Attached files
EXECUTION COPY
| _____________________________________________________ |
_____________________________ |
NOTICE: THIS INSURANCE IS ISSUED PURSUANT TO THE INSURANCE LAW (2008 REVISION) OF THE CAYMAN ISLANDS. THE INSURER IS A CAYMAN ISLANDS EXEMPT INSURANCE COMPANY. IN CASE OF INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED.
MORTALITY PROTECTION INSURANCE POLICY
POLICY NUMBER: DGUMP00004
DECLARATIONS
Item 1. | Insureds Name: |
|
|
|
|
| Insureds Address: |
|
|
|
|
| Additional Named Insureds Name: |
|
|
|
|
| Additional Named Insureds Address: |
|
|
|
|
|
|
|
Item 2. | Effective Date: |
|
|
|
|
Item 3. | Term: | The Term shall be continuous from the Effective Date until the earlier of: (i) the fifteenth (15th) anniversary of the Coverage Certificate Effective Date or Amended Coverage Certificate Effective Date if applicable or (ii) the date this Policy is terminated pursuant to Section VII., as more fully described in that section. |
|
|
|
Item 4. | Limit of Liability: | For the Covered Portfolio, the Limit of Liability shall be the amount set forth as such in the applicable Coverage Certificate or Amended Coverage Certificate as amended from time to time. |
|
|
|
Item 5. | MPIC Premium and Commitment Fee: | For the Covered Portfolio, the MPIC Premium and the Commitment Fee shall be the amounts set forth as such in the applicable Coverage Certificate or Amended Coverage Certificate as amended from time to time and shall be payable in accordance with Section IV. |
|
|
|
Item 6. | Broker: Mailing Address: | |
|
|
|
Item 7. | Attachments: | Exhibit A Form of Coverage Certificate Exhibit B Form of Proof of Claim Exhibit 1 Calculation of Claim Exhibit C Form of Recovery Reconciliation Exhibit 2 - Calculation of Recovery Exhibit D - Form of MPIC Application Exhibit E Form of Status Report Exhibit F Form of Intercreditor Agreement Exhibit G Form of Account Control and Custodian Agreement Exhibit H Form of Notification of Permitted Sale Exhibit I Insureds Account Information Exhibit J Insurers Account Information Exhibit K Form of Loan Documents Exhibit L List of Policy Documents |
__________________________________ |
|
|
|
Name: |
Title: |
|
|
Signed on the ____ day of ____, 2013 |
-iii-
POLICYHOLDER NOTICE
Thank you for purchasing insurance from _____________________. __________________ generally pays compensation to brokers and independent agents, and may have paid compensation in connection with your Policy.
-iv-
EXECUTION COPY
________________________________________________
NOTICE: THIS INSURANCE IS ISSUED PURSUANT TO THE INSURANCE LAW (2008 REVISION) OF THE CAYMAN ISLANDS. IN CASE OF INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED.
MORTALITY PROTECTION INSURANCE POLICY
POLICY NUMBER:
In consideration of the Insurers receipt of the MPIC Premium, in reliance on the representations, warranties, acknowledgements and covenants of the Insured and the Additional Named Insured contained herein, and in accordance with and subject to the terms, conditions, limitations and exclusions contained herein, including the Declarations, Coverage Certificates and any exhibits, schedules, endorsements or other documents attached hereto or incorporated herein by reference (if applicable), which together shall constitute this Mortality Protection Insurance Policy (this Policy), _______________ (the Insurer), ________________ (the Insured or a Covered Entity) and _________________ (the Additional Named Insured or a Covered Entity and together with the Insured, the Covered Entities) agree as follows:
SECTION I. INSURING AGREEMENT AND LOSS CALCULATION
Subject to the terms and conditions of this Policy:
This Policy provides the coverage specified herein and in each Coverage Certificate and Amended Coverage Certificate issued by the Insurer to the Covered Entities during the Term of this Policy.
Subject to the conditions and limitations specified herein and in each Coverage Certificate and Amended Coverage Certificate issued by the Insurer to the Covered Entities during the Term of this Policy, if on any Anniversary Date during the Term, beginning on the second Anniversary Date, the sum of the Gross Cash Flows and the Recovery Principal are less than the sum of the Attachment Point (on such Anniversary Date as scheduled in the Coverage Certificate or Amended Coverage Certificate, as applicable) and the Cumulative Recovery Premium Paid, and a Covered Entity or the MPIC Servicer timely submits a related Proof of Claim to the Insurer, then the Insurer shall pay to the applicable Covered Entity which submitted such Proof of Claim, via electronic funds transfer to the Insureds Account, the Claim Amount on or before the related Payment Date; provided, however that, in the event a Claim Amount is payable in connection with the second Anniversary Date in excess of the product of (x) six percent (6.0%) and (y) the cumulative Death Benefits of all Covered Policies, the Claim Amount payable on such Payment Date shall be reduced by the amount of such excess and such excess shall not be due and payable until the third Anniversary Date of the Policy. In no event shall any Claim Amount be due or payable prior to the second Anniversary Date of the Policy nor any Claim Amount be due or payable in relation to any loss or Proof of Claim submitted more than ninety (90) days after the last Anniversary Date that occurs during the Term.
On any Anniversary Date, in the event that any death benefit of one or more Covered Policies has increased due to the provisions of a return of premium rider with respect to any of such Covered Policies (such increase, an ROP Increase), then the cumulative forecasted death benefits set forth on the related Coverage Certificate shall automatically be increased by such ROP Increase and such increase shall become effective upon payment to the Insurer of (I) an additional MPIC Premium (to the extent due and payable) in respect of such ROP Increase which shall be calculated as the amount of
such ROP Increase multiplied by two hundred basis points (two percent) and (II) an additional Commitment Fee (to the extent due and payable) in respect of such ROP Increase which shall be calculated as (A) if such Anniversary Date is on or prior to the third Anniversary Date, the amount of such ROP Increase multiplied by one hundred basis points (one percent), which shall be due and payable (x) if there is a Payment Date related to the third Anniversary Date, on such Payment Date otherwise (y) on the date that is ninety (90) days after the third Anniversary Date and (B) if such Anniversary Date is after the third Anniversary Date, the amount of such ROP Increase multiplied by one hundred basis points (one percent).
If any Claim Amount has been paid by the Insurer at any time hereunder, the Covered Entities shall pay a Recovery Amount to the Insurer in one or more installments, as more fully specified herein. Upon receipt by a Covered Entity of any Death Benefit or other proceeds of any Covered Policy or related property such that, as of the date of the receipt thereof, the sum of the Gross Cash Flows and the Recovery Principal exceeds the sum of the Attachment Point (at the next Anniversary Date as scheduled in the Coverage Certificate or Amended Coverage Certificate, as applicable) and the Cumulative Recovery Premium Paid, (a) a Covered Entity or the MPIC Servicer shall submit a related Recovery Reconciliation to the Insurer within thirty (30) days of such receipt and (b) the Covered Entities shall pay to the Insurer, in each case by wire transfer to the Insurers Account in immediately available funds, free and clear of any setoff, counterclaim or other deduction, the applicable Recovery Amount on or before the Payment Date relating to such Recovery Reconciliation. The Covered Entities shall have the right to prepay any Recovery Principal or Recovery Premium with their own funds if Gross Cash Flows are not sufficient to cover such repayment at any time, without penalty. Each payment of a Recovery Amount shall first be applied to the Recovery Principal and then shall be applied to Recovery Premium.
If the sum of the Recovery Principal and Recovery Premium is greater than zero (0) as of the end of the Term, a Post Term Recovery Payment shall be due within thirty (30) days of a Covered Entitys receipt of any Death Benefit or other proceeds of any Covered Policy or related property until the date the Recovery Principal and Recovery Premium are equal to zero (0), in each case by wire transfer to the Insurers Account in immediately available funds, free and clear of any setoff, counterclaim or other deduction.
SECTION II. AMENDMENTS, PERMITTED POLICY SALES AND SUBSTITUTIONS
A.
So long as the Insurer has not reached its Maximum Capacity, at any time when all conditions precedent to coverage and conditions to payment of claims specified herein are then satisfied, the Insured may request the right to add Covered Policies to the Covered Portfolio by filing an Amended MPIC Application; provided that after the addition of any Covered Policies, the Average LE of the Covered Portfolio will be less than one hundred eighty (180) months. No such addition of any Covered Policies will extend the Term of this Policy or with respect to any Permitted Loan, increase the amount set forth on the related disbursement schedule unless such disbursement schedule has been approved by the Insurer. The Insurer may accept or reject such Amended MPIC Application in its sole discretion, and has no obligation whatsoever to extend coverage under this Policy to additional Covered Policies. If the Insurer accepts an Amended MPIC Application, an Amended Coverage Certificate shall be issued and upon the Amended Coverage Certificate Effective Date shall replace any prior Coverage Certificate. If the Insurer rejects an Amended MPIC Application, the submission of such Amended MPIC Application shall have no impact on the Coverage Certificate in effect at that time.
-2-
B.
The Additional Named Insured may conduct any Permitted Sales upon providing a Notice of Permitted Sale to the Insurer at least ten (10) days prior to the conclusion of such Permitted Sale. The Additional Named Insured shall direct the buyer in any Permitted Sale to pay on the closing date of such Permitted Sale, an amount that equals the amount necessary to cause the sum of the Recovery Principal and the Recovery Premium (or such other amount agreed to by the Insurer in the case of a Permitted Sale that does not generate sufficient proceeds to repay the sum of the Recovery Principal and the Recovery Premium in full) to be funded directly into the Insurers Account out of the sale proceeds in accordance with the Transaction Documents. The application of the proceeds of any Permitted Sale to the reduction of the Recovery Principal and the Recovery Premium shall be taken into account in each subsequent Proof of Claim and Recovery Reconciliation as applicable. For all other purposes following a Permitted Sale, the Coverage Certificate will be deemed amended to exclude the Covered Policy that was the subject of such Permitted Sale.
C.
In the event the Insurer has reached its Maximum Capacity and the Additional Named Insured has made a Permitted Sale of a Covered Policy, a Covered Entity shall have the right, within the first thirty-six (36) months following the Effective Date, to request that the Insurer replace such Covered Policy with a new Covered Policy by filing an Amended MPIC Application; provided that after the replacement of any Covered Policies, the Average LE of the Covered Portfolio will be less than one hundred eighty (180) months. No such addition of any Covered Policies will extend the Term of this Policy. The Insurer may accept or reject such Amended MPIC Application in its sole discretion, and has no obligation whatsoever to extend coverage under this Policy to additional Covered Policies. If the Insurer accepts an Amended MPIC Application, an Amended Coverage Certificate shall be issued and upon the Amended Coverage Certificate Effective Date shall replace any prior Coverage Certificate. If the Insurer rejects an Amended MPIC Application, the submission of such Amended MPIC Application shall have no impact on the Coverage Certificate in effect at that time. The right to request substitutions of Covered Policies shall not exceed twenty-five percent (25%) of the Covered Portfolio.
SECTION III. LIMIT OF LIABILITY / Guaranty
With respect to the Covered Portfolio, the Limit of Liability is the maximum amount that the Insurer will pay under this Policy as set forth in the applicable Coverage Certificate or Amended Coverage Certificate.
SECTION IV. MPIC PREMIUM AND COMMITMENT FEE
A.
With respect to the Covered Portfolio that is subject to the first Coverage Certificate issued under this Policy, the Insurers receipt of payment of the MPIC Premium on or before the Coverage Certificate Effective Date is a condition precedent to any coverage being provided by this Policy. With respect to the first Coverage Certificate issued under this Policy, the related Commitment Fee shall be due and payable (x) if there is a Payment Date related to the third Anniversary Date, on such Payment Date otherwise (y) on the date that is ninety (90) days after the third Anniversary Date.
B.
In the event the Insured files an Amended MPIC Application which is approved by the Insurer and results in an Amended Coverage Certificate, the Insurers receipt of any additional MPIC Premium due and payable on or before the Amended Coverage Certificate Effective Date is a condition precedent to the enforcement of the Amended Coverage
-3-
Certificate and the Insurer shall also be entitled to any additional Commitment Fee which shall be due and payable (i) if the related Amended Coverage Certificate Effective Date is on or prior to the third Anniversary Date, (x) if there is a Payment Date related to the third Anniversary Date, on such Payment Date otherwise (y) on the date that is ninety (90) days after the third Anniversary Date and (ii) if the related Amended Coverage Certificate Effective Date is after the third Anniversary Date, on such Amended Coverage Certificate Effective Date; provided, that if the related Amended Coverage Certificate Effective Date is on or prior to the third Anniversary Date and a Covered Entity receives any Death Benefits with respect to any Covered Policy that was added to this Policy pursuant to such Amended Coverage Certificate, then within ten 10 Business Days of such receipt such Covered Entity shall pay an amount up to the portion of the Commitment Fee for such Covered Policy out of such Death Benefits to the Insurers Account by wire transfer in immediately available funds; provided further, that any MPIC Premium or Commitment Fee paid in connection with the substitution of a Covered Policy in accordance with Section II.C shall be at a reduced rate equal to twenty-five percent (25%) of the otherwise applicable MPIC Premium or Commitment Fee.
C.
MPIC Premium shall be calculated as the cumulative Death Benefits of all Covered Policies times two hundred basis points (2.0%). The Commitment Fee shall be calculated as the cumulative Death Benefits of all Covered Policies times one hundred basis points (1.0%).
D.
All MPIC Premium and Commitment Fee shall be paid to the Insurers Account by wire transfer in immediately available funds, free and clear of any setoff, counterclaim or other deduction.
E.
MPIC Premium and the Commitment Fee shall be fully earned upon receipt by the Insurer and nonrefundable.
SECTION V. CONDITIONS PRECEDENT TO COVERAGE; CONDITIONS TO PAYMENT OF CLAIM
A.
With respect to the Covered Entities and each applicable Covered Policy, the inception of coverage under this Policy with respect to such Covered Policy is subject to strict satisfaction of the conditions precedent that:
(i)
A Covered Entity has submitted to the Insurer the MPIC Application or Amended MPIC Application if applicable;
(ii)
The Covered Entities have delivered to the Insurer complete and accurate copies of all related Policy Documents (including such Covered Policy), all Transaction Documents, all Loan Documents that have been entered into by the Covered Entities through such date, and all material amendments and supplements thereto, in the case of the related Policy Documents, and the Covered Entities shall not have entered into or be bound by any material agreement that has not been disclosed to (and a copy thereof delivered to) the Insurer that conflicts with, breaches or violates any material provision of any Transaction Document, Loan Document or related Policy Document.
(iii)
Any loan, debt, or other obligation secured, in whole or in part, by the Covered Policy, qualifies as a Permitted Loan and such Covered Policy meets all of the Covered Policy Parameters;
-4-
(iv)
the Insurer has accepted such Covered Policy and the related Policy Documents, in each case, in its sole discretion, and the Insurer has issued the Coverage Certificate or Amended Coverage Certificate if applicable;
(v)
the Insurer has received payment of the applicable MPIC Premium and Commitment Fee or portion thereof, in each case, to the extent due and payable in accordance with Section IV MPIC Premium and Commitment Fee on or before the Coverage Certificate Effective Date and on or before the Amended Coverage Certificate Effective Date if applicable. For the avoidance of doubt the submission of an Amended MPIC Application does not void an existing Coverage Certificate until such time as the Amended Coverage Certificate has been issued and met all conditions precedent as described in this document;
(vi)
to the Covered Entities knowledge, there has been no Default, Event of Default, violation of any applicable law, material breach or violation of any representation, warranty or covenant of any party (other than the Insurer) under any Loan Document, related Policy Document or Transaction Document (including those of the Insured set forth in Section VIII hereof), to the Covered Entities knowledge, each of which is in full force and effect and enforceable against all parties thereto (other than the Insurer) in accordance with their respective terms, and to the Covered Entities knowledge, none of which is subject to any notice of Default, Event of Default, violation of any law, breach, violation or termination or other claim, proceeding or action challenging the legality, validity or enforceability thereof or of the transactions contemplated thereby; and
(vii)
None of the Insured, the Additional Named Insured, the MPIC Servicer (or any other servicer employed by the Insured or the Additional Named Insured with respect to the Covered Portfolio), or any party to any Transaction Document, nor any affiliate of any of them, nor any officer, employee, agent or representative of any of the foregoing, shall have knowingly delivered to the Insurer any false, incomplete, inaccurate or misleading information or failed to deliver to the Insurer material information in its possession concerning the Insured, the Additional Named Insured, such Covered Policy or any transactions contemplated by this Policy or any Transaction Document.
For the avoidance of doubt, with respect to each applicable Covered Policy, the foregoing conditions precedent in the preceding paragraph must be strictly satisfied in order for the inception of coverage under this Policy to be applicable to such Covered Policy. In addition, for the avoidance of doubt, the non-satisfaction of any of the conditions precedent in the preceding paragraph with respect to any Covered Policy shall have no effect on any other Covered Policies and each such other Covered Policies shall remain a Covered Policy. The issuance by the Insurer of a Coverage Certificate or Amended Coverage Certificate, as applicable, with respect to such Covered Policy shall be conclusive evidence that the foregoing conditions precedent in the preceding paragraph have been strictly satisfied. With respect to the Covered Portfolio, the Covered Entities and each applicable Covered Policy, and provided that the conditions precedent with respect to such Covered Policy have been strictly satisfied, the Insurers obligation to pay any applicable Claim Amount with respect such Covered Policy is subject to strict satisfaction of the following conditions precedent, and the absence of any applicable exclusion pursuant to Section VI hereof:
-5-
B.
On or before ten (10) Business Days after each Anniversary Date for each Covered Policy (and in any event prior to the submission of any Proof of Claim relating to such Anniversary Date):
(1)
the MPIC Servicer or a Covered Entity shall provide to the Insurer evidence that such Covered Policy has remained continuously in force from the Effective Date through such Anniversary Date, a Covered Entity has paid the Life Insurance Carrier the related premium in an amount that the Covered Policy shall remain in force for at least thirty (30) days after such Anniversary Date and no Covered Entity has paid the Life Insurance Carrier any premium such that the period covered by such premium exceeds one (1) year from the date the related premium payment was due. For the avoidance of doubt, the period of time through the thirtieth (30th) day after the related Anniversary Date shall not include any grace period afforded by the Life Insurance Carrier under the terms of the applicable Covered Policy;
(2)
the MPIC Servicer or a Covered Entity shall provide to the Insurer certification by an Authorized Officer that to such Covered Entitys or the MPIC Servicers knowledge, there has been no material amendment or modification of or waiver of any material provision of such Covered Policy, any related Policy Document or Transaction Document that has not been previously consented to by the Insurer, and that to such Covered Entitys or the MPIC Servicers knowledge, such Covered Policy, related Policy Document and Transaction Document, is in full force and effect and enforceable against all parties thereto (other than the Insurer) in accordance with their respective terms, and to such Covered Entitys or the MPIC Servicers knowledge, no party to any of them has breached or violated any material provision of any of them, nor delivered any notice of breach, violation or termination or lodged or commenced any claim, proceeding or action challenging the validity or enforceability thereof or of the transactions contemplated thereby;
(3)
a Covered Entity shall represent that none of the Covered Entities, the MPIC Servicer (or any other servicer employed by the a Covered Entity with respect to the Covered Portfolio), any party to any Transaction Document (other than the Insurer), nor any affiliate of any of them, nor any officer, employee, agent or representative of any of the foregoing, nor to the knowledge of a Covered Entity and the MPIC Servicer, any related Policy Seller, shall have knowingly delivered to the Insurer any false, incomplete, inaccurate or misleading information or failed timely to deliver to the Insurer material information in its possession concerning the Covered Entities, such Covered Policy, and related Policy Document, any Transaction Document or any transactions contemplated by this Policy or any Transaction Document (including, without limitation, in or in connection with the delivery of any Amended MPIC Application, Proof of Claim or Recovery Reconciliation or other report, notice , certification or information that is to be delivered to the Insurer pursuant to this Policy or any Transaction Document (including, without limitation, pursuant to Section VIII.M hereof);
(4)
the MPIC Servicer or a Covered Entity shall provide to the Insurer evidence that all payments, dividends or distributions by the Covered Entities or the Borrower to any Person (including, without limitation, under a Permitted Loan) have been made strictly in accordance with the applicable Transaction Documents, Loan Documents, Policy Documents or other agreements disclosed to the Insurer as contemplated by
-6-
Section V.A(ii), and no Event of Default (as defined in the Loan Documents) has occurred;
(5)
the Covered Entities shall not have failed timely to pay to Insurer any Recovery Principal or Recovery Premium, become insolvent or the subject of any bankruptcy, insolvency, receivership, reorganization or similar proceedings in any jurisdiction or under any similar law or regulations;
(6)
the MPIC Servicer or a Covered Entity shall provide to the Insurer evidence that there shall not have occurred any waiver, release, cancellation or termination of the ownership or security interests (or perfection thereof) in, to and under such Covered Policy and related assets or other material assets of the Additional Named Insured (including by sale or disposition that is not a Permitted Sale hereunder), nor any change to the identity of any trustee of any trust whose trust agreement is a related Policy Document nor of any securities intermediary whose security account control agreement is a related Policy Document, in each case as constituted and existing or purportedly constituted and existing as of the date hereof, and of each Coverage Certificate or Amended Coverage Certificate issued hereunder;
(7)
the MPIC Servicer or a Covered Entity shall provide to the Insurer certification by an Authorized Officer that the Covered Entities shall not have entered into or be bound by any material agreement that has not been disclosed to (and a copy thereof delivered to) the Insurer as required by Section V.A(ii) that conflicts with, breaches or violates any material provision of any Transaction Document, Loan Document or related Policy Document; and
(8)
each Covered Entity shall represent that it has not suffered a Change of Control (as defined in the related Loan Agreement).
C.
Any Proof of Claim will be valid only if submitted to the Insurer within ninety (90) days after each Anniversary Date, and the MPIC Servicer or a Covered Entity must submit to the Insurer a Recovery Reconciliation within 30 days of its receipt of any Death Benefit or other proceeds of Covered Policies or related property.
SECTION VI. EXCLUSIONS
A.
This Policy shall not apply and the Insurer shall have no liability in relation to any actual or purported coverage hereunder (and is hereby released from liability hereunder) for any future claim relating to a Covered Policy if, at any time during the Term there is an Excluded Policy Event with respect to such Covered Policy, which Excluded Policy Event occurs before a Covered Entitys receipt of the Insurers written consent to or waiver of such Excluded Policy Event. In the event of an Excluded Policy Event without the Insurers written consent or waiver, the Coverage Certificate will be deemed amended to exclude such Covered Policy for all purposes and the coverage shall continue in effect with respect to all remaining Covered Policies and the Attachment Point, the MPIC Premium and Commitment Fee shall be updated to reflect the exclusion of such Covered Policy. In the event that a Recovery Payment is due to the Insurer at the time of occurrence of any such Excluded Policy Event, all or a portion of such Recovery Payment equal to the quotient of the face amount of such Covered Policy divided by the face amount of the Covered Portfolio (including such Covered Policy) shall be due within ninety (90) days of such Excluded Policy Event.
-7-
B.
This Policy shall not apply to, and the Insurer shall not be liable for, any Claim Amount relating to a Proof of Claim if a Covered Entity or the MPIC Servicer fails to submit such Proof of Claim to the Insurer prior to ninety (90) days after the related Anniversary Date. In the event a Recovery Amount is due to the Insurer and a Recovery Reconciliation is not filed within ninety (90) days after the related Anniversary Date, the Recovery Premium shall accrue thereon from and after the ninety (90) day period at a rate of LIBOR plus 1,000 basis points, rather than at the rate specified in the related Coverage Certificate or Amended Coverage Certificate, and the Insurer may prepare and submit the Recovery Reconciliation; provided that no Recovery Premium shall accrue on any portion of the Recovery Principal that is payable based on the implementation of the Gross Cash Flows Floor on and after the eighth Anniversary Date due to the Gross Cash Flows at such time being lower than the Gross Cash Flows Floor. Recovery Principal and Recovery Premium shall be due and payable as specified in this Policy and the related Coverage Certificate or Amended Coverage Certificate regardless of the delivery or failure to deliver any Recovery Reconciliation hereunder.
C.
This Policy does not apply to, and the Insurer shall not be liable hereunder for, any loss relating to a Coverage Certificate if the conditions set forth in Sections II, IV and V with respect to the Covered Portfolio relating thereto, and elsewhere in this Policy , are not at all times strictly satisfied in their entirety or waived by the Insurer , including, without limitation, in accordance with all applicable time restrictions.
D.
If any event or circumstance occurs that is known to the Insurer which is reasonably likely to relieve the Insurer of its obligation to pay the applicable Claim Amount, assuming timely submission of the related Proof of Claim, the Insurer shall provide prompt written notice of such event or circumstance to each Covered Entity and the other parties to the Transaction Documents.
SECTION VII. TERMINATION
As described in Item 3 of the Declarations, the Term of this Policy shall be continuous from the Effective Date until the earlier of: (i) the fifteenth (15th) anniversary of the Coverage Certificate Effective Date or Amended Coverage Certificate Effective Date, or (ii) the date this Policy is terminated pursuant to this Section VII.
(1)
Notwithstanding any other provision of this Policy, each of the Insurer and the Insured shall have the right to terminate this Policy by providing written notice to the other parties, and such termination shall be effective ten (10) Business Days after the date of receipt of such written notice by such other parties.
(2)
Termination of this Policy shall not affect (i) the insurance provided by any Coverage Certificate delivered by the Insurer before the effective date of such termination as specified in such written notice, (ii) the obligation of the Covered Entities to pay all Recovery Principal and Recovery Premium as and when specified herein or (iii) the applicability of the confidentiality provisions set forth in Section XI, all of which obligations shall survive the termination of this Policy subject, in each case, to the terms, conditions, exclusions and limitations specified herein.
The exercise of its rights under this Section VII shall not preclude any party from exercising any other rights that it may have under any other section of this Policy.
-8-
SECTION VIII. REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGEMENTS
Each Covered Entity on behalf of itself represents, warrants and covenants to the Insurer as of the date hereof and as of the date of each Amended MPIC Application, Amended Coverage Certificate, Proof of Claim and Recovery Reconciliation that:
A.
It has obtained all requisite consents, approvals, authorizations and orders, and made all requisite filings and registrations and obtained all requisite licenses, qualifications and permits of or with any court, governmental or regulatory authority, agency or other body that is necessary for such Covered Entity to conduct its business relating to the transactions contemplated by this Policy.
B.
the Insureds principal place of business is located at the address in the Cayman Islands as set forth in Item 1 of the Declarations, the Additional Named Insureds principal place of business is located at the address in the Cayman Islands as set forth in Item 1 of the Declarations and that each Covered Policy is held by the securities intermediary named in the Account Control and Custodian Agreement. The Insured covenants that the Insured will not change its address in the Cayman Islands and the Additional Named Insured covenants that the Additional Named Insured will not change its address in South Dakota, in each case, without first obtaining written consent from the Insurer (not to be unreasonably withheld).
C.
all Permitted Loans have been or shall be originated in accordance with all Applicable Laws and that the conduct of each of the Covered Entities in connection with those loans shall be in accordance with all Applicable Laws.
D.
the Insureds and the Additional Named Insureds activities with respect to the Covered Portfolio and each Covered Policy, including but not limited to the Additional Named Insureds purchase of such Covered Portfolio, are in accordance with all Applicable Laws.
E.
to the best of its knowledge, each Covered Policy was issued to the original owner and transferred to each subsequent owner (including the Additional Named Insured) in accordance with all Applicable Laws.
F.
(1)
It has delivered and shall deliver to the Insurer true and accurate copies of each material document and agreement (a) comprising a Loan Document (including the Loan Agreement, the Account Control Agreement and the Intercreditor Agreement being used in connection with each Permitted Loan), and (b) comprising a Policy Document or (c) comprising any other material agreement to which it is a party that conflicts with, breaches or violates any material provision of any Transaction Document, Loan Document or Policy Document; and
(2)
it shall not agree to or purport to amend, modify, waive or terminate any material term or condition of any Loan Document, Policy Document or Transaction Document in any way that would comprise or lead to a breach, violation or deviation from the material terms of the Intercreditor Agreement or any Transaction Document without the prior written consent of the Insurer.
-9-
G.
(1)
the Insurers identity and the Policy have not been and shall not be disclosed by it or any Affiliate to any other Person without the prior written consent by the Insurer, except that it may disclose the Insurers identity and the Policy to any Transaction Party or, to any regulatory body governing such Covered Entity, the lender under any Permitted Loan or any third-party service providers to such Covered Entity or the Borrower or to the lender under any Permitted Loan. The Insurers consent for additional parties for which a Covered Entity has a business need to disclose such information shall not be unreasonably withheld by the Insurer; and
(2)
the Policy has not been and will not be disclosed by it, any Affiliate of such Covered Entity or, to the knowledge of such Covered Entity, any other Transaction Party or lender under a Permitted Loan in any offering materials or discussions with rating agencies or any life insurance company without the prior written consent of the Insurer (which consent the Insurer can withhold in its sole and absolute discretion).
H.
it acknowledges that the Insurer is an exempt insurance company that is recognized as eligible to write insurance business under the Insurance Law (2008 Revision) of the Cayman Islands and, depending on Applicable Law, the Insured may not be entitled to any benefits from any governmental guaranty or similar fund with respect to this Policy.
I.
it will provide written notice to the Insurer within three (3) Business Days of obtaining knowledge that any Covered Policy is not current with respect to the premiums required to keep the Covered Policy in force, or is or is reasonably likely to be the subject of any rescission, termination, cancellation, modification or refusal of payment obligations thereunder on any basis, or any challenge with respect to the ownership or right to benefits thereunder by any person (including, without limitation, any governmental authority), or of any other actual or purported fact or circumstance that reasonably could bear on the Insurers obligations hereunder or the Covered Entities ability or willingness timely to fund any Recovery Amount or Recovery Premium, and also will provide copies of all notices received by such Covered Entity from any person that relate to a Covered Policy. For the avoidance of doubt, only one Covered Entity shall be required to deliver written notice to the Insurer even if both Covered Entities obtain knowledge of any event or circumstance which requires them to deliver written notice to the Insurer in accordance with this Section VIII.I.
J.
if such Covered Entity or any other Responsible Party obtains actual knowledge that the issuance, acquisition or making of any Permitted Loan or Covered Policy failed at any time to comply in any material respect with any Applicable Laws or any term, condition or provision of any Loan Document, Transaction Document or this Policy, such Covered Entity shall notify the Insurer of such failure and all relevant facts and information known to it relating thereto, and shall request the relevant Transaction Parties or parties to the Policy Documents, if possible, to take all commercially reasonable action to remedy such noncompliance. For the avoidance of doubt, only one Covered Entity shall be required to notify the Insurer even if both Covered Entities obtain actual knowledge of any event or circumstance which requires them to notify the Insurer in accordance with this Section VIII.J.
K.
within forty-five (45) days following the end of each calendar quarter during the Term of this Policy, a Covered Entity will provide to the Insurer a written status report in the form of Exhibit E attached hereto or another format reasonably acceptable to the Insurer detailing, as of the last day of such calendar quarter, the status of the Covered Portfolio and the occurrence and
-10-
status of any fact or circumstance known to an Authorized Officer that is or may reasonably be expected to become a breach of a material representation, warranty, covenant or other material provision of any Transaction Document, Loan Document or Policy Document or an Event of Default (as defined in the Loan Agreement). If such written status report is not delivered by one of the Covered Entities for two (2) consecutive calendar quarterly periods, then the Insurer may withhold payment of any Claim Amount that may otherwise be due and payable to a Covered Entity under the terms of this Policy until such breach has been remedied.
L.
it will not consent or agree to any change to any of the parties to a Permitted Loan without the express prior written consent of the Insurer (not to be unreasonably withheld) and will notify the Insurer of any such change within fifteen (15) days of such Covered Entity or any other Responsible Party becoming aware of such change. Twenty (20) Business Days prior to entering into any potential Permitted Loan, a Covered Entity shall provide the Insurer with written notice of such potential Permitted Loan and obtain approval from the Insurer for such potential Permitted Loan. If the Insurer fails to respond to such notice within such twenty (20) Business Day time period, such Permitted Loan shall be deemed approved by the Insurer.
M.
if the Covered Entities desire to appoint any Person to perform any duties on behalf of the Covered Entities under this Policy, other than one of the Covered Entities, the Covered Entities must provide the Insurer notice identifying the Person and the actions to be performed by such Person at least ten (10) Business Days prior to such action being taken by such Person. Following such appointment, actions by such Person on behalf of the Covered Entities in connection with this Policy shall constitute actions of the Covered Entities for purposes of this Policy, but the Covered Entities shall remain liable for the full and timely performance of all such duties regardless of any such appointment.
The Broker represents, warrants and covenants to the Insurer that the Broker has complied, and will continue to comply, with all requirements of all Applicable Laws in connection with the procurement of this Policy, including without limitation any applicable requirement relating to the collection and/or payment of taxes, fees or surcharges.
For the avoidance of doubt, except as and to the extent specified elsewhere in this Policy, any breach of the representations, warranties or covenants set forth in this Section VIII with respect to any Covered Policy shall have no effect on any other Covered Policies and each such other Covered Policies shall remain a Covered Policy. Notwithstanding the foregoing, each of the Covered Entities and the Broker acknowledges that the Insurer is entering into this Policy in reliance upon the genuineness of such representations, warranties and covenants in Section VIII.A. through Section VIII.M. and in the immediately preceding paragraph and the Insurer shall retain all remedies available at law or in equity in connection with any such breach; provided that the Covered Entities shall not be liable for any breach by the Broker of the representation, warranty and covenant set forth in the immediately preceding paragraph and the Broker shall not be liable for any breach by the Covered Entities of any representation, warranty or covenant in Section VIII.A. through Section VIII.M.
The Insurer represents, warrants and covenants to the Covered Entities as of the date hereof and as of the date of each Amended MPIC Application, Amended Coverage Certificate, Proof of Claim and Recovery Reconciliation that: it has conducted, and will conduct at all times before the termination of all coverage provided by the Insurer under this Policy, its business relating to the provision of coverage contemplated by this Policy and/or each relevant Transaction Document in all material respects in accordance with all Applicable Laws and has obtained all requisite consents, approvals, authorizations and orders, and made all requisite filings and registrations and obtained all requisite
-11-
licenses, qualifications and permits of or with any court, governmental or regulatory authority, agency or other body that is necessary for the Insurer to conduct its business relating to the transactions contemplated by this Policy.
The Insurer acknowledges that the Insured is entering into this Policy in reliance upon the genuineness of such representations, warranties and covenants in the immediately preceding paragraph and the Covered Entities shall retain all remedies available at law or in equity in connection with any such breach.
SECTION IX. DEFINITIONS
A.
Account Control and Custodian Agreement means, in the event there are any Permitted Loans, the agreement among the Additional Named Insured, the Insured, the Insurer, the Borrower, the lender under any Permitted Loan, the custodian designated therein and the other parties thereto.
B.
Additional Named Insured has the meaning set forth in the Preamble of this Policy. For the avoidance of doubt, actions by the MPIC Servicer on behalf of the Additional Named Insured shall constitute acts of the Additional Named Insured for purposes of this Policy.
C.
Affiliate of any Person means any other Person that (i) directly or indirectly controls, is controlled by or is under common control with such Person or (ii) is an officer or director of such Person. A Person shall be deemed to be controlled by any other Person if such other Person possesses, directly or indirectly, power: (a) to vote 50% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing partners or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
D.
Amended Coverage Certificate means, for the Covered Portfolio, a certificate substantially in the form set forth in Exhibit A attached hereto, issued and duly executed by the Insurer and pursuant to which coverage under this Policy for the Covered Portfolio is provided and is an update to the first Coverage Certificate issued under this Policy.
E.
Amended Coverage Certificate Effective Date means the date set forth as such in the applicable Amended Coverage Certificate.
F.
Amended MPIC Application means a document substantially in the form set forth in Exhibit D attached hereto, properly completed and duly executed by the Insured.
G.
Anniversary Date means, for the Covered Portfolio, the date which is each annual anniversary of the Effective Date of the Covered Portfolio set forth in the applicable Coverage Certificate.
H.
Applicable Laws means any applicable state or federal laws, statutes, rules and regulations.
I.
Attachment Point means the annual amount scheduled and identified as such in the Coverage Certificate or Amended Coverage Certificate, which shall be calculated as the cumulative forecasted death benefits payable through each Anniversary Date of the Covered Portfolio that occurs during the Term, multiplied by (i) 85% for each of the first three (3) Anniversary Dates and (ii) 75% for each succeeding Anniversary Date but (iii) $0 for each Anniversary Date after the Term.
-12-
J.
Authorized Officers for any relevant Person means any director, chief executive officer, president, chief operating officer, chief financial officer, treasurer, general counsel, lead compliance officer, vice president, manager or other person performing substantially similar duties or of comparable authority in relation to any duties or obligations of the relevant Person under or in relation to this Policy, any Covered Policy, any Policy Document, any Loan Document or any Transaction Document.
K.
Average LE means the average life expectancy of all Underlying Lives in the Covered Portfolio, calculated by taking the life expectancy set forth in two life expectancy reports for each Underlying Life, issued by reputable life expectancy providers and weighting such life expectancies 70% for the longer life expectancy and 30% for the shorter life expectancy.
L.
Borrower means _________________, an Affiliate of the Insured and the Additional Named Insured.
M.
Broker has the meaning set forth in Item 6 of the Declarations.
N.
Business Day means any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York or the Cayman Islands are authorized or required to be closed for business.
O.
Claim Amount in relation to any Anniversary Date, and subject to adjustment (down) in relation to the second Anniversary Date and (up) in relation to the third Anniversary Date as specified in Section I hereof, means the amount equal to the difference between (i) the sum of the related Attachment Point and the Cumulative Recovery Premium Paid and (ii) the sum of the Gross Cash Flows payable through such Anniversary Date, and the related unpaid Recovery Principal, which amount shall be set forth and substantiated in any Proof of Claim submitted in relation to such Anniversary Date.
P.
Co-Borrower means ___________________, an Affiliate of the Insured and the Additional Named Insured.
Q.
Commitment Fee means, for the Covered Portfolio, the amount which is the fee payable to the Insurer as set forth as such in the applicable Coverage Certificate or Amended Coverage Certificate, as applicable, calculated in accordance with Section IV; provided that the Commitment Fee for any Covered Policy that is substituted for another Covered Policy in accordance with Section IV.B shall be at a reduced rate equal to twenty-five percent (25%) of the otherwise applicable Commitment Fee.
R.
Confidential Information has the meaning set forth in Section XI.A.
S.
Contest means, for each Covered Policy, that the Life Insurance Carrier has rescinded, terminated or challenged the validity of such Covered Policy (including without limitation on the basis of a lack of insurable interest) or its obligation to pay any material portion of the specified benefits thereof pursuant to a written notice.
T.
Coverage Certificate means, for the Covered Portfolio, a certificate substantially in the form set forth in Exhibit A attached hereto, as amended from time to time as provided for herein, issued and duly executed by the Insurer and pursuant to which coverage under this Policy for the Covered Portfolio is provided. For the avoidance of doubt, a Coverage Certificate that is issued by the Insurer following the Insureds submission of the related MPIC Application
-13-
or Amended MPIC Application shall not become effective under this Policy unless and until the Insurer has received the applicable MPIC Premium in accordance with Section IV MPIC Premium and Commitment Fee and all other conditions to such effectiveness specified herein (including in Sections V and VI hereof) are satisfied.
U.
Coverage Certificate Effective Date means, for the Covered Portfolio, the date set forth as such in the applicable Coverage Certificate.
V.
Covered Entity and Covered Entities shall have their respective meanings as set forth in the preamble of this Policy. For the avoidance of doubt, actions by the MPIC Servicer on behalf of the Covered Entities shall constitute acts of the Covered Entities, for the purposes of this Policy.
W.
Covered Portfolio means the aggregate of all Covered Policies described in an MPIC Application or Amended MPIC Application that was accepted by the Insurer for coverage under this Policy, as evidenced by the Insurers execution and delivery a Covered Entity of a Coverage Certificate or Amended Coverage Certificate for the Covered Portfolio.
X.
Covered Policy means, for the Covered Portfolio, each life insurance policy that is identified by its policy number in the Coverage Certificate or Amended Coverage Certificate and meets the Covered Policy Parameters and as to which all other conditions to the effectiveness of the coverage in relation to such policy are satisfied at and as of the relevant times specified herein.
Y.
Covered Policy Parameters means, for each Covered Policy, (i) the Underlying Life is a U.S. citizen or has a valid U.S. Social Security Number, (ii) the maximum Death Benefit is $30,000,000.00, (iii) the Underlying Life is at least seventy (70) years of age, (iv) at least two (2) years have lapsed since the issue date, (v) there is only one living Underlying Life, (vii) each Covered Policy is a Universal Life product, (viii) a Covered Entity does not, and does not attempt to, materially amend any of the Transaction Documents or Policy Documents to which it is a party; (v) no Covered Entity is in default, violation, breach or other violation of any Transaction Document or Policy Documents (with respect to any Covered Policy), (ix) there is no denial of coverage or to the Covered Entities knowledge any basis for any denial of coverage of such Covered Policy and such Covered Policy has not been contested or rescinded or to the Covered Entities knowledge investigated for possible contest or rescission by the applicable insurance company, (x) such Covered Policy has been, at all times since issuance, in full force and effect and all premium payments due on such Covered Policy have been paid in full through the date hereof and (xi) title to and ownership of the Covered Policy was acquired by the Additional Named Insured in accordance with all applicable federal, state and local laws, rules and regulations of the United States and any other country then in effect.
Z.
Cumulative Recovery Premium Paid means, as of the date of determination, the cumulative amount of Recovery Premium that has been paid to the Insurer in accordance with this Policy.
AA.
Death Benefit means, for any Covered Policy, the amount set forth as such on the applicable Coverage Certificate or Amended Coverage Certificate.
BB.
Default has the meaning set forth in the Loan Agreement.
CC.
Declarations means the declaration pages attached to the front of this Policy.
-14-
DD.
Effective Date has the meaning set forth in Item 2 of the Declarations.
EE.
Event of Default has the meaning set forth in the Loan Agreement.
FF.
Excluded Policy Event means any (i) rescission, cancellation or termination of, or material reduction or adverse modification in benefits payable under or the terms and conditions of payment thereof under a Covered Policy on any basis, (ii) the making or borrowing of any policy loan against a Covered Policy, (iii) the making of any cash withdrawal related to a Covered Policy, (iv) the surrender or lapse of a Covered Policy to the issuing Life Insurance Carrier, (v) the sale, assignment or grant of any right, title or interest or claim in, to or under any Covered Policy that does not comprise a Permitted Loan, (vi) the failure of the issuing Life Insurance Carrier of a Covered Policy to pay to the Additional Named Insured any claim thereunder in full for any reason whatsoever or delivery by such Life Insurance Carrier of its intention to cancel, rescind, terminate or deny payment of any material portion of the related death benefit thereof, (vii) any failure of the Additional Named Insured to own a Covered Policy (directly or through ownership of all beneficial interests in the related trust or through another ownership structure approved by the Insurer) free and clear of all liens, claims and encumbrances other than Permitted Loans or a lien permitted under the related Loan Agreement, (viii) the Insureds or the Additional Named Insureds agreement to or execution and delivery of any amendment, modification, waiver or consent of or in relation to any Covered Policy or Transaction Document that is prohibited by this Policy or any representation, warranty or covenant of a Covered Entity herein that reasonably could be expected to materially and adversely affect the rights or interests of the Insurer hereunder in relation to any Covered Policy or the ability of the Covered Entities to fund timely and in full any Recovery Payment or Recovery Premium, (ix) any exercise of rights or remedies against the Additional Named Insured or in relation to or affecting any assets of the Additional Named Insured by or on behalf of the lender under or in relation to any Permitted Loan other than as permitted under the Intercreditor Agreement or by or on behalf of any party (other than the Covered Entities) under or in relation to any Transaction Document or Policy Document (including, without limitation, the related insured or any heir, relative, representative or agent of the insured) that reasonably could be expected to adversely affect the rights or interests of the Insurer hereunder in relation to any Covered Policy or the ability of the Covered Entities to fund timely and in full any Recovery Payment or Recovery Premium or (x) the failure to satisfy any of the conditions precedent set forth in Section V.B.
GG.
Gross Cash Flows as of any date of determination means the cumulative Death Benefits paid or payable in relation to all Covered Policies in the Covered Portfolio because of the confirmed maturity of such Covered Policies since the Effective Date, which amount shall be no less than the Gross Cash Flows Floor for any date that is on or after the eighth Anniversary Date.
HH.
Gross Cash Flows Floor means with respect to any date the product of (i) 40% and (ii) the cumulative forecasted death benefits payable through the related Anniversary Date of the Covered Portfolio.
II.
Indemnified Losses has the meaning set forth in Section XII.N.
JJ.
Indemnified Party has the meaning set forth in Section XII.N.
-15-
KK.
Insured has the meaning set forth in the preamble of this Policy. For the avoidance of doubt, actions by the MPIC Servicer on behalf of the Insured shall constitute acts of the Insured for purposes of this Policy.
LL.
Insureds Account means the Insureds account described on Exhibit I, as amended from time to time.
MM.
Insurer has the meaning set forth in the preamble of this Policy.
NN.
Insurers Account means the Insurers account described on Exhibit J, as amended from time to time.
OO.
Intercreditor Agreement means, in the event there are any Permitted Loans, the agreement between the Insured, the Additional Named Insured, the Insurer, the Borrower, the lender under any Permitted Loan, the collateral agent designated therein and the other parties thereto.
PP.
LIBOR means the 12 month London Interbank Offered Rate as of the applicable date as published in the Wall Street Journal.
QQ.
Life Insurance Carrier means, for each Covered Policy, the issuer of such Covered Policy identified as such in the applicable Coverage Certificate.
RR.
Limit of Liability means, for the Covered Portfolio, the amount set forth as such in the applicable Coverage Certificate or Amended Coverage Certificate, as applicable.
SS.
Loan Agreement means that certain Loan and Security Agreement listed on Exhibit K and substantially in the form of the documents attached to Exhibit K.
TT.
Loan Documents means the documents listed on Exhibit K and substantially in the form of the documents attached to Exhibit K relating to any Permitted Loan.
UU.
Loan Party means any party to a Loan Document.
VV.
Maximum Capacity means the Insurer has provided notice to the Covered Entities that it has reached its maximum capacity for providing coverage as set forth in the Policy.
WW.
MPIC Application means a document substantially in the form set forth in Exhibit D attached hereto, properly completed and duly executed by the Insured.
XX.
MPIC Premium means, for the Covered Portfolio, the amount which is the premium payable to the Insurer as set forth as such in the applicable Coverage Certificate or Amended Coverage Certificate, as applicable, calculated in accordance with Section IV; provided that the MPIC Premium for any Covered Policy that is substituted for another Covered Policy in accordance with Section IV.B shall be at a reduced rate equal to twenty-five percent (25%) of the otherwise applicable MPIC Premium.
YY.
MPIC Servicer means _______________ or such successor as may be approved by the Insurer, which shall be engaged by a Covered Entity to review and qualify MPIC Applications, draft Coverage Certificates for final approval by the Insurer, and to process all claims under this Policy on behalf of the Covered Entities.
-16-
ZZ.
Payment Date means the date that is ten (10) days following the Insurers receipt of a Proof of Claim or a Recovery Reconciliation.
AAA.
Permitted Loan means any loan made to the Borrower and the Co-Borrower that (i) provides for the purchase of or the payment of ongoing premiums on one or more of the Covered Policies, (ii) complies with the terms and provisions of the Loan Documents; (iii) has been approved or deemed approved by the Insurer, (iv) neither the related Loan Agreement nor the related disbursement schedule can be amended without the consent of the Insurer (except that the Insurers consent shall not be required with respect to any amendment extending the maturity date or renewing such Permitted Loan so long as the other terms of such Permitted Loan (other than the related disbursement schedule) are not changed) and (v) gives the lender a secured interest in such Covered Policies, so long as (a) such loan is scheduled to be repaid, in full, prior to the end of the Term, and (b) the lender, the Insured, the Additional Named Insured, the Borrower and the Insurer enter into a Intercreditor Agreement substantially in the form set forth on Exhibit F and an Account Control and Custodian Agreement substantially in the form set forth on Exhibit G hereto, confirming the priority of payments related to the Covered Portfolio and managing cash flows in a manner consistent with this Policy and the other Transaction Documents.
BBB.
Permitted Sale means (i) any sale of a Covered Policy for a price that will result in the payment in full to the Insurer of the outstanding Recovery Principal and accrued and unpaid Recovery Premium or (ii) any other sale of a Covered Policy that is approved, in writing, by the Insurer; in each case, following a Permitted Sale, the Covered Policy that was the subject of such Permitted Sale will be excluded from coverage under this Policy from and after the date of such Permitted Sale.
CCC.
Person means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated association, joint venture, government or any agency or political subdivision thereof or any other entity.
DDD.
Policy has the meaning set forth in the preamble hereof.
EEE.
Policy Documents means the documents listed on Exhibit L hereto, or any other material agreements of the Additional Named Insured relating to the acquisition, maintenance or servicing of any Covered Policy and related property (such as documents or information relating thereto) or the enforcement of the rights and remedies of the Additional Named Insured in relation thereto.
FFF.
Post Term Recovery Payments shall mean all net cash flows (death benefits and other proceeds of Covered Policies minus premiums) received after the Term from the Covered Portfolio until the sum of the Recovery Principal and the Recovery Premium equals zero (0).
GGG.
Proof of Claim means a certificate in the form set forth in Exhibit B attached hereto, properly completed and duly executed by a Covered Entity, with all required exhibits thereto (including an exhibit, in the form set forth in Exhibit 1 to the Proof of Claim attached hereto, reflecting such Covered Entitys non-binding calculation of the Claim Amount and, if applicable, all notices received by the Covered Entities or any agent, servant or employee of the Covered Entities from any Person in connection with the lapse or Contest of any Covered Policy. or that is otherwise to be delivered to the Insurer pursuant to this Policy or any Transaction Document.
-17-
HHH.
Recovery Amount as of any date of determination means the amount calculated as (i) the sum of the Gross Cash Flows and the then outstanding Recovery Principal, minus (ii) the sum of the Attachment Point (on or as of the succeeding Anniversary Date, as applicable based on the purpose for such calculation) and the Cumulative Recovery Premium Paid; provided that the Recovery Amount shall never exceed the sum of the applicable Recovery Principal and Recovery Premium, which amount shall be specified and substantiated as such in any related Recovery Reconciliation.
III.
Recovery Premium means the aggregate balance, from time to time, of the interest accrued on the Recovery Principal at the rates and compounded as described in the Coverage Certificate or Amended Coverage Certificate as applicable, together with interest accrued on all accrued and unpaid Recovery Premium at the same rates and following the same compounding methodologies from the start date specified in such applicable Coverage Certificate or Amended Coverage Certificate; provided that no interest shall accrue on any portion of the Recovery Principal that is payable based on the implementation of the Gross Cash Flows Floor on and after the eighth Anniversary Date due to the Gross Cash Flows at such time being lower than the Gross Cash Flows Floor.
JJJ.
Recovery Principal as of any date of determination means the aggregate cumulative amount of the Claim Amounts specified in all Proofs of Claims submitted and paid prior to such date and reduced, but not below zero, by any payments of any Recovery Amounts received by the Insurer prior to such date (and not paid or applied in reduction of any Recovery Premium); provided that such amount shall never exceed the product of (x) 25% and (y) the cumulative Death Benefits of all Covered Policies in the Covered Portfolio.
KKK.
Recovery Reconciliation means a certificate in the form set forth in Exhibit C attached hereto properly completed and duly executed by a Covered Entity, with all required exhibits thereto (including an exhibit, in the form set forth in Exhibit 2 to the Recovery Reconciliation attached hereto, reflecting such Covered Entitys non-binding calculation of the Recovery Amount and if applicable all notices received by the Covered Entities or any agent, servant or employee of the Covered Entities from any Person in connection with the lapse or Contest of any Covered Policy). or that is otherwise to be delivered to the Insurer pursuant to this Policy or any Transaction Document.
LLL.
Responsible Party means the Insured or the Additional Named Insured or any of their respective Authorized Officers or employees.
MMM.
Services Agreement means the Servicing Agreement, entered into by and among the MPIC Servicer, the Borrower and the Additional Named Insured, as may be amended and restated, or otherwise modified from time to time.
NNN.
Term has the meaning set forth in Item 3 of the Declarations.
OOO.
Transaction Documents means this Policy and any Coverage Certificates issued under this Policy, the Intercreditor Agreement, the Account Control and Custodian Agreement and the Services Agreement, as any of the foregoing may be amended, supplemented, amended and restated, or otherwise modified from time to time.
PPP.
Transaction Party means, any of the Insured, the MPIC Servicer, the Borrower, the Additional Named Insured, any of their respective Affiliates or any Authorized Officers or employee of such Persons.
-18-
QQQ.
Underlying Life means, for each Covered Policy, the individual (or individuals) specified as such (by unique identifying number or otherwise) in the applicable Coverage Certificate and who is the measuring life (or are the measuring lives) under such Covered Policy.
SECTION X. SUBROGATION
Except as specifically otherwise provided with respect to any Permitted Loan, in the event any payment of any Claim Amount is made by the Insurer under or in connection with this Policy in respect of the Covered Portfolio or any Covered Policy, in addition to all other rights, remedies and/or recoveries available to the Insurer (including those relating to any Covered Policy ) , the Insurer shall be subrogated to all the Insureds and the Additional Named Insureds rights of recovery against any Person pursuant to any Covered Policy, Permitted Loan, Transaction Document or Policy Document and from all assets of the Insured and the Additional Named Insured (including, but not limited to each Covered Policy) and all proceeds thereof up to the amounts of all such payments, and each Covered Entity shall execute and deliver all instruments and papers reasonably requested by the Insurer and do whatever else is requested by the Insurer in writing that is commercially reasonable to secure any such rights, remedies and/or recoveries and to achieve the priority thereof being senior to all indebtedness (other than Permitted Loans) and other payment and performance obligations to all other Persons, including every other Transaction Party all in accordance with the Intercreditor Agreement if applicable. Notwithstanding the foregoing, the lender under any Permitted Loan shall be senior to the rights of any other Transaction Party and each Permitted Loan shall have a first priority security interest in the Policy Documents and Covered Policies as set forth in the Loan Documents and Intercreditor Agreement. For avoidance of doubt, the rights of subrogation set forth in this section shall in no way impact the right of the lender under any Permitted Loan or the Covered Entities to receive Claim Amounts hereunder or the timing of the payment thereof or the priority of any such partys rights thereto. Each Covered Entity shall do nothing to prejudice such rights, remedies or recoveries by the Insurer and shall cause all other relevant Transaction Parties to recognize such rights and interests of the Insurer and to do nothing to prejudice the same. For the avoidance of any doubt, any sale of the Covered Policy pursuant to a foreclosure shall not be deemed to prejudice such subrogation rights pursuant to this Section X.
SECTION XI. CONFIDENTIALITY
A.
Each party hereto agrees that Confidential Information means (i) the identity of the Insurer, (ii) each of the Transaction Documents and its contents, (iii) all medical and personal information concerning any Underlying Life and (iii) all confidential or non-public information and data in whatever form, whether written, oral, electronic or otherwise furnished by any party in connection with this Policy in each case to the extent, (a) not already in the receiving partys possession, (b) not available to the receiving party before its disclosure under this Policy, (c) not in the public domain when transmitted by one party to another, (d) not published or otherwise becoming part of the public domain (through no fault of the receiving party) before or after transmission, (e) not known to the receiving party through disclosure by a third party (and not to the knowledge of the recipient of such information bound by any duty to the transmitting party to keep such information confidential), and (f) not independently developed by the receiving party.
B.
Each party hereto shall safeguard and hold, and cause their respective officers, directors employees, agents or representatives to safeguard and hold, as confidential all Confidential Information, and shall use Confidential Information solely for the purposes contemplated by the Transaction Documents unless and only to the extent (i) disclosed to such partys (or any of its Affiliates) own officers, directors, employees, agents or representatives (including attorneys
-19-
and internal and outside auditors) that have a need to know such information in connection with the underwriting or administration of any coverage contemplated or provided under this Policy, (ii) compelled to disclose by judicial or administrative process or by other requirements of law or regulation, (iii) requested to disclose by any competent executive, legislative, judicial, regulatory or administrative authorities with regulatory authority over the disclosing party, or (iv) disclosed in any action or proceeding brought by a party in pursuit of its rights or in the exercise of its remedies under this Policy. Notwithstanding the foregoing, this Policy, the form hereof and any other document delivered by the Insurer in connection with this Policy, shall constitute Confidential Information of the Insurer, and the Insurer shall be entitled to use the form of this Policy in its business with no restrictions imposed by the provisions of this Section XI.
C.
Notwithstanding anything to the contrary set forth in this Policy, each of the Insurer, the Insured and the Additional Named Insured (and each employee, representative, or other agent of such party) may disclose to any and all Persons, without limitation of any kind, the Tax Treatment and Tax Structure of this Policy. For purposes of these provisions, Tax Treatment is strictly limited to the purported or claimed United States federal income tax or Cayman Island tax treatment of this Policy and Tax Structure is strictly limited to any fact that may be relevant to understanding the purported or claimed United States federal income tax or Cayman Island tax treatment of this Policy. These provisions are meant to be interpreted so as to prevent this Policy from being treated as offered under conditions of confidentiality within the meaning of the Internal Revenue Code and the Treasury Regulations thereunder.
SECTION XII. GENERAL POLICY PROVISIONS
A.
ASSIGNMENT: This Policy and any and all rights under this Policy may not be assigned by any party without the prior written consent of the other parties; provided, however, that the Insurer may assign this Policy and any and all rights under this Policy to an insurance company that is an Affiliate of the Insurer without the prior written consent of the Covered Entities so long as such Affiliate, at the time of transfer, has a financial strength rating from any of Standard & Poors Rating Services, a division of the McGraw-Hill Companies, Inc., Moodys Investors Services, Inc., A.M. Best Company, Inc. or Fitch, Inc. equal to or better than that of the Insurer, but in no event less than a single A rating, at the time of such assignment, and in the event of any such assignment by the Insurer, the Insurer or the assignee shall provide the Covered Entities with prior written notice of such assignment and the assignee shall confirm, in writing, that it is capable of meeting any payments of Claim Amounts and accepts all obligations under this Policy and makes all representations, warranties and covenants of the Insurer under this Policy. The Insurer shall not be bound by any assignment or transfer of interest that takes place without its prior written consent. Any purported or actual assignment of this Policy or of any right or benefit granted or conveyed to the Covered Entities hereunder or under any Coverage Certificate or Amended Coverage Certificate that is made without the express prior written consent of the Insurer is void ab initio.
B.
CHANGES AND WAIVERS: Notice to any representative of the Insurer or knowledge possessed by any such representative or by any Person shall not effect a waiver or change in any part of this Policy; nor shall the terms of this Policy be waived, changed, modified or amended unless agreed to in writing by an Authorized Officer of the Insurer. The failure of any party to enforce any provision of this Policy shall not constitute a waiver by such party of any such provision. Any past waiver of a provision by any party shall not constitute a course of conduct or a waiver in the future of that same provision.
-20-
C.
EXAMINATION OF BOOKS AND RECORDS: The Insurer shall have the right, but not the obligation, from time to time to examine or audit, at such applicable Covered Entitys expense, all of the Covered Entitys books and records that pertain to the coverage provided by this Policy, all Covered Policies, and all transactions contemplated by and all reports and information delivered in relation to the Transaction Documents and Policy Documents. The Insurer shall notify such Covered Entity of such an inspection at least five (5) Business Days in advance. To the extent that such books and records are to be maintained by a third party on behalf of such Covered Entity, such Covered Entity shall ensure that any related agreement with such third party allows for the Insurer to examine such books and records and the Covered Entity shall direct such third party to allow the Insurer to examine such books and records in accordance with this section.
D.
ASSISTANCE AND COOPERATION: Each Covered Entity and MPIC Servicer shall comply with all lawful and reasonable requests of the Insurer to assist the Insurer in verifying the validity of a loss and securing any rights, remedies or recoveries arising out of a payment by the Insurer under this Policy (including those relating to any Covered Policy), including without limitation assisting the Insurer to obtain information regarding any Covered Policy or the Underlying Life under any Covered Policy from any Life Insurance Carrier, insured, trustee or other relevant Person. In addition, each Covered Entity and MPIC Servicer shall use commercially reasonable efforts to comply (and to cause all such other Persons to comply) with all lawful and reasonable requests that may be made by the Insurer in connection with keeping a Covered Policy in force, including without limitation paying (or arranging for the payment of, or allowing the Insurer if the Insurer so chooses to pay or arrange for the payment of) additional premiums on such Covered Policy; it being understood that any such requests that may be made by the Insurer shall be in writing.
E.
THIRD PARTIES: This Policy shall not be deemed to give any right or remedy whatsoever to any third party unless said right or remedy is specifically granted to such third party by the terms hereof. For the avoidance of doubt, no third party rights are created in favor of any Person, including without limitation, any equity holders of the Additional Named Insured that are limited to an interest in the Covered Portfolio.
F.
ENTIRE AGREEMENT: This Policy, together with all other documents, agreements and information referred to herein (including every Covered Policy and other Transaction Document), all MPIC Applications, Amended MPIC Applications, Coverage Certificates, Amended Coverage Certificates, Proofs of Claim, Recovery Reconciliations and other documents, reports and information delivered under or in relation to any of the foregoing, contains the full and complete understanding and agreement between the parties hereto with respect to the subject matter hereof. The parties acknowledge that no party is entering into this Policy in reliance upon any term, condition, representation or warranty not stated herein or in the foregoing items and that this Policy, together with all of the foregoing items, replaces any and all prior agreements whether oral or written, pertaining to the subject matter hereof.
G.
CONSTRUCTION: It is understood and agreed that this Policy is a manuscript policy that has been negotiated at arms length and on equal footing as among the Insured, Insurer and the Additional Named Insured, that all parties are sophisticated and that all parties fully understand and agree to all the terms and conditions contained in this Policy. Accordingly, in any dispute concerning the meaning of this Policy, or any terms or condition hereof, such dispute shall be resolved without any presumption or rule of construction in favor of either party or any related or similar doctrine. With respect to each defined term, the singular shall include the plural and the plural shall include the singular wherever the context of this Policy permits.
-21-
H.
NOTICES: Except as set forth in Section XII.J below, any communication required to be given hereunder shall be effective only if in writing and shall be deemed sufficiently given only if sent to the Insured, to the Additional Named Insured or to the Insurer, as applicable, at the address or facsimile number shown below, unless a change in address is received by the notifying party.
If to the Insurer:
|
|
|
|
|
|
|
With copies to the lender of any Permitted Loan at its address as set forth in the related Loan Documents.
If to the Insured:
|
With copies to the lender of any Permitted Loan at its address as set forth in the related Loan Documents.
If to the Additional Named Insured:
With copies to the lender of any Permitted Loan at its address as set forth in the related Loan Documents.
With regard to any notices or other documents referenced in this Policy that are to be delivered to the Insured or the Additional Named Insured by any Person other than the Insurer, such notices shall be deemed to have been delivered to the Insured or the Additional Named Insured in the event that they were delivered to any named agent, servant or employee of the Insured or the Additional Named Insured or any other Person appointed by the Insured or the Additional Named Insured to perform any duties on behalf of the Insured or the Additional Named Insured in connection with this Policy.
I.
GOVERNING LAW: This Policy shall be interpreted and all disputes and controversies arising under or related to this Policy shall be governed by and decided under the internal laws of the State of South Dakota, without regard to conflicts or choice of laws principles that would require or allow for the application of any other jurisdictions law.
J.
SERVICE OF SUIT: Each of Insured, the Additional Named Insured and Insurer hereby agree to submit to the jurisdiction of any court of competent jurisdiction within the United States. Nothing in this condition constitutes or should be understood to constitute a waiver of the Insurers rights to commence an action in any court of competent jurisdiction in the United
-22-
States, to remove an action to a United States District Court or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. Service of process in such suit may in the case of the Insurer be made upon ____________________, in the case of the Insured may be made on _____________________ and in the case of the Additional Named Insured may be made on _______________________.
Further, pursuant to any statute of the Cayman Islands or any state, territory, or district of the United States which makes provision therefore, the Insurer hereby designates the Superintendent, Commissioner, or Director of Insurance, other officer specified for that purpose in the statute, or his or her successor or successors in office as its true and lawful attorney upon whom may be served any lawful process in any action, suit, or proceeding instituted by or on behalf of the Insured or the Additional Named Insured arising out of this Policy, and hereby designates the above named counsel as the individual to whom the officer is authorized to mail such process or a true copy thereof.
K.
PAYMENT OF NON-VALID CLAIMS: If Insurer disagrees with a Claim Amount, it can provide payment of such amount without binding itself to such Claim Amount as long as it provides a written notice of such dispute to the Covered Entities. Covered Entities shall use any disputed claim proceeds to retire a Permitted Loan and/or provide for an escrow of such funds until such time as a court can determine the validity of such Claim. If the Insurers dispute is proved to be accurate, Covered Entities shall return such Claim Amounts and the MPIC Servicer shall amend the Proof of Claim or Recovery Reconciliation such that they accurately reflect the courts conclusion, and the Covered Entities agree to pay interest on such Claim Amount, from the date of receipt related thereto, at a rate equal to LIBOR plus 1,000 basis points, compounded annually and based on a 360 day year.
L.
COUNTERPARTS: This Policy may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document.
M.
INDEMNIFICATION: The Covered Entities agree, jointly and severally, to indemnify and hold harmless the Insurer, its Affiliates and their respective officers, directors, shareholders, controlling persons, employees, agents, advisors, successors, transferees, participants and assigns (the Insurer and each of the foregoing persons being individually called an Indemnified Party) from and against any and all claims, demands, damages, losses, liabilities, charges and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted against any Indemnified Party (all of the foregoing being collectively called Indemnified Losses), in each case, related to or arising out of or in connection with (i) any breach or alleged breach by a Covered Entity of any representation, covenant or warranty or failure by a Covered Entity to comply with any of the agreements set forth in this Policy, (ii) any failure of a Covered Portfolio or a Covered Policy to comply with all Applicable Laws, (iii) any fraud of a Covered Entity or of any officer, director, employee, any affiliate, representative or agent thereof in connection with this Policy, any MPIC Application any Amended MPIC Application any Proof of Claim, any Recovery Reconciliation or any other report, information, certificate, document or instrument delivered by or on behalf of a Covered Entity under or in relation to this Policy and (iv) all reasonable costs and expenses incurred by or on behalf of the Insurer in the enforcement of its rights and remedies hereunder. The indemnification available to any Indemnified Party (including the Insurer) under this Section XII shall not be reduced in any way by any MPIC Premium or Commitment Fee received or receivable by the Insurer pursuant to this Policy. The Covered Entities shall remit payment with respect to a claim for indemnification under this Section XII within fifteen (15) Business Days of any non-appealable court ruling confirming the amount due or other
-23-
agreement as to the amount thereof by an Indemnified Party and the Covered Entities. The indemnification provided by this Section XII shall survive the termination of this Policy.
N.
INADVERTENT ERRORS: If, after the issuance of a Coverage Certificate, the Insurer or a Covered Entity discovers that an inadvertent error has been made in such Coverage Certificate, such party shall promptly notify the other parties of such inadvertent error. Following such notification, such inadvertent error may be corrected with the issuance of a replacement Coverage Certificate, but only under one of the following circumstances: (i) such inadvertent error was an inadvertent omission, incorrect reference, typographical error or unintended inconsistency in any MPIC Application or any Coverage Certificate and the issuance of the revised Coverage Certificate would not adversely affect the rights of the Insurer or a Covered Entity; (ii)(x) concurrently with the issuance of such revised Coverage Certificate, the Covered Portfolio and any related loan purchased by a Covered Entity is repaid to the extent necessary to restore the Insurer and the Covered Entities to the same position that each such Person would have occupied had such inadvertent error not occurred and (y) the issuance of the revised Coverage Certificate would not adversely affect the rights of the Insurer or a Covered Entity; or (iii) any other circumstance in which the issuance of such revised Coverage Certificate would not adversely affect the rights of the Insurer or a Covered Entity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-24-
IN WITNESS WHEREOF, __________________has caused this Policy to be signed by its President, and countersigned on the declarations page by a duly Authorized Agent of the Company.
| |
| |
Name: | |
Title: _________ |
This Policy shall not be valid unless signed at the time of issuance by an authorized representative of the Insurer on the Declarations page.
IN WITNESS WHEREOF, each of the Insured, the Additional Named Insured and the Broker has caused this Policy to be signed by its duly authorized representative.
Broker: | |
| |
| |
| |
| |
By: |
|
Name: |
|
Title: |
|
| |
| |
Insured: | |
| |
| |
| |
| |
| |
By: |
|
Name: |
|
Title: |
|
| |
| |
Additional Named Insured: | |
| |
| |
| |
| |
| |
| |
| |
By: |
|
Name: |
|
Title: |
|