled for payment or deposit on the next
Payment Date (detailing the amounts of such fees and expenses and
providing evidence of any required preapproval of servicing
expenses by the Majority Noteholders), and each Noteholder shall
advance funds to the Issuer within five (5) Business Days
thereafter to pay such fees and expenses, provided that the
Noteholders shall contribute such funds in proportion to the
principal balance of Notes each holds. Any such advance shall be
added to principal in accordance with Section 2.09(d) hereof. Any
amounts so advanced shall be used solely for the payment of the
fees and expenses described in such notice.
(ii) (2) the Majority Holders may require, at their discretion, that
each Noteholder advance funds to the Issuer upon ten (10) Business
Days written notice to pay any other accrued but unpaid expenses
of the Issuer described in a written notice received from the
Servicer or the Indenture Trustee; provided that the Noteholders
shall contribute such funds in proportion to the principal balance
of Notes each holds. Any such advance shall be added to principal
in accordance with Section 2.09(d) hereof. Any amounts so advanced
shall be used solely for the payment of expenses described in such
notice.
49
ARTICLE NINE
------------
SUPPLEMENTAL INDENTURES
------------------------
Section 9.01 Supplemental Indentures with Consent of Noteholders.
------------ ----------------------------------------------------
With the consent of the Majority Noteholders, by Act of said Holders
delivered to the Issuer and the Indenture Trustee, the Issuer, the Servicer and
the Indenture Trustee may enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of modifying in any manner
the rights of the Holders of the Notes under the Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holders of
each Outstanding Note affected thereby:
(1) change the Stated Maturity of any Note or the due date of any
installment of principal of, or any installment of interest on, any
Note, or reduce the principal amount thereof or the Note Interest Rate
or change any place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment, or change the
basis on which interest on any Note is computed; or
(2) reduce the percentage in principal amount of the Outstanding
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of the
Indenture or Events of Default or their consequences; or
(3) impair or adversely affect the Trust Estate except as
otherwise permitted herein; or
(4) modify or alter the provisions of the proviso to the
definition of the term AOutstanding@; or
(5) modify or alter the provisions of the proviso to Section 6.04
hereof; or
(6) modify any of the provisions of this Section 9.01, except to
increase the percentage of Holders required for any modification or
waiver or to provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby; or
(7) permit the creation of any lien ranking prior to or on a
parity with the lien of the Indenture with respect to any part of the
Trust Estate or terminate the lien of the Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the
security afforded by the lien of the Indenture; or
(8) modify any of Sections 6.01(1) or (2), 6.02, 6.18, or 12.02(d)
hereof.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
50
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Indenture Trustee shall
not be obligated to enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under the
Indenture or otherwise.
Promptly after the execution by the Issuer, the Servicer, the Indenture
Trustee and the Majority Noteholders (or all Noteholders if so required to
approve such amendment or supplement) of any supplemental indenture pursuant to
this Section, the Issuer shall mail to the Holders of the Notes a copy of such
supplemental indenture.
Section 9.02 Execution of Supplemental Indentures.
------------ -------------------------------------
In executing any supplemental indenture permitted by this Article or
the modifications thereby of the trusts created by the Indenture, the Indenture
Trustee shall be entitled to receive upon request, and (subject to Section 7.01
hereof) shall be fully protected in relying in good faith upon, an Opinion of
Counsel reasonably acceptable to the Indenture Trustee stating that the
execution of such supplemental indenture is authorized or permitted by the
Indenture. The Indenture Trustee may, but shall not be obligated to, enter into
any such supplemental indenture which affects the Indenture Trustee's own duties
or immunities under the Indenture or otherwise.
Section 9.03 Effect of Supplemental Indentures.
------------ ----------------------------------
Upon the execution of any supplemental indenture under this Article,
the Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of the Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
Section 9.04 Reference in Notes to Supplemental Indentures.
------------ ----------------------------------------------
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
51
ARTICLE TEN
-----------
REDEMPTION OF NOTES
--------------------
Section 10.01 Redemption at the Option of the Issuer; Election to
-------------- -------------------------------------------------------
Redeem.
- -------
The Issuer shall have the option to redeem the Notes, in whole but not
in part, as to the then Outstanding Notes, at the Redemption Price at such time
as the Outstanding Principal Balance is below 10% of the Commitment Amount at
its highest amount.
The Issuer shall set the Redemption Date and the Redemption Record Date
and give notice thereof to the Indenture Trustee pursuant to Section 10.02
hereof.
Installments of interest and principal due prior to the Redemption Date
shall continue to be payable to the Holders of Notes called for redemption as of
the relevant Record Dates according to their terms and the provisions of Section
2.09 hereof. The election of the Issuer to redeem any Notes pursuant to this
Section shall be evidenced by a Board Resolution directing the Indenture Trustee
to make the payment of the Redemption Price on all of the Notes to be redeemed
from monies deposited with the Indenture Trustee pursuant to Section 10.04
hereof.
Section 10.02 Notice to Indenture Trustee.
------------- ----------------------------
In the case of any redemption pursuant to Section 10.01 hereof, the
Issuer shall, at least 15 days prior to the Redemption Date, notify the
Indenture Trustee of such Redemption Date and shall deposit into the Redemption
Account on the Business Day immediately preceding the Redemption Date an amount
equal to the Redemption Price of all Notes to be redeemed. Upon delivery to the
Indenture Trustee of an Officer's Certificate from the Issuer certifying that
such deposit in the Redemption Account has been made, the Indenture Trustee
shall promptly release its interest in the Collateral as provided in Article
Four hereof.
Section 10.03 Notice of Redemption by the Issuer.
------------- ------------------------------------
Upon receipt of the notice set forth in Section 10.02 above, the
Indenture Trustee shall provide telephonic notice thereof and a copy of such
notice of redemption pursuant to Section 10.01 by courier delivery or certified
mail, dispatched or mailed no later than the Business Day following the date on
which such notice was provided, to each Noteholder whose Notes are to be
redeemed, at his telephone number and address in the Note Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Note, and that interest thereon shall cease to accrue
on such date; and
(4) the address at which Notes shall be delivered.
52
Notice of redemption of Notes shall be given by the Indenture Trustee
in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
Section 10.04 Notes Payable on Redemption Date.
------------- ---------------------------------
Notice of redemption having been given as provided in Section 10.03
hereof, the Notes to be redeemed shall, on the applicable Redemption Date,
become due and payable at the Redemption Price and on such Redemption Date
(unless the Issuer shall default in the payment of the Redemption Price) such
Notes shall cease to bear interest. The Noteholders shall be paid the Redemption
Price by the Paying Agent on behalf of the Issuer upon presentation of their
respective Notes. If the Holders of any Note called for redemption shall not be
so paid, the principal shall, until paid, bear interest from the Redemption Date
at the related Note Interest Rate and the redemption shall be canceled and the
Notes shall be payable at Stated Maturity.
53
ARTICLE ELEVEN
---------------
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
Section 11.01 Representations and Warranties. The Issuer hereby makes
------------- -------------------------------
the following representations and warranties for the benefit of the Indenture
Trustee and the Noteholders on which the Indenture Trustee relies in accepting
the Trust Estate in trust and in authenticating the Notes. Such representations
and warranties are made as of (i) the Closing Date with respect to the Original
Policies, and (ii) the related Acquisition Date with respect to Additional
Policies that are subsequently added to the Series Pool, and shall survive the
transfer, grant and assignment of the Trust Estate to the Indenture Trustee.
(a) Organization and Good Standing. The Issuer 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 the Issuer to perform its
obligations under the Transaction Documents.
(b) Authorization. The Issuer has the power, authority and legal right
--------------
to execute, deliver and perform under the Transaction Documents and the
execution, delivery and performance of the Transaction Documents have been duly
authorized by the Issuer by all necessary corporate action.
(c) Binding Obligation. The Notes and the Indenture, assuming due
--------------------
authorization, execution and delivery by the Indenture Trustee and the Servicer,
and the Contribution, Sale and Servicing Agreement, assuming due authorization,
execution and delivery by PWCC and the Indenture Trustee, each constitutes a
legal, valid and binding obligation of the Issuer, enforceable against the
Issuer 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.
(d) No Violation. The consummation of the transactions contemplated by
-------------
the fulfillment of the terms of the Transaction Documents 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 the Issuer, or any material indenture,
agreement, mortgage, deed of trust or other instrument to which the Issuer 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 indenture, agreement,
mortgage, deed of trust or other such instrument, other than any Lien created or
imposed pursuant to the terms of the Transaction Documents, or violate any law
or, to the best of the Issuer's knowledge, any material order, rule or
regulation applicable to the Issuer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Issuer or any of its properties.
(e) No Proceedings. There are no proceedings or investigations to which
---------------
the Issuer, or any of the Issuer's Affiliates, is a party pending, or, to the
knowledge of the Issuer, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (A)
asserting the invalidity of the Transaction Documents or any Policy, (B) seeking
to prevent the issuance of any of the Notes or the consummation of any of the
transactions contemplated by the Transaction Documents, or (C)
54
seeking any determination or ruling that would materially and adversely affect
the performance by the Issuer of its obligations under, or the validity or
enforceability of, the Transaction Documents or any Policy.
(f) 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 the Transaction
Documents and with the valid and proper authorization, issuance and sale of the
Notes pursuant to the 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.
(g) Place of Business. The Issuer's chief executive office is located
-----------------
in San Francisco, California.
(h) Security Interest. Upon (i) execution and delivery by the parties
-------------------
hereto of this Indenture and the Contribution, Sale and Servicing Agreement and
performance in accordance with Section 2.06 thereof, (ii) filing with the
applicable Obligor of an assignment form in respect of the related Policy
assigning ownership of such Policy in the name of "Bankers Trust Company," as
Agent or "Bankers Trust Company", (iii) filing the UCC financing statements in
accordance with Section 4.02 hereof, and (iv) obtaining an acknowledgment by the
Obligor of each Policy of the assignment referred to in clause (ii) above, the
Indenture Trustee shall have a valid perfected security interest in the Issuer's
right, title and interest in the Policies, and in the proceeds thereof prior and
superior to and free and clear of any other security interest or lien other than
as provided in the proviso to Section 11.02(a).
(i) Ownership of the Issuer. As of the Closing Date, PWCC is the
--------------------------
registered owner of all of the issued and outstanding common stock of the
Issuer, all of which common stock has been validly issued, is fully paid and
nonassessable and is owned of record, free and clear of all mortgages,
assignments, pledges, security interests, warrants, options and rights to
purchase.
(j) Contribution, Sale and Servicing Agreement. As of the Closing Date,
-------------------------------------------
the Issuer has entered into the Contribution, Sale and Servicing Agreement with
PWCC relating to its acquisition of the Policies, and the representations and
warranties made by PWCC relating to the Policies have been validly assigned to
and are for the benefit of the Issuer, the Indenture Trustee and the Noteholders
and such representations and warranties are true and correct in all material
respects as of each date made.
(k) Bulk Transfer Laws. The transfer, assignment and conveyance of the
-------------------
Policies by PWCC to the Issuer pursuant to the Contribution, Sale and Servicing
Agreement or by the Issuer pursuant to this Indenture is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
(l) The Policies. The Issuer hereby represents and warrants that: (i)
-------------
the Face Value of any Policy does not exceed the greater of 5% of the
Outstanding Principal Balance and $1,500,000, (ii) the Face Value of any Policy
issued by any Obligor with no claims paying ability rating or a rating below the
Minimum Rating, does not exceed (A) with respect to a Policy subject to the
California guaranty fund, 125% of the liability limits for single policies
applicable to such fund, as set forth on Exhibit F to the Original Indenture (as
amended from to time) and (B) with respect to any other Policy, the liability
limits for single Policies established by state life/health guaranty fund
provisions as set forth on Exhibit F to the Original Indenture; (iii) as of the
time that a Policy was acquired from the related Owner, the Insured under the
Policy was residing within the United States; (iv) each Policy is beyond the
contestability and suicide periods (including any contestability and suicide
periods that were re-established due to a lapsed premium payment); (v) the
Insured has a documented life expectancy of 36 months or less as reviewed and
certified by an Eligible Physician and the Insured has a Terminal Illness; (vi)
each Policy is non-cancelable by the Obligor on such Policy or, in the event of
a cancelable group
55
Policy, contains a convertibility clause as long as the insurance premium
payments in respect of the Policy are made on a timely basis to the Obligor
thereon; (vii) no Policy is an industrial life insurance policy, an assessment
plan life insurance policy, workmen's compensation, or a war risk policy; (viii)
the primary beneficiary or beneficiaries immediately prior to the acquisition of
the Policy from the Owner are not minors; (ix) PWCC has delivered to the
Indenture Trustee on the Issuer's behalf, each Policy with each item of related
Documentation listed in the definition of "Documentation" accompanying it; (x)
the benefits payable under each Policy shown on the books and records of the
Issuer are true and correct in all material respects; (xi) as of the related
Acquisition Date with respect to Additional Policies, and as of the Closing Date
with respect to Policies acquired by the Issuer on the Closing Date, there
exists no fact that would impair the validity or collectability of any Policy;
and (x) each Policy is enforceable in accordance with its terms. If any of the
representations and warranties made by the Issuer in this Section 11.01(l) is
breached and subsequently cured by PWCC in accordance with Section 3.03 of the
Contribution, Sale and Servicing Agreement, such breach shall be deemed cured
for all purposes of this Indenture.
Section 11.02 Covenants. The Issuer hereby makes the following
-------------- ----------
covenants on which the Indenture Trustee relies in accepting the Trust Estate in
trust and in authenticating the Notes. Such covenants are made as of (i) the
Closing Date with respect to Policies in the Series Pool as of the Closing Date,
and (ii) the related Acquisition Date with respect to Additional Policies, but
shall survive the transfer, grant and assignment of the Trust Estate to the
Indenture Trustee.
(a) No Liens. Except for the conveyances and grant of security
----------
interests hereunder, the Issuer will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on any
Trust Estate now existing or hereafter created, or any interest therein prior to
the termination of the Indenture pursuant to Section 5.01 hereof; the Issuer
will notify the Indenture Trustee of the existence of any Lien on any Trust
Estate immediately upon discovery thereof; and the Issuer shall defend the
right, title and interest of the Indenture Trustee in, to and under the Trust
Estate now existing or hereafter created, against all claims of third parties
claiming through or under the Issuer; provided, however, that nothing in this
-------- -------
Section 11.02(a) shall prevent or be deemed to prohibit the Issuer from
suffering to exist upon any of the Trust Estate any Liens for municipal or other
local taxes and other governmental charges if such taxes or governmental charges
shall not at the time be due and payable or if the Issuer shall currently be
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
(b) Delivery of Collections. On each Disbursement Date, the Issuer
-------------------------
shall deposit the related Policy Proceeds or shall use its best efforts to
ensure that such Policy Proceeds are deposited into the Collection Account in
accordance with Section 12.01 hereof.
(c) Obligations with Respect to the Policies. The Issuer will duly
--------------------------------------------
fulfill all material obligations on its part to be fulfilled under or in
connection with each Policy and will do nothing to impair the rights of the
Indenture Trustee (for the benefit of the Noteholders) in the Trust Estate.
(d) Taxes. The Issuer shall pay or cause to be paid all taxes,
------
assessments, and other government charges or levies imposed upon it or upon its
income, profits or property, except for taxes being contested in good faith and
by appropriate proceedings for which adequate reserves have been established
with respect thereto. In addition, the Issuer shall provide the Indenture
Trustee with copies of completed and executed forms that are necessary for the
Indenture Trustee to deliver a check for Taxes as provided in Section 12.02(g)
hereof.
56
(e) Compliance with Law. The Issuer will comply, in all material
---------------------
respects, with all acts, rules, regulations, orders, decrees and directions of
any governmental authority applicable to it or the Policies or any part thereof
or necessary for it to perform its responsibilities hereunder; provided,
however, that the Issuer may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not materially and adversely
affect the rights of the Indenture Trustee (for the benefit of the Noteholders)
in the Policies.
(f) Preservation of Security Interest. The Issuer shall execute and
------------------------------------
file such documents which may be required by law to fully preserve and protect
the first priority security interest of the Indenture Trustee (for the benefit
of the Noteholders) in the Trust Estate.
(g) Maintenance of Office, etc. The Issuer will not, without providing
---------------------
30 days notice to the Indenture Trustee and without filing such amendments to
any previously filed financing statements as the Indenture Trustee may require
or as may be required in order to maintain the Indenture Trustee's perfected
security interest in the Trust Estate, (a) change the location of its principal
place of business, or (b) change its name, identity or corporate structure in
any manner that would make any financing statement or continuation statement
filed by the Issuer in accordance with the Contribution, Sale and Servicing
Agreement or the Indenture seriously misleading within the meaning of Article
9-402(7) of any applicable enactment of the UCC.
(h) Further Assurances. The Issuer will make, execute or endorse,
-------------------
acknowledge, and file or deliver to the Indenture Trustee from time to time such
schedules, confirmatory assignments, conveyances, transfer endorsements, powers
of attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Trust Estate, as the Indenture Trustee or
Noteholders may request or may reasonably require.
(i) Notice of Liens. The Issuer shall notify the Indenture Trustee
----------------
promptly after becoming aware of any Lien on any portion of the Trust Estate,
except for any Liens for municipal or other local taxes if such taxes shall not
at the time be due or payable without penalty or if the Issuer shall currently
be contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto.
(j) Activities of the Issuer. The Issuer (a) shall engage in only (1)
-------------------------
the acquisition, ownership, selling and pledging of the property acquired by the
Issuer pursuant to the Contribution, Sale and Servicing Agreement, and causing
the issuance of, receiving and selling the Notes issued pursuant to the
Indenture and (2) the exercise of any powers permitted to corporations under the
corporate law of its applicable Issuer state of incorporation which are
incidental to the foregoing or necessary to accomplish the foregoing and the
Issuer shall incur no debt other than trade payables and expense accruals in
connection with its operations in the normal course of business; (b) will (1)
maintain its books and records separate from the books and records of any other
entity, (2) maintain separate bank accounts and no funds of the Issuer shall be
commingled with funds of any other entity, (3) keep in full effect its
existence, rights and franchises as a corporation under the laws of its
applicable state of incorporation, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of the Indenture; and (c) will not (1) dissolve or liquidate in
whole or in part, (2) own any subsidiary or lend or advance any moneys to, or
make an investment in, any Person, (3) incur debt in making any capital
expenditures, (4)(A) commence any case, proceeding or other action under any
existing or future bankruptcy, insolvency or similar law seeking to have an
order for relief entered with respect to it, or seeking reorganization,
arrangement, adjustment, wind-up, liquidation, dissolution, composition or
57
other relief with respect to it or its debts, (B) seek appointment of a
receiver, trustee, custodian or other similar official for it or any part of its
assets, (C) make a general assignment for the benefit of creditors, or (D) take
any action in furtherance of, or consenting or acquiescing in, any of the
foregoing, (5) guarantee (directly or indirectly), endorse or otherwise become
contingently liable (directly or indirectly) for the obligations of, or own or
purchase any stock, obligations or securities of or any other interest in, or
make any capital contribution to, any other Person, (6) merge or consolidate
with any other Person, (7) engage in any other action that bears on whether the
separate legal identity of the Issuer will be respected, including without
limitation (A) holding itself out as being liable for the debts of any other
party or (B) acting other than in its corporate name and through its duly
authorized officers or agents, or (8) create, incur, assume, or in any manner
become liable in respect of any indebtedness other than trade payables and
expense accruals incurred in the ordinary course of business and which are
incidental to its business purpose; provided, however, that the Issuer may take
any action prohibited by this clause (8) if the Majority Noteholders otherwise
consent to such action. On or before each April 15, so long as any of the Notes
are Outstanding, the Issuer shall furnish to each Noteholder and the Indenture
Trustee, an Officer's Certificate confirming that the Issuer has complied with
its obligations under this Section 11.02(j).
(k) Directors. The Issuer agrees that at all times, at least one of the
----------
directors and one of the executive officers of the Issuer (which may be one
person who is serving as both a director and an executive officer) will not be a
director, shareholder, officer or employee of any direct or ultimate parent, or
Affiliate of the parent or of the Issuer; provided, however, that such
independent director and officer may serve in similar capacities for other
"special purpose corporations" formed by PWCC and its Affiliates.
(l) Treatment for Tax Purposes. The Issuer shall treat (i) the issuance
--------------------------
of the Notes as indebtedness of the Issuer, and (ii) the Policy Assets as assets
of the Issuer, for purposes of Taxes imposed upon the Issuer.
(m) Other Necessary Data. The Issuer shall, on request of the Indenture
--------------------
Trustee or the Majority Noteholders, on reasonable notice, (i) furnish the
Indenture Trustee and Noteholders such data necessary for the administration and
monitoring of the Trust Estate as can be reasonably generated by the Issuer's
existing data processing systems, and (ii) on and after an Event of Default,
provide the Indenture Trustee and the Noteholders with immediate access to the
Issuer's existing data processing systems, books and record, and premises.
(n) Preservation of the Policies. The Issuer warrants that it is the
------------------------------
lawful owner and possessor of the Policies and that it will warrant and defend
such Policies against all Persons, material claims and demands whatsoever. The
Issuer shall not assign, sell, pledge, or exchange, or in any way encumber or
permit the encumbrance of, or otherwise dispose of, the Policies except as
permitted hereunder.
(o) Enforcement of the Contribution, Sale and Servicing Agreement. The
--------------------------------------------------------------
Issuer will take all actions necessary, and diligently to pursue all remedies
available to it, to the extent commercially reasonable, to enforce the
obligations of PWCC under the Contribution, Sale and Servicing Agreement and to
secure its rights thereunder.
(p) Issuer May Not Consolidate or Merge. The Issuer shall not
----------------------------------------
consolidate or merge with or into any other Person or convey or transfer its
properties and assets substantially as an entirety to any Person.
(q) Successor Substituted. Upon any consolidation or merger, or any
-----------------------
conveyance or transfer of the properties and assets of the Issuer substantially
as an entirety in accordance with Section 11.02(p) hereof,
58
the Person formed by or surviving such consolidation or merger (if other than
the Issuer) or the Person to which such conveyance or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Issuer under the Indenture with the same effect as if such Person had been
named as the Issuer herein. In the event of any such conveyance or transfer, the
Person named as the AIssuer@ in the first paragraph of the Indenture or any
successor which shall theretofore have become such in the manner prescribed in
this Article shall be released from its liabilities as obligor and maker on all
the Notes and from its obligations under the Indenture and may be dissolved,
wound-up and liquidated at any time thereafter.
(r) Use of Proceeds. The proceeds from the sale of the Notes will be
---------------
used by the Issuer to repay existing indebtedness, pay the expenses associated
with the issuance of the Notes and the funding of the accounts described in
Article Twelve hereof, purchase additional insurance policies and for general
corporate purposes, including payment of administrative expenses and dividends.
None of the transactions contemplated in this Indenture (including the use of
the proceeds from the sale of the Notes) will result in a violation of Section 7
of the Securities and Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto, including Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Issuer does
not own or intend to carry or purchase any "margin security" within the meaning
of said Regulation G, including margin securities originally issued by it or any
"margin stock" within the meaning of said Regulation U.
(s) Financial Statements; Certification as to Compliance; Notice of
------------------------------------------------------------------
Default; Etc. (1) The Issuer will deliver to the Indenture Trustee and to each
- --------------
Noteholder of Outstanding Notes, within 90 days after the end of each fiscal
year of the Issuer, commencing with the fiscal year ending December 31, 1999, a
copy of the Issuer'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 Issuer 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;
(2) In addition, the Issuer will deliver to the Indenture Trustee and
to each Noteholder of Outstanding Notes:
(i) immediately upon becoming aware of the existence of any
condition or event which constitutes a Default or an Event of Default,
a written notice describing its nature and period of existence and what
action the Issuer is taking or proposes to take with respect thereto;
(ii) promptly upon the Issuer's becoming aware of:
(A) any proposed or pending investigation of it or PWCC or the
Key Employees by any governmental authority or agency, which
involves or may involve the possibility of materially and
adversely affecting the properties, business, prospects, profits
or condition (financial or otherwise) of the Issuer or PWCC; or
(B) any pending or proposed court or administrative proceeding
against it or PWCC or the Key Employees which involves or may
involve the possibility of materially and adversely affecting the
properties, business, prospects, profits or condition (financial
or otherwise) of PWCC or the Issuer,
59
a written notice specifying the nature of such investigation or
proceeding and what action the Issuer is taking or proposes to take
with respect thereto and evaluating its merits;
(iii) with reasonable promptness any other data and information
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.
(3) The Issuer shall deliver to each Noteholder of outstanding Notes
within 60 days of the end of each fiscal year, an Officer's Certificate to the
effect that the Issuer is in compliance with all of its obligations under
Section 11.02 of this Indenture, or if not, describing the nature of any
violation and what action the Issuer has taken and is taking with respect
thereto.
(t) Access to Certain Documentation and Information.
------------------------------------------------
(i) The Issuer shall provide to the Indenture Trustee and any
Noteholder and their duly authorized representatives, attorneys or
accountants access to any and all documentation regarding the Trust
Estate that the Issuer may possess, such access being afforded without
charge but only upon reasonable request and during normal business
hours so as not to interfere unreasonably with the Issuer's normal
operations or customer or employee relations, at offices of the Issuer
designated by the Issuer.
(ii) Nothing in this Section 11.02(t) shall affect the obligation
of the Issuer to observe any applicable law prohibiting disclosure of
information regarding the Insureds, and the failure to provide
information otherwise required by this Section 11.02(t) as a result of
such observance by the Issuer, shall not constitute a breach of this
Section 11.02(t).
(u) Confidentiality. All non-public information obtained by the
----------------
Indenture Trustee or any Noteholder regarding the financial or legal affairs of
the Issuer or PWCC, or regarding the Policies or the Insureds, whether upon
exercise of its rights under Sections 11.02(s) or (t) hereof, 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 Indenture, provided that the Indenture Trustee will use its best efforts to
provide prior notice of such disclosure to the Issuer.
Section 11.03 Other Matters as to the Issuer.
------------- -------------------------------
The directors, officers, or employees of the Issuer shall not be under
any liability to the Trust, the Indenture Trustee, the Noteholders, or any other
Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of the Indenture and the
issuance of the Notes.
60
Section 11.04 Tax Treatment.
------------- --------------
The Issuer has structured the transaction contemplated by this
Indenture and the Notes with the intention that the Notes will qualify under
applicable tax law as indebtedness of the Issuer, and the Indenture Trustee, the
Servicer, and each Noteholder by acceptance of its Note, agree to treat the
Notes as indebtedness for all purposes.
61
ARTICLE TWELVE
--------------
ACCOUNTS AND ACCOUNTINGS
-------------------------
Section 12.01 Collection of Money.
------------- -------------------
Except as otherwise expressly provided herein, the Indenture Trustee
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money (including, but not limited to Policy Proceeds) and other property
payable to or receivable by the Indenture Trustee pursuant to the Indenture. The
Indenture Trustee shall, upon request from the Servicer, provide the Servicer
with sufficient information regarding the amount of collections with respect to
the Policies received by the Indenture Trustee in the Collection Account and the
other accounts held in the name of the Indenture Trustee to permit the Servicer
to perform its duties under the Contribution, Sale and Servicing Agreement. The
Indenture Trustee shall hold all such money and property so received by it as
part of the Trust Estate and shall apply it as provided in the Indenture.
If any Policy Proceeds fail to be paid by the Obligor upon Maturity of
the related Policy, the Indenture Trustee, upon Issuer or Servicer request may,
and upon the request of the Majority Noteholders shall, take such action as may
be appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under the
Indenture and to proceed thereafter as provided in Article Six hereof.
Section 12.02 Collection Account; Redemption Account; Tax Account.
------------- -----------------------------------------------------
(a) The Indenture Trustee shall maintain a segregated trust account at
its Corporate Trust Office (the "Collection Account") for the benefit of the
Noteholders, for the receipt of (i) Policy Proceeds, (ii) amounts transferred
from the Liquidity Account in accordance with Section 12.03 hereof, (iii)
contributions made by the Noteholders pursuant to the Master Agreement, (iv)
amounts transferred from the Premium Account in accordance with Section 12.04
hereof, and (v) any Reinvestment Income earned on such amounts. Funds in the
Collection Account shall not be commingled with any other monies. All payments
to be made from time to time by the Issuer to the Noteholders out of funds in
the Collection Account pursuant to the Indenture or the Contribution, Sale and
Servicing Agreement shall be made by the Indenture Trustee or the Paying Agent
of the Issuer. All monies deposited from time to time in the Collection Account
pursuant to the Indenture shall be held by the Indenture Trustee as part of the
Trust Estate as herein provided.
(b) Upon Issuer Order, the Indenture Trustee shall invest the funds in
the Collection Account in Eligible Investments. The Issuer Order shall specify
the Eligible Investments in which the Indenture Trustee shall invest, shall
state that the same are Eligible Investments and shall further specify the
percentage of funds to be invested in each Eligible Investment. No such Eligible
Investment shall mature later than the Business Day preceding the next following
Acquisition Date and shall not be sold or disposed of prior to its maturity;
provided that Eligible Investments may mature on any Payment Date. In the
absence of an Issuer Order, the Indenture Trustee shall invest funds in the
Collection Account in Eligible Investments described in clause (vii) of the
definition thereof. Eligible Investments shall be made in the name of the
Indenture Trustee for the benefit of the Noteholders. The Indenture Trustee
shall provide to the Servicer monthly written confirmation of such investments,
describing the Eligible Investments in which such amounts have been invested.
62
(c) Any income or other gain from investments in Eligible Investments
as outlined in (b) above shall be credited to the Collection Account and any
loss resulting from such investments shall be charged to such account. The
Indenture Trustee shall not be liable for any loss incurred on any funds
invested in Eligible Investments pursuant to the provisions of this Section
12.02 (other than losses from nonpayment of investments in obligations of
Bankers Trust Company issued in its capacity other than as Indenture Trustee).
(d) On each Payment Date if either no Default or Event of Default shall
have occurred and be continuing or a Default or Event of Default shall have
occurred and be continuing but the entire Outstanding Principal Balance of all
Notes shall not have been declared due and payable pursuant to Section 6.02
hereof, then on such Payment Date, after making all transfers and deposits to
the Collection Account pursuant to Section 12.02(a) hereof, the Indenture
Trustee shall withdraw from the Collection Account amounts sufficient to make
the following disbursements, and shall make such disbursements in the following
order in accordance with the provisions of and instructions on the Monthly
Servicing Report; provided, however, that the Indenture Trustee shall withdraw
from the Collection Account and make interest payments based on the Outstanding
Principal Balance of the Notes even if it shall not have received the Monthly
Servicing Report and, upon receipt of the Monthly Servicer Report, or such other
information as may be required by the Indenture Trustee, shall pay each such
other amounts set forth below, all as set forth in the Monthly Servicer Report
or in such other information delivered to the Indenture Trustee:
(i) to pay to PWCC: (A) the portion of the Total Servicing Fee then due
under the Contribution, Sale and Servicing Agreement; (B) to pay the
reasonable costs and expenses incurred by PWCC, as Servicer (including
advances made by the Servicer for reasonable attorney's fees and
out-of-pocket expenses) that have accrued and remain unreimbursed, in
connection with the realization, attempted realization or enforcement
of rights and remedies upon Defaulted Policies; and (C) any other
amounts due the Servicer that have accrued and remain unreimbursed as
expressly provided herein and in the Contribution, Sale and Servicing
Agreement but in case of clauses (B) and (C) above, only to the extent
previously approved in writing by the Majority Noteholders, which
approval shall not be unreasonably withheld;
(ii) to pay to the Indenture Trustee the Trustee Fee then due and to
pay to the Indenture Trustee any other amounts due to the Indenture
Trustee as expressly provided herein and in the Contribution, Sale and
Servicing Agreement and other Transaction Documents;
(iii) with respect to any Sourcing Agents who are not employees or
Affiliates of PWCC or the Issuer, to pay such Sourcing Agent any
Back-End Sourcing Agent Fees with respect to Policies that Matured
during the related Collection Period, and to reimburse PWCC for its
advancing of the costs, in an amount not to exceed $27,000, of
increasing the Face Value of the Policies owned by the Issuer;
(iv) [intentionally deleted]
(v) to pay to the Issuer or as directed by the Issuer, an amount equal
to any Taxes constituting franchise taxes or other taxes not measured
by income, gross receipts or payroll of the Issuer which the Indenture
Trustee has been notified by the Issuer are estimated to be due on the
next Estimated Tax Due Date, which amount shall not exceed $2,000 per
year;
(vi) to pay to the Noteholders interest due on that Payment Date and
any accrued and unpaid interest;
63
(vii) to pay the Noteholders the Outstanding Principal Balance;
(viii) to deposit into the Tax Account an amount equal to any other
Taxes not previously paid pursuant to Section 12.02(d)(v) hereof which the
Indenture Trustee has been notified by the Issuer are estimated to be due on the
next Estimated Tax Due Date and not yet deposited in the Tax Account; and
(viii) to pay the remainder of any funds to the Issuer, provided that
the Notes have been repaid in full.
(e) Prior to the Closing Date, the Issuer shall cause the Indenture
Trustee to open and maintain a trust account at the Corporate Trust Office (the
"Redemption Account") for the benefit of Noteholders, for the receipt of the
Redemption Price of any Notes to be redeemed in accordance with Article Ten
hereof. On any Redemption Date, the Indenture Trustee shall withdraw the
applicable Redemption Price from the Redemption Account and the Paying Agent
shall remit the Redemption Price to the applicable Noteholders in accordance
with Section 10.04 hereof. Moneys in the Redemption Account shall be invested in
Eligible Investments that mature no later than two Business Days prior to the
relevant Redemption Date. Any monies deposited in the Redemption Account for
purposes of redeeming Notes pursuant to Article Ten hereof shall, subject to
Section 7.15 hereof, remain in the Redemption Account until used to redeem such
Notes.
(f) Prior to the Closing Date, the Issuer shall cause the Indenture
Trustee to open and maintain a trust account at the Corporate Trust Office (the
"Tax Account") for the benefit of the Noteholders, for the receipt of funds for
the payment of Taxes in accordance with Sections 12.02(d)(viii) hereof. If
amounts for Taxes are requested to be deposited into the Tax Account pursuant to
Section 12.02(d)(viii) hereof or paid from the Tax Account with respect thereto,
the Servicer shall provide the Majority Noteholders with a draft of any relevant
proposed tax forms at least 10 Business Days prior to the date set for filing of
such forms. Upon receipt from the Servicer or Issuer of copies of the proper tax
forms (and the approval of such forms by the Majority Noteholders, which
approval shall not be unreasonably withheld) and any such other information as
the Indenture Trustee may reasonably request, the Indenture Trustee shall
withdraw the proper amount of funds from the Tax Account and deliver to PWCC or
the Issuer, on a timely basis, a check for Taxes payable on behalf of the
Issuer, such check to be made payable to the applicable taxing authority. The
Issuer shall provide to the Indenture Trustee evidence that payment of all Taxes
(whether described in 12.02(d)(v) or (viii) hereof) was in fact made by promptly
delivering to the Indenture Trustee proof, by evidence of a return receipt, that
a check therefor was mailed.
Section 12.03 Liquidity Account.
------------- -------------------
(a) The Indenture Trustee shall maintain a segregated trust account at
the Corporate Trust Office (the "Liquidity Account") for the benefit of the
Noteholders, for the receipt of (i) funds transferred from the Collection
Account pursuant to Section 12.02(d) hereof and (ii) contributions made by the
Noteholders pursuant to the Master Agreement. Monies shall be subject to
withdrawal in accordance with Section 12.03(d) hereof.
(b) Upon Issuer Order all or a portion of the Liquidity Account shall
be invested and reinvested at the Issuer's written direction in one or more
Eligible Investments. In the absence of an Issuer Order, the Indenture Trustee
shall invest funds in the Liquidity Account in Eligible Investments described in
clause (vii) of the definition of Eligible Investments. All income or other gain
from such investments shall be credited to such Liquidity Account and any loss
resulting from such investments shall be charged to such Liquidity Account;
provided, however, that the Issuer shall make or cause to be made on any
Calculation Date a
64
deposit to the Liquidity Account to the extent of any losses therein caused as a
result of the Issuer's investment instructions. All investment earnings on funds
held in the Liquidity Account will be retained therein to the extent needed to
pay the expenses for which the funds were deposited into such account, except as
otherwise directed by the Majority Noteholders. No Eligible Investment shall
mature later than the Business Day preceding the next following Payment Date and
shall not be sold or disposed of prior to its maturity. Eligible Investments
shall be made in the name of the Indenture Trustee for the benefit of the
Noteholders. The Indenture Trustee shall provide to the Servicer monthly written
confirmation of such investments, describing the Eligible Investments in which
such amounts have been invested.
(c) If any amounts invested as provided in Section 12.03(b) hereof
shall be needed for disbursement from the Liquidity Account as set forth in
Section 12.03(d) hereof, the Indenture Trustee shall cause such investments of
such Liquidity Account to be sold or otherwise converted to cash to the credit
of such Liquidity Account. The Indenture Trustee shall not be liable for any
investment loss resulting from investment of money in the Liquidity Account in
any Eligible Investment in accordance with the terms hereof (other than losses
from nonpayment of investments in obligations of Bankers Trust Company issued in
its capacity other than as Indenture Trustee).
(d) On each Payment Date, disbursements from the Liquidity Account
shall be made in the following order of priority, provided that funds therefor
are available.
(i) Until the Outstanding Principal Balance of all Notes has been
repaid in full, the Indenture Trustee shall withdraw from the Liquidity
Account and deposit into the Collection Account, the amount, if any, by
which the funds then held in the Liquidity Account exceeds the Required
Liquidity Amount.
(ii) If the Outstanding Principal Balance of the Notes has been paid in
full, the Indenture Trustee shall withdraw the remaining funds in the
Liquidity Account and disburse such withdrawn amounts to or at the
direction of the Issuer.
Section 12.04 Premium Account.
------------- ----------------
(a) The Indenture Trustee shall maintain a segregated trust account at
its Corporate Trust Office known as the Premium Account for the benefit of the
Noteholders. From time to time funds may be deposited in the Premium Account as
a result of contributions made by the Noteholders pursuant to Section 8.01
hereof and the Master Agreement. Funds in the Premium Account shall not be
commingled with any other monies. All amounts deposited from time to time in the
Premium Account pursuant to the Indenture shall be held by the Indenture Trustee
as part of the Trust Estate as herein provided.
(b) Upon Issuer Order all or a portion of the Premium Account shall be
invested and reinvested at the Issuer's written direction in Eligible
Investments. In the absence of an Issuer Order, the Indenture Trustee shall
invest funds in the Premium Account in those Eligible Investments set forth in
clause (vii) of the definition thereof. All income or other gain from such
investments shall be credited to such Premium Account and any loss resulting
from such investments shall be charged to such Premium Account. No Eligible
Investment shall mature later than the Business Day preceding the next following
Payment Date and shall not be sold or disposed of prior to its maturity.
Eligible Investments shall be made in the name of the Indenture Trustee for the
benefit of the Noteholders. The Indenture Trustee shall provide to the Servicer
monthly written confirmation of such investments, describing the Eligible
Investments in which such amounts have been invested.
65
(c) If any amounts invested as provided in Section 12.04(b) hereof
shall be needed for disbursement from the Premium Account as set forth in
Section 12.04(d) hereof, the Indenture Trustee shall cause such investments of
such Premium Account to be sold or otherwise converted to cash to the credit of
such Premium Account. The Indenture Trustee shall not be liable for any
investment loss resulting from investment of money in the Premium Account in any
Eligible Investment in accordance with the terms hereof (other than losses from
nonpayment of investments in obligations of Bankers Trust Company issued in its
capacity other than as Indenture Trustee). Any Reinvestment Income earned on the
Premium Account shall be retained in the Premium Account to the extent needed to
pay premiums due with respect to any Policy, unless otherwise directed by the
Majority Noteholders.
(d) Disbursements from the Premium Account shall be made in the
following order of priority, provided that funds therefor are available:
(i) The Indenture Trustee shall disburse funds in the Premium Account
on each Payment Date to reimburse the Servicer for all premiums paid by
it, upon submission by the Servicer of a request for reimbursement
accompanied by written proof of such payment. If directed by the
Noteholders in writing, the Indenture Trustee shall also withdraw funds
from the Premium Account, prepare a check made payable to the
applicable Obligor for payment of premiums then due, and deliver such
check as directed by the Noteholders.
(ii) Unless otherwise directed by the Noteholders in writing, on each
Payment Date until all interest and the Outstanding Principal Balance
of all Notes have been repaid in full, the Indenture Trustee shall
withdraw from the Premium Account and deposit into the Collection
Account, the amount, if any, by which the funds then held in the
Premium Account exceeds the Required Premium Amount.
(iii) If all interest and the Outstanding Principal Balance of the
Notes have been paid in full, the Indenture Trustee shall withdraw the
remaining funds in the Premium Account and disburse such withdrawn
amounts to or at the written direction of the Issuer.
(e) The Indenture Trustee shall verify the premium information required
to be maintained by the Servicer under the Contribution, Sale and Servicing
Agreement, as provided in the Monthly Servicing Report, and shall verify the
payment of premiums by reference to the copies of checks provided to the
Indenture Trustee by the Servicer and information provided in the Monthly
Servicer Report.
(f) Notwithstanding the foregoing, PWCC shall have no obligation or
liability for any adverse consequences caused by the lapse of any Policy solely
due to errors in the payment of any premium pursuant to the second sentence of
Section 12.04(d)(i) hereof.
Section 12.05 Reports by Indenture Trustee to Noteholders.
------------- --------------------------------------------
(a) On each Payment Date the Indenture Trustee shall account to each
Noteholder the amount which represents principal and the amount which represents
interest, and shall contemporaneously advise the Issuer of all such payments.
The Indenture Trustee may satisfy its obligations under this Section 12.05 by
delivering the Monthly Servicer's Report to each such Noteholder. On or before
the 10th day prior to the final Payment Date the Indenture Trustee shall provide
notice to the Noteholders of the final Payment Date for the Notes. Such notice
shall include (1) a statement that interest shall cease to accrue as of the last
day preceding the date on which the final Payment Date occurs, and (2) shall
specify the place or places at which presentation
66
and surrender may be made.
(b) The Indenture Trustee shall, on a monthly basis beginning on the
first Calculation Date, confirm the credit rating or, if more than one credit
rating has been assigned, each such credit rating of each institution in which
funds are invested pursuant to the definition of Eligible Investments and shall
promptly notify the Noteholders if any such credit rating has been lowered.
(c) At least annually, or as otherwise required by law, the Servicer
shall prepare or cause to be prepared, and the Indenture Trustee shall
distribute to Noteholders, any 1099 form, or other tax information or statements
as are required by applicable tax law.
Section 12.06 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. No
later than 12:00 noon (New York time) on the following Verification Date, the
Indenture Trustee shall (to the extent the Indenture Trustee received the
information needed to do so) verify the information contained in the Monthly
Servicing Report based on the information used by the Servicer to generate the
Monthly Servicing Report and provided to the Indenture Trustee. Upon
verification, the Servicer shall deliver to the Issuer, PWCC and each
Noteholder, the Monthly Servicing Report in the form attached hereto as Exhibit
-------
A. The Monthly Servicing Report shall include: (i) information with respect to
- -
the Policy Proceeds received by the Indenture Trustee for the benefit of the
Noteholders during the Collection Period ended on the last day of the month
immediately preceding such Submission Date, (ii) information with respect to the
Principal Distribution Amount (if any) and interest due and owing on the Notes,
Taxes, if any, Back-End Sourcing Agents Fees, Monthly Servicing Fee and Trustee
Fees due on the immediately upcoming Payment Date, (iii) calculations and
certifications that Additional Policies acquired during such month are Eligible
Policies, (iv) information with respect to the payment of premiums on any
Policy, including, but not limited to: (A) the date and amount of premiums due
in the Collection Period ended on the last day of the month immediately
preceding such Submission Date, and that confirmations of such payments were
received from the related Obligors or the date the checks written for such
premium payments cleared the bank account on which such checks were drawn, (B)
the date and amount of premiums due in the Collection Period commencing on the
first day of the month during which the Submission Date occurs and (C) the
amount of premiums paid by PWCC to be reimbursed on the Payment Date, (v)
information with respect to amounts, if any, on deposit in the Liquidity Account
and the Premium Account, (vi) information with respect to Policies that are to
be repurchased by PWCC due to a breach of a representation or warranty, (vii)
the Face Value and Policy Cost of Additional Policies acquired during the
Collection Period ended on the last day of the month immediately preceding such
Submission Date, (viii) the date of any claim made with respect to a Matured
Policy, and (ix) a notation on whether any Events of Default have occurred. In
the event the Indenture Trustee finds discrepancies or errors in the Monthly
Servicing Report that are not corrected by 3:00 p.m. (New York time) on the
Verification Date, it shall notify the Servicer on or prior to the Verification
Date, and the Servicer and the Indenture Trustee shall attempt a resolution of
any such error or discrepancy. If any discrepancy or error is not resolved, the
Indenture Trustee's determination shall control absent manifest error.
Section 12.07 Reporting and Inspection Rights of Noteholders.
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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
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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.
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ARTICLE THIRTEEN
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PROVISIONS OF GENERAL APPLICATION
---------------------------------
Section 13.01 General Provisions. All of the provisions of this Article
--------------------------------
shall apply to this Indenture.
Section 13.02 Acts of Noteholders.
-----------------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by the Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the AAct@ of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of the Indenture and (subject to Section 7.01 hereof) conclusive
in favor of the Indenture Trustee and the Issuer, if made in the manner provided
in this Section 13.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind the Holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not notation
of such action is made upon such Note.
Section 13.03 Notices
------------- -------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other document provided or permitted by the Indenture
to be made upon, given or furnished to, or filed with any party hereto shall be
sufficient for every purpose hereunder if in writing and telecopied, mailed by
registered mail, overnight bonded courier or personally delivered, and addressed
to the appropriate address below (or such other address as may be provided to
the other parties in writing from time to time):
(a) to the Indenture Trustee at 4 Albany Street, Corporate Trust and
Agency Group/Structured Finance, New York, New York 10006, telephone (212)
250-5326, telecopy (212) 250-6439, or at any other address previously furnished
in writing to the Issuer and the Noteholders; or
(b) to the Issuer at 1700 Montgomery Street, Suite 250, Office A, San
Francisco, CA 94111, Attention: Alan Perper, telephone (415) 362-1913 , telecopy
(415) 394-9471, or at any other address subsequently furnished in writing to the
Indenture Trustee and the Noteholders by the Issuer; or
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(c) to the Servicer at 1700 Montgomery Street, Suite 250, San
Francisco, CA 94111, Attention: Alan Perper, telephone (415) 362-1913 , telecopy
(415) 394-9471, or at any other address subsequently furnished in writing to the
Indenture Trustee and the Noteholders by the Servicer.
Section 13.04 Notices to Noteholders; Waiver.
------------- ------------------------------
Where the Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed by registered mail, overnight bonded courier
or delivered personally to each Noteholder affected by such event, at his
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice. In
any case in which notice to Noteholders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders, and any notice which is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
Where the Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of the Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Section 13.05 Effect of Headings and Table of Contents.
------------- -----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 13.06 Successors and Assigns.
------------- -----------------------
All covenants and agreements in the Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not.
Section 13.07 Separability.
------------- -------------
In case any provision in the Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 13.08 Benefits of Indenture.
------------- ----------------------
Nothing in the Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, the Noteholders, and any
Paying Agent which may be appointed pursuant to the provisions hereof, and any
of their successors hereunder, any benefit or any legal or equitable right,
remedy or claim under the Indenture or under the Notes.
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Section 13.09 Legal Holidays.
------------- ---------------
In any case in which the date of any Payment Date or the Stated
Maturity of any Note shall not be a Business Day, then (notwithstanding any
other provision of the Notes or the Indenture) payment of principal or interest
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the nominal date of any such
Stated Maturity or Payment Date and, assuming such payment is actually made on
such subsequent Business Day, no additional interest shall accrue on the amount
so paid for the period from and after any such nominal date.
Section 13.10 Governing Law.
------------- --------------
The Indenture and each Note shall be construed in accordance with and
governed by the internal laws of the State of New York applicable to agreements
made and to be performed therein, without regard to the conflict of laws
provisions of any State.
Section 13.11 Counterparts.
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The Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 13.12 Corporate Obligation.
------------- ---------------------
No recourse may be taken, directly or indirectly, against any
incorporator, subscriber to the capital stock, stockholder, employee, officer or
director of the Issuer or of any predecessor or successor of the Issuer with
respect to the Issuer's obligations on the Notes or under the Indenture or any
certificate or other writing delivered in connection herewith.
Section 13.13 Master Agreement to Control.
------------- ---------------------------
If any provision in the Indenture or in the Notes shall conflict with
the provisions or intent of the Master Agreement, the parties hereto intend that
the Master Agreement shall control.
* * * * *
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective duly authorized officers
as of the date and year first above written.
BANKERS TRUST COMPANY,
as Indenture Trustee
By /s/ Franco B. Talavera
-------------------------
AVP
DIGNITY PARTNERS FUNDING
CORP 1.
-------------------------
By /s/ Alan B. Perper
-------------------------
President
POINT WEST CAPITAL
CORPORATION
==================
By /s/ Alan B. Perper
-------------------------
President