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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 17, 1998
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NYLIFE STRUCTURED ASSET MANAGEMENT COMPANY LTD.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 33-43870 13-3641944
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification
Number)
51 Madison Avenue, Room 1700, New York, New York 10010
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 576-6456
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ITEM 2 - DISPOSITION OF ASSETS; ITEM 5 - OTHER EVENTS
On December 17, 1998, NYLIFE Structured Asset Management Company Ltd. ("SAMCO")
sold to Protection One Alarm Monitoring, Inc., as successor by merger to
WestSec, Inc. ("WestSec"), its remaining security alarm monitoring contracts and
related assets, including those which constituted the collateral securing
SAMCO's Series C Notes. The purchase price for the contracts and related assets
was $29.5 million.
The transaction was consummated pursuant to a Settlement Agreement dated
December 17, 1998 between SAMCO and WestSec which resolved the litigation
between the parties described in SAMCO's Form 10-Q for the quarter ended
September 30, 1998.
A portion of the proceeds of the sale were used to purchase United States
Government obligations which were deposited with United States Trust Company of
New York (the "Trustee") pursuant to section 7.1(b) of the Indenture. The
securities have an aggregate value that is sufficient to pay principal and
interest to the Series C Noteholders on the remaining distribution dates of
February 15, 1999, May 17, 1999 and at maturity on August 16, 1999. Under
section 7.1(b) of the Indenture, upon the aforesaid deposit and satisfaction of
certain other conditions, SAMCO is entitled to be relieved of its obligations
under the Series C Notes, the Indenture and the Security Agreement. SAMCO
expects to satisfy these conditions on or about March 19, 1999.
SAMCO is contractually obligated to obtain a release of the lien of the Security
Agreement not later than March 24, 1999.
ITEM 7 - FINANCIAL STATEMENT, PRO FORMA
FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
1. Accounts Purchase Agreement dated December 17, 1998 between
Protection One Alarm Monitoring, Inc., as successor by
merger to WestSec, Inc. and NYLIFE Structured Asset
Management Company Ltd.
2. Settlement Agreement dated December 17, 1998 between
Protection One Alarm Monitoring, Inc., as successor by
merger to WestSec, Inc. and NYLIFE Structured Asset
Management Company Ltd.
3. Indemnity Agreement from SAMCO to the Trustee dated December
18, 1998.
4. Settlement Agreement and Release among BK Financial, Inc.,
Tudor Financial, Inc. and SAMCO dated December 11, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NYLIFE Structured Asset Management Company Ltd
Date: January 5, 1999
By: /s/ Kevin M. Micucci
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Kevin M. Micucci
President (Principal Executive,
Financial and Accounting Officer)
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EXHIBIT 1
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ACCOUNTS PURCHASE AGREEMENT
Accounts Purchase Agreement (this "Agreement"), dated as of December 17,
1998, between Protection One Alarm Monitoring, Inc., as successor by merger to
WestSec, Inc., a Delaware corporation ("WestSec" or "Buyer"), and NYLIFE
Structured Asset Management Company Ltd., a limited liability company formed
under the laws of the State of Texas ("SAMCO" or "Seller").
RECITALS
A. SAMCO and Westinghouse Electric Corporation, a Pennsylvania corporation
("WEC"), entered into that certain Operational Services Agreement dated as of
November 15, 1991 (as heretofore amended or modified, the "OSA") pursuant to
which WEC agreed, among other things, to perform management and monitoring
services, on behalf of SAMCO, for certain security alarm system accounts.
B. WEC, Westinghouse Security Systems, L.P. ("WSSP") and SAMCO entered
into the (i) Accounts Purchase Agreement dated as of July 15, 1992 (as
heretofore amended or modified, the "July Purchase Agreement"), (ii) Accounts
Purchase Agreement dated as of September 16, 1992 (as heretofore amended or
modified, the "September Purchase Agreement"), (iii) Accounts Purchase Agreement
dated as of November 19, 1992 (as heretofore amended or modified, the "November
Purchase Agreement"), and (iv) Accounts Purchase Agreement dated as of December
14, 1992 (as heretofore amended or modified, the "December Purchase Agreement").
C. WEC and SAMCO entered into the Accounts Purchase Agreement dated as of
June 18, 1993 (as heretofore amended or modified, the "1993 Purchase Agreement";
the July Purchase Agreement, September Purchase Agreement, November Purchase
Agreement, December Purchase Agreement and 1993 Purchase Agreement are sometimes
collectively referred to herein as the "Purchase Agreements").
D. SAMCO has issued (i) its Series A Notes, due February 15, 1998 (the
"Series A Notes"), (ii) its Series B Notes, due August 15, 1998 (the "Series B
Notes"), and (iii) its Series C Notes, due August 15, 1999 (the "Series C
Notes"), pursuant to an Indenture dated as of July 15, 1992 (as heretofore
supplemented and amended, the "Indenture") between SAMCO and the United States
Trust Company of New York, as trustee (the "Trustee").
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E. The Series A Notes, Series B Notes, and Series C Notes are secured by,
among other things, the security and alarm monitoring contracts and related
assets (the "Contracts") sold by WSSP and WEC to SAMCO pursuant to the Purchase
Agreements.
F. WEC, WestSec, and Western Resources, Inc., a Kansas corporation
("Western"), entered into the Asset Purchase Agreement dated as of December 16,
1996, as amended by the Amendment thereto dated as of December 30, 1996 (as so
amended, the "Asset Purchase Agreement"), pursuant to which WestSec and Western
purchased the business of selling and servicing monitoring and response security
systems that was operated under the name Westinghouse Security Systems.
G. In connection with the consummation of the transactions contemplated by
the Asset Purchase Agreement, WEC assigned to WestSec all of its rights, title
and interest, and WestSec assumed all of WEC's liabilities and obligations,
under the OSA and Purchase Agreements.
H. SAMCO, WEC, WestSec and Westar Capital, Inc., a Kansas corporation
"Westar Capital"), entered into that certain Consent, Assignment, Assumption,
Amendment and Modification Agreement dated as of December 30, 1996 (the
"Consent") pursuant to which SAMCO consented to the assignment to WestSec of the
OSA and the Purchase Agreements and the parties modified certain provisions of
the Purchase Agreements and the OSA.
I. Pursuant to Section 9.1 of the OSA, as amended by the Consent, WestSec
became obligated to purchase the security alarm monitoring contracts and related
assets that secured the Series A Notes, the Series B Notes and the Series C
Notes (collectively, "the Notes") and has previously paid Twenty-three million
one hundred eighty-two thousand one hundred sixty-five dollars ($23,182,165) to
SAMCO.
J. A dispute has arisen between WestSec and SAMCO regarding, among other
things, the total number of the Contracts constituting the collateral securing
SAMCO's Notes, the calculation of WestSec's performance bonus upon the sale of
the Contracts constituting the collateral securing SAMCO's Notes, and the fair
market value of the Contracts constituting the collateral securing SAMCO's
Notes.
K. On March 2, 1998, WestSec filed a petition against SAMCO in the 44th
Judicial District Court of Dallas County, Texas; Cause No. DV 98-01761-B (the
"Litigation"), setting forth claims for declaratory judgment, breach of contract
and attorneys' fees. On March 27, 1998, SAMCO filed an answer in the Litigation,
setting forth a general denial, affirmative defenses and counterclaims against
WestSec for declaratory judgment,
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breach of contract and attorneys' fees. The parties recognize that bona fide
disputes and controversies exist between WestSec and SAMCO, both as to liability
and the amount thereof.
L. WestSec and SAMCO have agreed to compromise and settle all claims and
causes of action of any kind between them. The settlement involves, inter alia,
the sale by SAMCO to WestSec of any and all Contracts in which SAMCO claimed or
claims an interest, in partial consideration of WestSec paying SAMCO Twenty-nine
million five hundred thousand dollars ($29,500,000) in addition to amounts
previously paid by WestSec to SAMCO.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
set forth herein, and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Sale and Purchase of Accounts. At the Closing, Buyer will acquire from
Seller and Seller will transfer to Buyer (each relying upon the other's
covenants, agreements, representations and warranties contained in this
Agreement) the security alarm monitoring contracts and related assets described
in Section 1.1.
1.1 Assets Transferred. The assets to be sold and assigned by Seller and
purchased and assumed by Buyer hereunder shall consist of all security alarm
monitoring contracts in which Seller has or claims an interest, whether or not
previously sold to WestSec, including those Contracts between Seller and
security alarm system customers (the "Customers") which now secure, or at any
time heretofore have secured, the Notes and those Contracts between Seller and
Customers which are otherwise owned by SAMCO (collectively, the "SAMCO
Contracts"), in each case including all rights and obligations thereunder
together with and including the assets described below (collectively, the
"Purchased Accounts"):
(a) Revenues received by Seller under the SAMCO Contracts on or
after the date of the Closing, through lockboxes or otherwise;
(b) All alarm equipment owned by Seller used in rendering alarm
monitoring services under any of the SAMCO Contacts and located on the premises
of any Customer (the "Related Equipment");
(c) All rental agreements between Seller and any Customer relating
to the Related Equipment (the "Related Agreements");
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(d) All books and records relating to the SAMCO Contracts, the
Customers and the other assets described above, including related accounts
receivable information as requested by Buyer (the "Related Books and Records"),
provided that Seller may maintain copies of such books and records to the extent
such books and records pertain to other assets of Seller; and
(e) All other tangible or intangible property of Seller, including
without limitation, all accounts, contract rights (excluding the OSA) and
general intangibles of Seller, and all lock box agreements (including the
Lockbox Agreement, dated as of July 8, 1994, among Bank One, Arizona, NA,
BancStar, Inc., United States Trust Company of New York and Seller), and all
revenues received on or after the date of the Closing, associated with or
arising from or in connection with the SAMCO Contracts (the "Other Property").
1.2 Assumption of Liabilities. Buyer shall expressly assume, as of the
Closing, all of the express obligations of Seller of any nature arising under
the Purchased Accounts on or after the date of the Closing (the "Related
Obligations"). Buyer does not hereby assume any other obligations of Seller.
1.3 Purchase Price.
(a) The purchase price (the "Purchase Price") for the Purchased
Accounts shall be Twenty-nine Million Five Hundred Thousand Dollars
($29,500,000). At the Closing, Buyer shall pay to Seller the full Purchase Price
by wire transfer in immediately available funds to the account specified below:
Account Name: Baker & Botts, L.L.P.
Account Number: 001 002 66627
Bank Name: Chase Bank of Texas, N.A.
712 Main
Houston, TX 77002
ABA: 113000609
(b) Payments received from Customers shall belong to Seller only if
due and received before the Closing Date. All payments by Customers due or
received on and after the Closing Date shall belong to Buyer, and Seller shall
hold any such payments it receives after the Closing Date in trust for Buyer and
shall promptly deliver any such payments to Buyer.
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2. Representations and Warranties of Seller. Seller represents and
warrants to Buyer that:
(a) Seller is a limited liability company duly formed and in good
standing under the laws of Texas and has all requisite company power and
authority to own, lease and operate its properties and to carry on its present
business.
(b) Seller has full limited liability company power and authority to
execute, deliver, and perform this Agreement and has taken all action necessary
to make this Agreement a valid, binding and enforceable obligation of Seller.
(c) This Agreement is a valid and binding obligation of Seller,
enforceable in accordance with its terms (except to the extent that
enforceability may be limited by bankruptcy or insolvency laws or other laws
generally relating to creditors' rights, or by general equity principles), and
the transfer and sale to Buyer of the Purchased Accounts and the Related
Obligations contemplated herein will not conflict with or violate the terms of
any material agreement to which Seller is a party or any court order, judgment,
writ, injunction or award applicable to Seller.
(d) Seller has (and has not previously conveyed) such title to, and
the transfer and sale to Buyer contemplated herein will vest Buyer with such
title to, the SAMCO Contracts, the Related Agreements, the Related Books and
Records, the Related Equipment and the Other Property as was conveyed to Seller
pursuant to the Purchase Agreements, the Consent or otherwise. Other than the
security interests and liens granted by Seller in favor of the Trustee in
connection with the transactions contemplated by the Indenture, the SAMCO
Contracts, the Related Agreements, the Related Books and Records, the Related
Equipment and the Other Property are free and clear of any mortgages, liens,
pledges, charges, judgments, security interests, claims or other encumbrances of
any nature arising by reason of any action or inaction by SAMCO; and to Seller's
knowledge there are no other mortgages, liens, pledges, charges, judgments,
security interests, claims or other encumbrances affecting the Purchased
Accounts.
(e) The Purchase Price is sufficient to discharge all obligations of
Seller that are secured by any interest in the Purchased Accounts held by the
Trustee, including without limitation the security interests and liens created
under the Security Agreement (as defined in the Indenture). As soon as possible,
and in any event within ninety-six (96) days after receipt of the Purchase
Price, Seller shall mail or cause the Trustee to mail to Buyer appropriate forms
UCC-3 discharging such obligations.
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3. Representations and Warranties of Buyer. Buyer represents and warrants
to Seller as follows:
(a) Buyer is a corporation duly incorporated and in good standing
under the laws of Kansas and has all requisite corporate power and authority to
own, lease and operate its properties and to carry out its present business.
(b) Buyer has full corporate power and authority to execute,
deliver, and perform this Agreement and has taken all action necessary to make
this Agreement a valid, binding and enforceable obligation of Buyer.
(c) This Agreement is a valid and binding obligation of Buyer,
enforceable in accordance with its terms (except to the extent that
enforceability may be limited by bankruptcy or insolvency laws or other laws
generally affecting creditors' rights or by general principles of equity), and
the transfer and sale to Buyer of the Purchased Accounts and the Related
Obligations contemplated herein will not conflict with or violate the terms of
any material agreement to which Buyer is a party or any court order, judgment,
writ, injunction or award applicable to Buyer.
4. Closing.
(a) The Closing shall take place on the date of full execution
hereof, or on such other date as agreed to by the parties (the "Closing"). The
Closing shall be effective for all purposes as of December 17, 1998. The Closing
may occur by the transmission of signed documents, in counterparts, by fax, to
be confirmed by the parties by telephone and to be followed by delivery of
original executed counterparts by Federal Express or other comparable nationally
recognized overnight courier service, and the simultaneous transfer of the
Purchase Price in accordance with Section 1.3(a) hereof,
(b) Without limiting the generality of the foregoing, at the Closing
each of Seller and Buyer shall deliver to the other the following:
(i) A General Bill of Sale and Assignment in the form attached
hereto as Exhibit B, as executed by Seller and acknowledged by Buyer, and an
Assumption of Liabilities in the form attached hereto as Exhibit C, as executed
by Buyer;
(ii) a Request for Termination of The Chase Manhattan Bank Letter of
Credit Number P-271117 in the form attached hereto as Exhibit D, as executed by
Buyer and Seller;
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(iii) All third-party consents, if any, required to be obtained by
Seller or Buyer, as the case may be, in connection with the sale and assignment
by Seller and the purchase and assumption by Buyer of the Purchased Accounts and
the Related Obligations hereunder.
(c) (i) Within ninety-two (92) days of the receipt by Seller of the
Purchase Price, Seller shall deliver to the Trustee (1) a request for the
termination of the Trustee's security interest in the Purchased Accounts, (2) an
Officers' Certificate and (3) Opinion of Counsel (as such terms are defined in
the Indenture) in satisfaction of the requirements set forth in Section 12 of
the Security Agreement (as defined in the Indenture), and (ii) as soon as
possible, and in any event within ninety-six (96) days after receipt of the
Purchase Price, Seller shall deliver, or cause the Trustee to deliver, to Buyer
a Confirmation of Release of Security Interest and UCC Releases executed by the
Trustee in form reasonably satisfactory to Buyer.
5. Release of Certain Obligations.
(a) Concurrently with the Closing in accordance with Section 4
above, all obligations of WestSec with respect to the performance of Account
Management Services (as defined in the OSA) as to the Purchased Accounts shall
cease and be satisfied, and the obligations of WestSec to purchase the SAMCO
Contracts pursuant to Section 9.1 of the OSA, as amended by the Consent, shall
be satisfied.
(b) Without limiting the generality of the foregoing subsection (a),
SAMCO hereby expressly releases WEC from any obligation of WEC under Section 9
of the Consent to pay SAMCO any amount by which the Purchase Price is less than
the amount of all principal and accrued and unpaid interest on the Series C
Notes.
(c) SAMCO is hereby released from its obligations under Article IV
of the OSA to pay WestSec the "Performance Bonus" (as defined therein), if any,
with respect to the SAMCO Contracts.
6. Certain Post-Closing Matters.
(a) Neither party shall make any announcement of the transactions
contemplated herein to any persons or entities outside the parties to this
Agreement, their affiliated companies, independent accountants, attorneys and
the Consultants (as defined in the OSA) without the prior written consent of the
other party, except for the purpose of enforcing this Agreement, the exhibits
thereto, or any provisions therein, and except as may
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be required by law, rule or regulation, including those of the Securities and
Exchange Commission.
(b) In addition to the actions, documents and instruments
specifically required to be taken or delivered hereby, prior to and after the
Closing and without further consideration, each of Seller and Buyer shall
execute, acknowledge and deliver such other assignments, transfers, consents and
other documents and instruments and take such other actions as either party or
its counsel may reasonably request in order to complete and perfect the
transactions contemplated herein; provided that this Section shall not require
either party to deliver any such documents or take any such actions which the
requesting party is not entitled to receive at the time of such request because
of a default then existing hereunder by such requesting party.
7. Seller Nonsolicitation; Nondisclosure.
(a) Seller agrees that for such period of time as may be necessary
to maximize the value of the Purchased Accounts owned by Buyer and which are
sold by Buyer to any third party, Seller shall not and shall not permit any of
its majority-owned subsidiaries or any of its wholly-owned subsidiaries to,
directly or indirectly, individually or with others, on its own behalf
(individually or collectively), or on behalf of any other person, either as a
principal, owner, agent, stockholder, partner, lender, consultant or in any
other capacity, intentionally and individually target any Customers under any
such Purchased Accounts, based on or through, directly or indirectly, any
information concerning any such Customers which was obtained by Seller as a
result of its ownership of the Purchased Accounts for the purpose of suggesting
to, inducing, soliciting or persuading (or intentionally and individually target
any such Customers for the purpose of attempting to suggest to, induce, solicit
or persuade) any such Customers to enter into a contract or agreement with
Seller or an affiliate of Seller for the provision of security alarm monitoring
services to such Customers.
(b) Seller further agrees that any information concerning any
Customers under any Purchased Accounts which was obtained by Seller as a result
of its ownership of the Purchased Accounts is confidential and proprietary
information of Buyer ("Confidential Information"). Seller shall not, without the
prior written consent of Buyer, disclose any such Confidential Information,
unless such information (i) becomes generally available to the public other than
by unauthorized disclosure by Seller, (ii) is disclosed to Seller's accountants,
attorneys or consultants (provided such persons are obligated to hold such
information in confidence on substantially the terms provided in this Section)
or (iii) is (upon the advice of counsel) required by law to be disclosed, in
which event, prior to any disclosure, Seller shall provide Buyer with prompt
written notice so that Buyer may seek
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(with the cooperation of Seller, if so requested by Buyer) a protective order or
other appropriate remedy. If such protective order or other remedy is not
obtained, Seller may furnish only that portion of the Confidential Information
which is legally required and shall exercise reasonable commercial efforts to
obtain reliable assurance that confidential treatment will be accorded the
Confidential Information so furnished.
8. Miscellaneous.
(a) Each of the parties hereto represents and warrants to the other
that no broker or finder has acted on its behalf in connection with this
Agreement or the transactions contemplated hereby. Each such party agrees to
indemnify and hold and save the other harmless from any claim or demand for
commission or other compensation by any broker, finder or similar agent claiming
to have been employed by or on behalf of such party.
(b) All representations, warranties, covenants and agreements of any
of the parties hereto made in this Agreement shall survive the execution and
delivery hereof and the Closing hereunder.
(c) Any notice or communication given pursuant hereto by any party
to the other parties hereto shall be in writing and shall be delivered or mailed
by registered mail, postage prepaid or sent by Federal Express or other
comparable nationally recognized courier service, as follows:
If to the Seller: NYLIFE Structured Asset Management Company Ltd.
51 Madison Avenue, Suite 1700
New York, NY 10010
Attn: Kevin M. Micucci
Telecopier: (212) 447-4127
With a copy to: Gilbert, Segall and Young LLP
430 Park Avenue
New York, NY 10022
Attn: Kenneth J. Stuart, Esq.
Telecopier: (212) 644-4051
If to the Buyer: Protection One Alarm Monitoring, Inc.
6225 N. Highway 161
Suite 400
Irving, Texas 75038-2227
Attn: Renee T. Kingsley
Telecopier: 972/916-6699
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or to such other address as shall hereinafter be furnished in writing by any
party hereto to the other parties hereto.
(d) Provided the Closing occurs, each of the parties hereto will
bear its own expenses incurred in connection with the sale of the Purchased
Accounts contemplated herein.
(e) This Agreement, the Settlement Agreement dated December 17, 1998
between WestSec and SAMCO, the OSA, the Purchase Agreements and the Consent set
forth the entire understanding and supersedes all prior agreements or
understandings of the parties hereto with respect to the subject matter hereof
and may not be changed or terminated except by a writing signed by each of the
parties hereto.
(f) This Agreement shall be construed in accordance with the laws of
Texas.
(g) This Agreement 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 instrument.
(h) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, personal representatives and
successors, and may not be assigned at any time by Seller or Buyer without the
prior written consent of the other.
(i) The headings in this Agreement are for reference purposes only
and shall not affect the meaning or interpretation of this Agreement.
[The balance of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
NYLIFE STRUCTURED ASSET MANAGEMENT
COMPANY, LTD.
(Seller)
By: /S/ KEVIN M. MICUCCI
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Name: KEVIN M. MICUCCI
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Title: PRESIDENT
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PROTECTION ONE ALARM MONITORING, INC.
(Buyer)
By: JOHN W. HESSE
--------------------------------
Name: JOHN W. HESSE
--------------------------
Title: EX. V.P.
--------------------------
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EXHIBIT A
GENERAL BILL OF SALE AND ASSIGNMENT
NYLIFE Structured Asset Management Company Ltd., a Texas limited
liability Company ("SAMCO"), for and in consideration of the Purchase Price (as
defined in the Accounts Purchase Agreement referred to below) and other good and
valuable consideration, the receipt of which is hereby acknowledged, paid to it
this day by Protection One Alarm Monitoring, Inc., as successor by merger to
WestSec, Inc., a Delaware corporation ("WestSec"), pursuant to that certain
Accounts Purchase Agreement, dated the date hereof, between SAMCO and WestSec
(the "Purchase Agreement), does hereby grant, bargain, sell, convey, transfer,
set over, assign and deliver unto WestSec and WestSec does hereby purchase,
assume, accept and acquire from SAMCO, all SAMCO's right, title and interest in
and to all security alarm monitoring contracts, whether or not previously sold
to WestSec, in which Seller has or claims an interest, including those contracts
which now secure, or at any time heretofore have secured, the Series A Notes,
the Series B Notes and the Series C Notes (the "Notes"), and contracts that are
otherwise owned by SAMCO, together with and including the assets described below
(collectively, the "Purchased Accounts"):
(a) Revenues received by SAMCO under the SAMCO Contracts on or after
the date of the Closing (as defined in the Purchase Agreement), through
lockboxes or otherwise, and
(b) All alarm equipment owned by SAMCO used in rendering alarm
monitoring services under any of the SAMCO Contracts and located on the premises
of any Customer (as defined in the Purchase Agreement) (the "Related
Equipment"); and
(c) All rental agreements between SAMCO and any Customer relating to
the Related Equipment, and
(d) All books and records relating to the SAMCO Contracts, the
Customers and the other assets described above, including related accounts
receivable infonnation as requested by WestSec; and
(e) All other tangible and intangible property of SAMCO, including
without limitation, all accounts, contract rights (excluding the OSA) and
general intangibles of SAMCO, and all lockbox agreements (including the Lockbox
Agreement, dated as of July 8, 1994, among Bank One, Arizona, NA, BancStar,
Inc., United States Trust Company of New York and SAMCO), and all revenues
received on or after the date hereof, associated with or arising from or in
connection with the SAMCO Contracts (the "Other Property").
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AND, for the consideration aforesaid, SAMCO hereby constitutes and
appoints WestSec, its successors and assigns, the true and lawful attorney or
attorneys of SAMCO, with full power of substitution, for WestSec and in its name
and stead or otherwise, by and on behalf of and for the benefit of WestSec, its
successors and assigns, to demand and receive from time to time any and all of
the Purchased Accounts hereby sold, assigned, transferred, conveyed and
delivered, and to give receipts and releases for and respect of the same and any
part thereof and from time to time to institute and prosecute in the name of
SAMCO or otherwise, but at the expense and for the benefit of WestSec, its
successors and assigns, any and all proceedings at law, in equity or otherwise
which WestSec, its successors and assigns, may deem proper in order to collect
assert, or enforce any claim, right or title of any kind in and to the Purchased
Accounts hereby sold, assigned, transferred, conveyed and delivered, and to
defend or compromise any and all actions, suits or proceedings in respect of the
Purchased Accounts and to do all such acts and things in relation thereto as
WestSec, its successors or assigns, shall deem desirable; and SAMCO hereby
declaring that the appointment made and the powers hereby granted are coupled
with an interest and are and shall be irrevocable by SAMCO in any manner or for
any reason.
AND, for the consideration aforesaid, SAMCO, for itself and its
successors and assigns, has covenanted and by this General Bill of Sale and
Assignment does covenant with WestSec, its successors and assigns, that it,
SAMCO, and its successors and assigns, will do, execute and deliver, or will
cause to be done, executed and delivered, at WestSec's expense, all such further
acts, transfers, assignments, conveyances, powers of attorney and assurances,
for the better assuring, conveying and confirming unto WestSec, its successors
and assigns, all and singular SAMCO's entire right, title and interest in and to
the Purchased Accounts hereby sold, transferred, assigned and conveyed as
WestSec, its successors or assigns, shall reasonably require; provided that this
paragraph shall not require SAMCO to deliver any such assurances to which
WestSec is not entitled at the time of such request because of a default by
WestSec under the then existing Purchase Agreement.
This General Bill of Sale and Assignment and the covenants and
agreements herein contained shall inure to the benefit of WestSec, its
successors and assigns, and shall be binding upon SAMCO, its successors and
assigns.
TO HAVE AND TO HOLD all of the above-described tangible and
intangible property and assets hereby sold, conveyed, transferred, set over,
assigned and delivered unto WestSec, its successors and assigns, to its and
their own use and behalf forever.
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IN WITNESS WHEREOF, SAMCO has caused these presents to be executed
as of the 17th day of December, 1998.
NYLIFE STRUCTURED ASSET MANAGEMENT
COMPANY LTD.
By: /S/ KEVIN M. MICUCCI
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Name: KEVIN M. MICUCCI
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Title: PRESIDENT
---------------------------
ACKNOWLEDGED:
PROTECTION ONE ALARM MONITORING, INC.
By: JOHN W. HESSE
-------------------------
Name: JOHN W. HESSE
-------------------
Title: EX. V.P.
-------------------
A-3
<PAGE>
EXHIBIT B
ASSUMPTION OF LIABILITIES
KNOW ALL MEN BY THESE PRESENTS for good and valuable consideration,
the receipt of which is hereby acknowledged, and pursuant to and in accordance
with the terms and provisions of that certain Accounts Purchase Agreement, dated
as of the date hereof, between NYLIFE Structured Asset Management Company Ltd.,
a Texas limited liability company ("SAMCO"), and Protection One Alarm
Monitoring, Inc., as successor by merger to WestSec, Inc., a Delaware
corporation ("WestSec") (the "Purchase Agreement"), that WestSec hereby
covenants and agrees as follows:
WestSec hereby assumes and agrees to pay, perform or discharge when
due all the obligations and liabilities of SAMCO defined as "Related
Obligations" in Section 1.2 of the Purchase Agreement.
IN WITNESS WHEREOF, WestSec has caused this Assumption of
Liabilities to be executed on its behalf by the undersigned this 17th day of
December, 1998
PROTECTION ONE ALARM MONITORING, INC.
By: JOHN W. HESSE
--------------------------------
Name: JOHN W. HESSE
--------------------------
Title: EX. V.P.
--------------------------
B-1
<PAGE>
EXHIBIT C
REQUEST FOR TERMINATION OF
THE CHASE MANHATTAN BANK
LETTER OF CREDIT NUMBER P-271117
December 17, 1998
The Chase Manhattan Bank
55 Water Street, 17th Floor
Room 1708
New York, New York 10041
Attn: Standby Letter of Credit Department
Pursuant to the terms of that certain Letter of Credit P-271117 between
WestSec Inc. ("Applicant"), The Chase Manhattan Bank ("Bank") and NYLife
Structured Asset Management Company Ltd. ("SAMCO"), with an effective date of
April 1st, 1997 ("Letter of Credit"), Applicant and SAMCO hereby jointly request
that the amount of the Letter of Credit be terminated.
IN WITNESS WHEREOF, SAMCO has caused these presents to be executed as of
the date first above written.
NYLIFE STRUCTURED ASSET MANAGEMENT
COMPANY LTD.
By: KEVIN M. MICUCCI
--------------------------------
Name: KEVIN M. MICUCCI
--------------------------
Title: PRESIDENT
--------------------------
ACKNOWLEDGED:
PROTECTION ONE ALARM MONITORING, INC.,
AS SUCCESSOR BY MERGER TO WESTSEC INC.
By: JOHN W. HESSE
--------------------------
Name: JOHN W. HESSE
--------------------
Title: EX. V.P.
--------------------
C-1
<PAGE>
EXHIBIT 2
<PAGE>
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") is entered into by and between
Protection One Alarm Monitoring, Inc., as successor by merger to WestSec, Inc.
("WestSec") and NYLIFE Structured Asset Management Company, Ltd. ("SAMCO").
SAMCO and WestSec are "the Parties" to this agreement.
WHEREAS, on or about November 15, 1991, SAMCO and WestSec's predecessor,
Westinghouse Electric Corporation ("WEC"), entered into the Operational Services
Agreement ("OSA") pursuant to which WEC agreed, among other things, to perform
management and monitoring services for certain security alarm system contracts
owned by SAMCO.
WHEREAS, in 1992 and 1993, WEC, Westinghouse Security Systems, L.P.
("WSS") and SAMCO entered into a series of Account Purchase Agreements dated
July 15, 1992, September 16, 1992, November 19, 1992, December 12, 1992, and
June 18, 1993 (collectively, the "Purchase Agreements") which provided for the
sale of certain security alarm system contracts and related assets to SAMCO by
WEC and WSS.
WHEREAS, in connection with the purchase of the security alarm contracts
under the Purchase Agreements, SAMCO issued its Series A Notes due on February
15, 1998, its Series B Notes due on August 15, 1998, and its Series C Notes due
on August 15, 1999 (collectively, the "Notes").
<PAGE>
WHEREAS, each series of Notes was secured by, among other things, security
alarm system contracts sold to SAMCO by WEC and WSS pursuant to the Purchase
Agreements (the "Contracts constituting the collateral securing such Notes" or
the "note holders' Lien").
WHEREAS, in or about December of 1996, WEC, WestSec and Western Resources,
Inc. ("WRI") entered into an Asset Purchase Agreement pursuant to which WestSec
and WRI purchased from WEC the business of managing, servicing and monitoring
security alarm systems.
WHEREAS, in connection with WEC's assignment to WestSec of WEC's rights,
title and interest in the OSA and Purchase Agreements, SAMCO, WEC, WestSec and
Westar Capital, Inc. ("Westar") entered into a Consent, Assignment, Assumption,
Amendment and Modification Agreement dated December 30, 1996 ("Consent
Agreement"), pursuant to which SAMCO consented to the assignment to WestSec of
the OSA and Purchase Agreements subject to the terms of the Consent Agreement.
WHEREAS, the Consent Agreement modified Section 9.1 of the OSA to require
WestSec or an affiliate of WestSec designated by it to "irrevocably purchase the
Contracts constituting the collateral securing [each series of] Notes."
WHEREAS, the Consent Agreement further provided that WestSec furnish SAMCO
with a letter of credit to secure its obligations under the OSA, the Consent
Agreement and the Purchase Agreements (the "Letter of Credit").
-2-
<PAGE>
WHEREAS, on or about February 15, 1998, SAMCO's Series A Notes matured,
which effectuated WestSec's obligation under the Consent Agreement to pay for
the Series A "Contracts constituting the collateral securing such Notes."
WHEREAS, on or about August 15, 1998, SAMCO's Series B Notes matured,
which triggered WestSec's obligation to pay for the Series B "Contracts
constituting the collateral securing such Notes."
WHEREAS, the Series C Notes are scheduled to mature on August 15, 1999, at
which time WestSec would be obligated to pay for the Series C "Contracts
constituting the collateral securing such Notes."
WHEREAS, a dispute has arisen between Westsec and SAMCO regarding, among
other things, the total number of the Contracts constituting the collateral
securing such Notes, the calculation of WestSec's performance bonus upon the
sale of the Contracts constituting the collateral securing such Notes, and the
fair market value of the Contracts constituting the collateral securing such
Notes
WHEREAS, on March 2, 1998, WestSec filed a petition against SAMCO in the
44th Judicial District Court of Dallas County, Texas; Cause No. DV 98-01761-B
(the "Litigation"), setting forth claims for declaratory judgment, breach of
contract and attorneys' fees.
-3-
<PAGE>
WHEREAS, on March 27, 1998, SAMCO filed an answer in the Litigation,
setting forth a general denial, affirmative defenses and counterclaims against
WestSec for declaratory judgment, breach of contract and attorneys' fees.
WHEREAS, WestSec has purchased from SAMCO the contracts securing the
Series A and B Notes, through transactions that were partially disputed prior to
this settlement.
WHEREAS, bona fide disputes and controversies exist between WestSec and
SAMCO, both as to liability and the amount thereof.
WHEREAS, by reason of such disputes and controversies, the Parties desire
to compromise and settle all claims and causes of action of any kind between the
Parties.
In exchange for their promises, the Parties agree:
1. Payment of Purchase Amount and Transfer of Accounts.
a. On or before December 17, 1998, WestSec shall pay SAMCO Twenty-nine
million five hundred thousand dollars ($29.5 million) (the "Purchase Amount") by
delivering the Purchase Amount in immediately available funds in trust to Rod
Phelan, SAMCO's attorney of record in the Litigation.
b. Upon receipt of the Purchase Amount, Phelan (on behalf of SAMCO) will
deliver to John Bickel, WestSec's attorney of record in the Litigation, a copy
of the Accounts Purchase Agreement, Bill of Sale and Assumption Agreement
attached as Exhibit A, executed by SAMCO, whereby SAMCO transfers and assigns to
WestSec title to any and
-4-
<PAGE>
all security alarm monitoring accounts in which SAMCO claims an interest
("Accounts"), unencumbered except for the note holders' Lien.
c. Bickel will deliver to Phelan a copy of the document attached as
Exhibit A (including the Assumption Agreement), executed by WestSec, it being
acknowledged by the Parties that the note holders' Lien will not be released by
the note holders trustee until 91 days after SAMCO deposits the funds referred
to in paragraph 3(b).
2. Mutual Releases and Dismissal with Prejudice.
Effective upon the delivery of the Purchase Amount and executed conveyance
document referred to in paragraph 1 above, and except as to rights and duties
created by this Agreement:
a. SAMCO generally releases WestSec and its parent, successors,
predecessors, affiliates, and their legal representatives, officers, directors,
employees, stockholders, insurers, assigns, and attorneys (collectively, the
"WestSec Parties") from any and all claims SAMCO has or may now have, including
in particular but without limitation claims of breach of contract, declaratory
judgment and attorneys fees. This release is intended to be as broad as the law
allows. SAMCO further covenants and agrees to not directly or indirectly assist,
aid, abet, sponsor, continue, renew, commence or prosecute, join in or
participate as an adverse party or as an adverse witness (in either instance,
however, subject to court order, requirement of law or compulsory legal process)
in any suit or action at law or otherwise against the WestSec Parties directly
or indirectly.
-5-
<PAGE>
b. WestSec generally releases SAMCO and its parent, successors,
predecessors, affiliates, and their legal representatives, officers, directors,
employees, stockholders, insurers, assigns, and attorneys (collectively, the
"SAMCO Parties") from any and all claims WestSec has or may now have, including
in particular but without limitation claims of breach of contract, declaratory
judgment and attorneys fees. This release is intended to be as broad as the law
allows. WestSec further covenants and agrees to not directly or indirectly
assist, aid, abet, sponsor, continue, renew, commence or prosecute, join in or
participate as an adverse party or as an adverse witness (in either instance,
however, subject to court order, requirement of law or compulsory legal process)
in any suit or action at law or otherwise against the SAMCO Parties directly or
indirectly.
c. Phelan will sign and Bickel will sign and deliver to the court for
entry the Agreed Order of Dismissal with Prejudice attached as Exhibit B, which
taxes costs to the party incurring them.
3. Warranties by SAMCO.
a. SAMCO warrants that it is solvent and paying its debts as they come
due, that it will not file a voluntary petition in any bankruptcy proceeding,
and that it has not committed and will not commit any acts of bankruptcy that
could result in a third party filing an involuntary petition in a bankruptcy
proceeding.
b. SAMCO warrants that within one business day after it receives the
payment described in P. 1(a), it will pay the trustee for the note holders the
money (or an equivalent
-6-
<PAGE>
amount of U.S. Government securities) required to obtain a release of the note
holders' Lien on the Accounts, and that the trustee will be irrevocably
instructed not to disburse this money or the proceeds of the Government
securities to the note holders until it has executed a UCC-3 releasing the note
holders' Lien; provided that the trustee may make the required payments of
interest and principal on February 15, 1999 and May 15, 1999.
c. SAMCO warrants that within 96 days after it receives the payment
described in P. 1(a), it will mail or cause the trustee to mail to WestSec
appropriate forms UCC-3, fully executed, releasing the note holders' Lien on the
Accounts.
d. SAMCO warrants that it has obtained a complete release of SAMCO and
WestSec from BK Financial, Daniel Buompane, Capital Recovery, Inc. and/or James
R. Day (collectively, the "Consultants"), as reflected by Exhibit C attached,
effective upon payment of the sum stated therein, which payment SAMCO warrants
that it will make within 3 business days of receipt from WestSec of the payment
described in paragraph 1.
e. In the event that SAMCO breaches any of these warranties, WestSec shall
be entitled to recover all damages caused by the breach.
4. Indemnification.
a. SAMCO agrees to indemnify, defend and hold harmless the WestSec Parties
against any claims by the Consultants. SAMCO also agrees to indemnify, defend
and hold harmless the Westsec Parties against any claims by the holders of the
Series A, Series B and Series C Notes.
-7-
<PAGE>
b. WestSec agrees to indemnify, defend and hold harmless the SAMCO Parties
against any claims by any of the customers whose security alarm contracts make
up the Accounts.
5. Merger Clause.
It is understood and agreed that this Agreement and its exhibits contain
the entire agreement between the Parties and supersede any and all prior
agreements, representations, arrangements or understandings between the Parties.
This Agreement cannot be changed or terminated orally. No other oral
understandings, representations, statements, promises or inducements in addition
to or contrary to the terms of this Agreement exist.
6. No Admission.
It is understood and agreed that the terms hereof are contractual and not
merely recitals. It is further understood and agreed that this Agreement is a
compromise of doubtful and disputed claims and that no payments made, releases
or other consideration given or anything contained herein shall be construed as
an admission by any party, all liability being expressly denied.
7. Confidentiality.
It is understood and agreed that the Parties and their attorneys shall
keep and maintain confidential all terms of this Agreement including the nature,
size and amount of consideration to be paid hereunder, and shall not voluntarily
disclose to any persons or entities outside the Parties and their attorneys any
of the terms of this Agreement, except for
-8-
<PAGE>
the purpose of enforcing this Agreement, the exhibits hereto, or any provisions
therein, and except as may be required by law, rule or regulation. However, it
shall not be a violation of this Agreement for representatives of the Parties
who are involved in negotiation, execution, and/or implementation of this
Agreement to disclose to any advisors, accountants, investors or any other
persons who reasonably need to know such information that the Litigation was
settled through a confidential agreement.
8. Warranty of Ownership, Non-Transfer & Non-Assignment of Claims.
It is expressly warranted by the Parties that they are the sole owners and
holders of all claims, actions and causes of action described in this Agreement
and that they have not sold, conveyed, assigned and/or transferred any of their
rights in or pertaining to such claims, actions and causes of action to any
person, including without limitation, natural persons, corporations,
partnerships, limited partnerships, joint ventures, sole proprietorships or
other business entities.
9. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas, and any disputes hereunder will
be brought in a State District Court in Dallas, Dallas County, Texas.
10. Acknowledgment That Agreement Is Voluntary.
The Parties acknowledge that they have carefully read and understand this
Agreement, including the attached exhibits referred to herein; that this
Agreement and the attached
-9-
<PAGE>
exhibits express the entire Agreement between the Parties; and that they have
executed this Agreement freely of their own accord and for good and valuable
consideration. Both parties make this agreement after obtaining advice of their
own counsel. Neither party is under any duress, coercion, or pressure to settle.
11. Severability Clause.
If any provision of this Agreement is or may be held by a court of
competent jurisdiction to be invalid, void, unenforceable, or in violation of
any laws, such provision may be judicially modified or reformed in such manner
as to be enforceable and the remaining provisions shall nevertheless survive and
continue in full force and effect without being impaired or invalidated in any
way.
-10-
<PAGE>
EXECUTED this 17th day of December, 1998.
PROTECTION ONE ALARM MONITORING, INC.
BY: /s/ John W. Hesse, EX.V.P.
------------------------------
NAME: John W. Hesse
TITLE: EX.V.P.
STATE OF TEXAS ss.
ss.
COUNTY OF DALLAS ss.
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared John W. Hesse being by me
first duly sworn, who stated to me that he is the person and officer whose name
is subscribed to the foregoing Agreement and acknowledged to me that he executed
this Agreement as the act of WestSec, Inc., for the purposes and consideration
therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 17th day of December, 1998.
- -----------------------------------
BRENDA BURNS /s/ Brenda Burns
[SEAL] Notary Public, State of Texas ------------------------------
My Commission Expires Notary Public, State of Texas
JUNE 17, 2002
- -----------------------------------
NOTARY INSIGNIA:
-11-
<PAGE>
EXECUTED this 17th day of December, 1998.
NYLIFE STRUCTURED ASSET
MANAGEMENT COMPANY, LTD.
BY: /s/ Kevin M. Micucci
----------------------------------
NAME: Kevin M. Micucci
TITLE: President
STATE OF NEW YORK ss.
ss.
COUNTY OF NEW YORK ss.
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared Kevin M. Micucci being by me
first duly sworn, who stated to me that he is the person and officer whose name
is subscribed to the foregoing Agreement and acknowledged to me that he executed
this Agreement as the act of NYLIFE Structured Asset Management Company, Ltd.,
for the purposes and consideration therein expressed, and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 17th day of December, 1998.
/s/ Jeanne Louther
----------------------------------
Notary Public, State of New York
NOTARY INSIGNIA: Jeanne Louther
Notary Public, STATE OF NEW YORK
No. 24-4846141
Qualified in Kings County
Certificate Filed in New York County
Commission Expires April 30, 1999
-12-
<PAGE>
EXHIBIT 3
<PAGE>
SETTLEMENT AGREEMENT AND RELEASE
Parties
The parties to this Agreement are BK Financial, Inc., a New York
corporation and Tudor Financial, Inc., a Colorado corporation, f/k/a/ Capital
Recovery, Inc. (collectively, the "Consultants") and NYLIFE Structured Asset
Management Company Ltd. ("SAMCO").
Facts
The following facts exist and form the basis of this Agreement:
1. SAMCO and Westinghouse Security Systems, a department of Westinghouse
Electric Corporation ("Westinghouse") entered into a transaction relating to
security alarm contracts (the "Transaction").
2. SAMCO and Westinghouse's successor, WestSec, Inc. are parties to
litigation involving claims related to the Transaction (the "Litigation").
3. The Consultants have contracts with SAMCO for services related to the
Transaction (the "Contracts").
4. The parties enter this Agreement to avoid the expense and uncertainty
of any present and future disagreements relating to the Litigation or the
Contracts.
Terms of Agreement
In consideration of the Recitals and these Agreement terms and conditions,
the Parties agree as follows:
1. In exchange for and conditioned upon SAMCO's payment to the Consultants
of $3,400,000, the Consultants hereby release SAMCO, WestSec, and Westinghouse,
and their parent and affiliated corporations, officers, directors, employees,
agents, and representatives, of and from any and
-1-
<PAGE>
all claims, demands, damages, rights, causes of action or suits of any kind that
the Consultants may now have based on existing facts, known or unknown. This
release is intended to be as broad and comprehensive as the law allows. It
covers and extinguishes all claims, rights, and causes of action that the
Consultants may now have, whether or not such claims and rights are related to
the Litigation or the Contracts.
2. SAMCO hereby releases the Consultants, and their parent and affiliated
corporations, officers, directors, employees, agents, and representatives, of
and from any and all claims, demands, damages, rights, causes of action or suits
of any kind that SAMCO may now have based on existing facts, known or unknown.
This release is intended to be as broad and comprehensive as the law allows. It
covers and extinguishes all claims, rights, and causes of action that SAMCO may
now have, whether or not such claims and rights are related to the Litigation or
the Contracts.
3. This Agreement constitutes the sole and entire agreement between the
Consultants and SAMCO, and supersedes all prior agreements, negotiations, and
discussions between the Parties. Consultants and SAMCO each represents it has
read and understands this Agreement, that this Agreement constitutes a good
faith settlement of the parties' dispute, and that each of them enters into this
Agreement freely and voluntarily. This Agreement is being entered into for the
express purpose of fully and finally compromising and settling all claims which
were or could have been asserted in any lawsuit or dispute between each of them.
The Consultants and SAMCO each acknowledge that, in entering into this
Agreement, it is not relying upon any representations, statements, or
understandings other than those expressly set forth in this Agreement.
4. The payment by SAMCO to the Consultants referred to in paragraph 1
hereof shall be made within three business days following SAMCO's receipt from
WestSec of the funds representing the final settlement between SAMCO and
WestSec. SAMCO will deliver its checks by
-2-
<PAGE>
reputable overnight courier as follows: check in the amount of $2,266,666.67
payable to BK Financial, Inc. sent to "Attn: Dan Buompane, 6 Woody Lane,
Larchmont, N.Y. 10538 (914-834-9119)", and check in the amount of $1,133,333.33
payable to Tudor Financial, Inc. sent to "Attn: James Day, 820 S. Adams, Denver,
Co. 80209 (303) 722-0118".
5. This Agreement, and all releases and settlements hereunder, shall be
null and void if the payment of funds to the Consultants is not made on or
before December 31, 1998, whereupon all existing agreements among the parties
hereto shall remain in full force and effect.
6. The parties covenant not to sue on any of the claims released by this
Agreement.
This Agreement is executed as of December 11, 1998.
SWORN TO BEFORE ME 12/9/98
BK Financial, Inc., a New York corporation
Notary: John A. Dionisio By: /s/ Daniel P. Buompane
---------------------- --------------------------------
Name: Daniel P. Buompane, President
JOHN A. DIONISIO
Notary Public, State of New York
No. 4804045
Qualified in Westchester County
Commission Expires September 30,
2000
Tudor Financial, Inc., a Colorado corporation
Notary: /s/ [ILLEGIBLE] By: /s/ James R. Day
---------------------- --------------------------------
Name: James R. Day, President
Comm exp: 12-9-2000
NYLIFE Structured Asset Management
Company Ltd.
Notary: /s/ Jeanne Louther By: /s/ Kevin M. Micucci
---------------------- --------------------------------
Name: Jeanne Louther Kevin M. Micucci, President
JEANNE LOUTHER
Notary Public, State of New York
No. 24-4846141
Qualified in Kings County
Certificate Filed in New York County
Commission Expires April 30, 1999
-3-
<PAGE>
EXHIBIT 4
<PAGE>
NYLIFE STRUCTURED ASSET MANAGEMENT COMPANY Ltd.
51 MADISON AVENUE
NEW YORK, NEW YORK 10010
December 17, 1998
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
RE: NYLIFE Structured Asset Management Company Ltd.
Series C, Five-Year Notes
Ladies and Gentlemen:
Reference is made to the Indenture dated as of July 15, 1992 between
NYLIFE Structured Asset Management Company Ltd. (the "Company") and United
States Trust Company of New York, as Trustee (the "Trustee"), pursuant to which
the Trustee is holding certain contracts as security for repayment of the
Company's Secured Five Year Notes, Series C, 9% Fixed Rate ("the Notes") issued
and authorized pursuant to the Second Supplemental Indenture of the Indenture
dated as of November 16, 1993. Further reference is made to Section 7.1(b) of
the Indenture which permits the Company to take certain action to terminate all
of its obligations under the Indenture, the Notes and the Security Agreement
with respect to such Notes by complying with the conditions set forth in said
Section 7.1 (b).
The Company has advised the Trustee of its intention to terminate its
obligations under the Indenture, the Notes and the Security Agreement by
fulfilling such conditions. In connection therewith, the Trustee has requested
that the Company indemnify the Trustee against loss or damage arising out of
potential claims by the holders of the Notes ("Holders") in the event the
Trustee permits defeasance of the Indenture and termination of the Company's
obligations as contemplated above.
1. Pursuant to the Trustee's request and in order to induce the Trustee to
accept the documents necessary to permit defeasance of the Indenture and
termination of the Company's obligations under the Indenture, the Notes and the
Security Agreement, the Company hereby agrees to indemnify and hold the Trustee
harmless from and against all claims, liabilities, losses, damages, expenses,
costs and lawsuits (including reasonable attorney's fees) incurred or suffered
by the Trustee as a result of any claim or demand made by a Holder against the
Trustee arising out of or connected with the early termination of the Company's
obligations under the Indenture, the Notes and the Security Agreement.
<PAGE>
2. In order to secure the indemnification obligation set forth above, the
Company hereby agrees to maintain on deposit until April 30, 2003 at United
States Trust Company of New York ("USTC") a Certificate of Deposit (the "CD") in
the principal amount of $150,000 to bear interest at the rate from time to time
paid by USTC upon ninety (90) day certificates of deposit of like size. The
Company shall have the right at any time on ninety days' prior written notice to
the Trustee to terminate or withdraw the CD from USTC by furnishing to the
Trustee other security or a substitute indemnity by a reasonably acceptable
party reasonably acceptable to the Trustee.
3. This letter contains the entire agreement between us with respect to
the subject matter hereof and supercedes all prior agreements and understandings
with respect to the subject matter hereof. This agreement may not be changed or
terminated orally. This agreement shall be binding upon the successors and
assigns of the parties hereto. This agreement shall be governed by and construed
in accordance with the laws of the State of New York.
If this letter correctly sets forth our understanding and agreement with
respect to the subject matter hereof, please sign the enclosed copy of this
letter in the place indicated for your signature and return it to us.
Very truly yours,
NYLIFE Structured Asset Management
Company Ltd.
By: /s/ Kevin M. Micucci
-------------------------------
Kevin M. Micucci, President
ACCEPTED AND AGREED TO:
United States Trust Company of New York
By: ________________________________
