EXHIBIT 10.8
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U.S. $100,000,000
AMENDED AND RESTATED
RECEIVABLES LOAN AND SECURITY AGREEMENT
Dated as of April 30, 2002
Among
SILVERLEAF FINANCE I, INC.,
as the Borrower,
SILVERLEAF RESORTS, INC.,
as the Servicer,
AUTOBAHN FUNDING COMPANY LLC,
as a Lender,
DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK,
FRANKFURT AM MAIN,
as the Agent,
U.S. BANK TRUST NATIONAL ASSOCIATION,
as the Agent's Bank,
and
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as the Backup Servicer
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS..................................................................................1
SECTION 1.01 Certain Defined Terms.................................................1
SECTION 1.02 Other Terms..........................................................37
SECTION 1.03 Computation of Time Periods..........................................37
ARTICLE II. THE RECEIVABLES FACILITY....................................................................37
SECTION 2.01 Borrowings...........................................................37
SECTION 2.02 The Initial Borrowing and Subsequent Borrowings......................38
SECTION 2.03 Facility Maturity Date...............................................39
SECTION 2.04 Selection of Fixed Periods...........................................39
SECTION 2.05 Remittance Procedures................................................40
SECTION 2.06 Payments and Computations, Etc.......................................44
SECTION 2.07 Fees.................................................................44
SECTION 2.08 Increased Costs; Capital Adequacy....................................44
SECTION 2.09 Collateral Assignment of Agreements..................................45
SECTION 2.10 Grant of a Security Interest.........................................46
SECTION 2.11 Evidence of Debt.....................................................47
SECTION 2.12 Survival of Representations and Warranties; Repayment
Obligations..........................................................47
SECTION 2.13 Release of Pledged Receivables.......................................47
SECTION 2.14 Treatment of Amounts Paid by the Borrower............................48
SECTION 2.15 Termination..........................................................48
SECTION 2.16 Lockbox Arrangements.................................................48
ARTICLE III. CONDITIONS OF LOANS.........................................................................49
SECTION 3.01 Conditions Precedent to Initial Borrowing............................49
SECTION 3.02 Conditions Precedent to All Borrowings...............................49
SECTION 3.03 Advances Do Not Constitute a Waiver..................................54
ARTICLE IV. REPRESENTATIONS AND WARRANTIES..............................................................54
SECTION 4.01 Representations and Warranties of the Borrower and the
Servicer.............................................................54
ARTICLE V. GENERAL COVENANTS OF THE BORROWER AND THE SERVICER..........................................59
SECTION 5.01 General Covenants....................................................59
ARTICLE VI. ADMINISTRATION AND SERVICING; CERTAIN COVENANTS.............................................63
SECTION 6.01 Appointment and Designation of the Servicer..........................63
SECTION 6.02 Collection of Receivable Payments; Modification and
Amendment of Receivables.............................................65
SECTION 6.03 Realization Upon Receivables.........................................65
SECTION 6.04 Insurance Regarding Intervals........................................66
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SECTION 6.05 Maintenance of Security Interests in Intervals.......................66
SECTION 6.06 Pledged Receivable Receipts..........................................67
SECTION 6.07 Unidentified Payments; Lender's Right of Presumption.................67
SECTION 6.08 No Rights of Withdrawal..............................................68
SECTION 6.09 Permitted Investments................................................68
SECTION 6.10 Servicing Compensation...............................................68
SECTION 6.11 Reports to the Agent; Account Statements; Servicing Information......68
SECTION 6.12 Statements as to Compliance; Financial Statements....................70
SECTION 6.13 Access to Certain Documentation; Obligors............................72
SECTION 6.14 Backup Servicer......................................................72
SECTION 6.15 Additional Remedies of Agent Upon Event of Default...................75
SECTION 6.16 Waiver of Defaults...................................................75
SECTION 6.17 Maintenance of Certain Insurance.....................................76
SECTION 6.18 Segregation of Collections...........................................76
SECTION 6.19 UCC Matters; Protection and Perfection of Pledged Assets.............76
SECTION 6.20 Servicer Advances....................................................77
SECTION 6.21 Repurchase of Receivables Upon Breach of Covenant or
Representation and Warranty by SRI...................................77
SECTION 6.22 Compliance with Applicable Law.......................................78
SECTION 6.23 The Consulting Agreement.............................................78
ARTICLE VII. EVENTS OF DEFAULT...........................................................................79
SECTION 7.01 Events of Default....................................................79
SECTION 7.02 Additional Remedies of Agent and Lender..............................82
ARTICLE VIII. INDEMNIFICATION.............................................................................83
SECTION 8.01 Indemnities by the Borrower..........................................83
SECTION 8.02 Indemnities by the Servicer..........................................85
ARTICLE IX. MISCELLANEOUS...............................................................................86
SECTION 9.01 Amendments and Waivers...............................................86
SECTION 9.02 Notices, Etc.........................................................86
SECTION 9.03 No Waiver; Remedies..................................................87
SECTION 9.04 Binding Effect; Assignability; Multiple Lenders......................87
SECTION 9.05 Term of This Agreement...............................................88
SECTION 9.06 Governing Law; Jury Waiver...........................................88
SECTION 9.07 Costs, Expenses and Taxes............................................88
SECTION 9.08 No Proceedings.......................................................89
SECTION 9.09 Recourse Against Certain Parties.....................................89
SECTION 9.10 Execution in Counterparts; Severability; Integration.................90
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE I Condition Precedent Documents
SCHEDULE II Credit and Collection Policy
SCHEDULE III Prior Names, Tradenames, Fictitious Names and "Doing Business As" Names
SCHEDULE IV Litigation
SCHEDULE V Eligible Developments
SCHEDULE VI Net Eligible Receivables Balance
SCHEDULE VII Additional Eligibility Criterion
SCHEDULE VIII Applicable Margin Definition
EXHIBIT A Form of Borrowing Base Certificate
EXHIBITS
EXHIBIT B Form of Commercial Paper Remittance Report
EXHIBIT C Form of Monthly Remittance Report
EXHIBIT D Form of Allonge
EXHIBIT E Backup Servicer Letter of Certification
EXHIBIT F Custodian's Fee
EXHIBIT G Form of Certificate of Beneficial Interest
EXHIBIT H Form of Mortgage and Assignment of Beneficial Interest
EXHIBIT I Form of UCC Assignment for ONS Intervals
EXHIBIT J Form of ONS Title Policy
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THIS AMENDED AND RESTATED
RECEIVABLES LOAN AND SECURITY
AGREEMENT is made as of April 30, 2002, among:
(1) SILVERLEAF FINANCE I, Inc., a Delaware corporation (the
"Borrower");
(2) SILVERLEAF RESORTS, INC., a Texas corporation ("SRI"), as the
Servicer (as defined herein);
(3) AUTOBAHN FUNDING COMPANY LLC ("Autobahn"), as a Lender (as
defined herein);
(4) DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK, FRANKFURT AM
MAIN (formerly known as DG Bank Deutsche Genossenschaftsbank
AG) ("DZ Bank"), as agent for the Lender (the "Agent");
(5) U.S. BANK TRUST NATIONAL ASSOCIATION, as the Agent's Bank (as
such term is defined herein); and
(6) ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a national
banking association ("▇▇▇▇▇ Fargo"), as the Backup Servicer
(as such term is defined herein).
WHEREAS, the Borrower, the Servicer, the Lender, the Agent,
the Agent's Bank and the Backup Servicer entered into a
Receivables Loan and
Security Agreement dated as of October 30, 2000 (the "Original RLSA");
WHEREAS, the parties hereto desire to amend and restate the
Original RLSA to effectuate certain amendments related thereto as more
particularly set forth hereinbelow; and
WHEREAS, the Original RLSA provides in Section 9.01(a) that
amendments, including those set forth in or put into effect by the execution and
delivery of this Agreement, are permitted and authorized with the consent of the
parties hereto;
NOW, THEREFORE, it is hereby agreed that the Original RLSA
shall be and hereby is amended and restated in its entirety as follows:
ARTICLE I. DEFINITIONS
SECTION 1.1 Certain Defined Terms. (a) Certain capitalized
terms used throughout this Agreement are defined above or in this Section 1.01.
(2) As used in this Agreement and its exhibits, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Acceptable Environmental Report" means an environmental
report or reports certified to the Borrower and SRI, and assigned by the
Borrower to the Agent, covering a Development and confirming: (i) the absence of
Hazardous Materials on, under, or affecting the Land or any other real property
or personal property comprising such Development, (ii) that an engineering or
environmental consulting firm has obtained, reviewed, and included within its
report a CERCLIS printout from the EPA, statements from the EPA and other
applicable state and local authorities, and such other information as the
Borrower may reasonably require, including, without limitation, a Phase I
Environmental Inspection, all of which information shall confirm that there are
no known or suspected Hazardous Materials located at, used or stored on, or
transported to or from the Development or in such proximity thereto as to create
a risk of contamination of any of the related Applicable Underlying Collateral;
and (iii) if such Development, or any part thereof, was constructed prior to
1986, the absence of friable asbestos within the Units, Common Elements, if any,
or elsewhere at such Development. If any such environmental report reflects the
presence of friable asbestos, regardless of when construction of the Development
was completed, such report shall be deemed not to be an Acceptable Environmental
Report. To the extent that an environmental report complying with the
requirements of this definition has been obtained with respect to a Development,
there shall be no requirement to obtain another environmental report or an
update of the prior environmental report, in each case, with respect to such
Development unless there shall have occurred an event that could make such
environmental report materially incorrect or misleading (in which case a new
Acceptable Environmental Report with respect to such Development shall be
obtained).
"Acceptable Insurance Policy" means, in respect of an
Interval, one or more fire and extended perils insurance policies in respect of
the related Development (i) issued by an insurance company or security bonding
company qualified to write such insurance policies in the relevant jurisdiction;
(ii) providing coverage against fire and extended perils, general liability and
other risks insured against by persons operating like properties in the locality
of such Development; (iii) in an aggregate amount not less than the full
replacement cost of the Development with respect to fire and extended perils,
and for other coverages, such amount necessary to avoid the operation of any
coinsurance provisions with respect to the Development but in any event
consistent with the amount that would have been required as of the date of
origination by SRI in its normal mortgage lending activities with respect to
similar properties in the same locality as the Development and covering only the
Development; (iv) all premiums in respect of which have been paid; (v) the terms
of which require prior notice to the insured of termination or cancellation;
(vi) in respect of which no notice of termination or cancellation has been
received which is still in effect; (vii) the cost and expense in respect of
which shall be paid by Silverleaf Club out of dues paid by Obligors and (viii)
with reasonable and customary deductions, if any.
"Acceptable Title Policy" means, in respect of an Interval, a
title insurance policy (i) issued by a title insurance company qualified to
write such title insurance policy in the relevant jurisdiction; (ii) insuring
that the Mortgage in respect thereof is a valid first mortgage lien on such
Interval, subject only to ordinary and customary exceptions which do not
materially interfere with the value or current use of such Interval; (iii) in
full force and effect; (iv) freely assignable;
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(v) which will inure to the benefit of the Agent as mortgagee of record; (vi) in
respect of which no prior mortgagee has done, by act or omission, anything which
would impair the coverage of any such title insurance policy; (vii) is on an
ALTA 1992 form (or the equivalent in the Applicable Jurisdiction, omitting or
waiving any arbitration requirement and the "creditor's rights" exclusion) with
an effective date as of the date of the recording of the Mortgage; and (viii)
containing endorsements (A) insuring that no building restriction, easement,
covenant or other similar exception to title disclosed on such title insurance
policy has been violated and that any violation thereof would not create or
result in any reversion, reverter or forfeiture of title, (B) with respect to
zoning in the form typically issued in the Applicable Jurisdiction (unless other
evidence of compliance with zoning requirements has been provided to the
satisfaction of the Agent); (C) insuring over any environmental superlien or
similar lien upon all or any portion of such Development and (D) insuring over
violation of usury laws, the fact that interest accrues at a changing or
changeable rate and the revolving nature of the Loans.
"Accountants' Report" has the meaning assigned to that term in
Section 6.12(b).
"Additional Deposit" has the meaning assigned thereto in the
Sinking Fund Agreement.
"Adjusted Eurodollar Rate" means with respect to any Fixed
Period for any Loan allocated to such Fixed Period, an interest rate per annum
equal to the sum of (i) the Applicable Margin and (ii) the Eurodollar Rate for
such Fixed Period.
"Adverse Claim" means a lien, security interest, charge,
encumbrance or other right or claim of any Person other than, with respect to
the Pledged Assets, any lien, security interest, charge, encumbrance or other
right or claim in favor of the Lender (or the Agent on behalf of the Lender).
"Affected Party" has the meaning assigned to that term in
Section 2.08.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such Person. For
the purposes of this definition, "control," when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" has the meaning assigned to that term in the preamble
hereto.
"Agent's Bank" means U.S. Bank Trust National Association.
"Agreement" means this Amended and Restated
Receivables Loan
and Security Agreement, as the same may be amended, restated, supplemented
and/or otherwise modified from time to time hereafter.
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"Allonge" means an allonge or allonges, substantially in one
or more of the forms attached hereto as Exhibit D, endorsing a Receivable from
SRI to the Borrower and endorsing such Receivable from the Borrower to the
Agent, for the benefit of the Lender.
"Amendment Date" means April 30, 2002.
"Applicable Declaration" means, with respect to a Development,
the declaration of condominium, declaration of covenants, conditions, and
restrictions, master deed, or similar document, together with any amendments or
restatements thereof, that establishes the underlying form of ownership of such
Development and, if required by Applicable Law, is recorded in the appropriate
public records of the Applicable Jurisdiction.
"Applicable Jurisdiction" means, with respect to a
Development, the state, county, municipality, and/or other governmental
jurisdiction (including a foreign jurisdiction if applicable) in which such
Development is located.
"Applicable Laws" means any and all foreign, federal, state,
and local statutes, ordinances, rules, regulations, court orders and decrees,
administrative orders and decrees, and other legal requirements of any and every
conceivable type to which SRI, the Borrower, a Development or any portion
thereof, or all or any portion of the Collateral or any Applicable Underlying
Collateral is or becomes subject to from time to time.
"Applicable Margin" shall have the meaning set forth in
Schedule VIII hereto.
"Applicable Timeshare Documents" means all Applicable
Declarations and other documents and instruments relating to a Development
and/or the Units, Common Elements, if any, Common Furnishings, if any, and
Intervals thereat, including, but not limited to, the project documents,
registrations and other approvals, business licenses, Applicable Timeshare
Owners' Association agreements and corporate documents and other documents to
the extent used in the marketing, sale, and financing of such Intervals. Each
Applicable Timeshare Document shall be in form and content acceptable to the
Agent. Promptly upon the request of the Agent, the Servicer shall deliver to the
Agent true, correct, and complete copies of all Applicable Timeshare Documents
and any material amendments thereto. The Agent's approval of such Applicable
Timeshare Documents and any amendments thereto shall be a condition precedent to
any Loans being advanced (or, if such documents are delivered to the Agent after
such Loans have been advanced, continued) hereunder secured by Receivables
related to the Development to which such Applicable Timeshare Documents pertain.
"Applicable Timeshare Owners' Association" means, with respect
to each Development, a not-for-profit corporation or other legal entity
organized under the laws of the Applicable Jurisdiction.
"Applicable Underlying Collateral" means any and all
collateral granted to SRI by an Obligor to secure the payment of all principal,
interest, and other amounts owed to SRI by such Obligor in connection with a
Pledged Receivable (all of which Applicable Underlying
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Collateral shall have been (i) assigned by SRI to the Borrower pursuant to the
Receivables Purchase Agreement and (ii) Pledged by the Borrower to the Agent,
for the benefit of the Lender, pursuant to the terms hereof).
"Assigned Documents" has the meaning assigned to that term in
Section 2.09.
"Assignment" has the meaning set forth in the Receivables
Purchase Agreement.
"Assignment and Acceptance" has the meaning assigned to that
term in Section 9.04.
"Assignment Documents" means each of the following (each in
form and substance acceptable to the Agent in its reasonable discretion):
(3) An absolute and unconditional assignment or assignments of
(i) all of SRI's right, title, and interest in and to all Mortgages that secure
the payment of Pledged Receivables to the Borrower (together with evidence of
the proper recordation thereof) and (ii) all of the Borrower's right, title, and
interest in and to all Mortgages that secure the payment of Pledged Receivables
to the Agent, for the benefit of the Lender (together with evidence of the
proper recordation thereof); and
(4) An absolute and unconditional assignment and pledge in and
to all of (i) SRI's right, title, and interest in all documents, instruments,
accounts, chattel paper, and general intangibles relating to the Pledged
Receivables, the Mortgages, and the other Applicable Underlying Collateral
(including the cash and non-cash proceeds thereof but excluding any dues, fees
or other charges payable by the related Obligor in connection with the ownership
and/or use of an Interval) to the Borrower and (ii) all of the Borrower's right,
title, and interest in all documents, instruments, accounts, chattel paper, and
general intangibles relating to the Pledged Receivables, the Mortgages, and the
other Applicable Underlying Collateral (including the cash and non-cash proceeds
thereof) to the Agent, for the benefit of the Lender.
"Autobahn" has the meaning assigned to that term in the
preamble hereto.
"Backup Servicer" means ▇▇▇▇▇ Fargo or any substitute Backup
Servicer appointed by the Agent pursuant to Section 6.14.
"Backup Servicer Delivery Date" has the meaning assigned to
that term in Section 6.11(e).
"Backup Servicer's Fee" means, for any Remittance Period or
portion thereof after the occurrence of a Servicer Default and the appointment
of the Backup Servicer as Servicer hereunder, an amount, payable out of
Collections on the Pledged Receivables and amounts applied to the payment of, or
treated as payments on, the Pledged Receivables, equal to the applicable Backup
Servicing Fee Rate multiplied by the Net Eligible Receivables Balance as of the
first day of such Remittance Period.
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"Backup Servicing Fee Rate" means the per annum rate of 1.00%.
"Bailee Agreements" means the Bailee Agreements among the
Agent, SRI, U.S. Bank Trust National Association and each Previous Lender, and
each document required or contemplated to be delivered thereunder.
"Bankruptcy Code" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, 11
U.S.C. Sections 101 et seq., as amended.
"Bankruptcy Event" shall be deemed to have occurred with
respect to a Person if either:
(5) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or all
or substantially all of its assets, or any similar action with respect to such
Person under any law relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60 consecutive
days or an order for relief in respect of such Person shall be entered in an
involuntary case under the federal bankruptcy laws or other similar laws now or
hereafter in effect; or
(6) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect, or
shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for such Person or for any substantial part of its property, or shall
make any general assignment for the benefit of creditors, or shall fail to, or
admit in writing its inability to, pay its debts generally as they become due,
or, if a corporation or similar entity, its board of directors shall vote to
implement any of the foregoing.
"Base Rate" means, on any date, a fluctuating rate of interest
per annum equal to the arithmetic average of the rates of interest publicly
announced by The Chase Manhattan Bank and ▇▇▇▇▇▇ Guaranty Trust Company of
New
York (or their respective successors) as their respective prime commercial
lending rates (or, as to any such bank that does not announce such a rate, such
bank's "base" or other rate determined by the Lender to be the equivalent rate
announced by such bank), except that, if any such bank shall, for any period,
cease to announce publicly its prime commercial lending (or equivalent) rate,
the Agent shall, during such period, determine the Base Rate based upon the
prime commercial lending (or equivalent) rates announced publicly by the other
such banks or, if each such bank ceases to announce publicly its prime
commercial lending (or equivalent) rate, based upon the prime commercial lending
(or equivalent) rate or rates announced publicly by one or more other banks
reasonably acceptable to the Borrower. The prime commercial lending (or
equivalent) rates used in computing the Base
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Rate are not intended to be the lowest rates of interest charged by such banks
in connection with extensions of credit to debtors. The Base Rate shall change
as and when such banks' prime commercial lending (or equivalent) rates change.
"Borrower" has the meaning assigned to that term in the
preamble hereto.
"Borrowing" means a borrowing of Loans under this Agreement.
"Borrowing Base Certificate" means a report, in substantially
the form of Exhibit A, prepared by the Servicer for the benefit of Lender
pursuant to Section 6.11(c).
"Borrowing Base Deficiency" means, at any time that the
Capital Limit shall be less than the Facility Amount, an amount equal to the
amount of such deficiency.
"Borrowing Date" means, with respect to any Borrowing, the
date on which such Borrowing is funded, which date, other than in the case of
the initial Borrowing, shall be a Subsequent Borrowing Date.
"Borrowing Limit" means $100,000,000; provided, that at all
times, on or after the Early Amortization Commencement Date, the Borrowing Limit
shall mean the aggregate outstanding Loans.
"Business Day" means a day of the year other than a Saturday
or a Sunday or any other day on which banks are not authorized or required to
close in
New York City; provided, that, if any determination of a Business Day
shall relate to a Loan bearing interest at the Adjusted Eurodollar Rate, the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Expenditures" shall mean all expenditures for the
acquisition or leasing (pursuant to a capital lease) of assets or additions to
equipment (including replacements, capitalized repairs and improvements) which
should be capitalized under GAAP.
"Capital Lease Obligation" means an obligation to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with GAAP, and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
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"Capital Limit" means, at any time, an amount equal to:
NERB + CA
where: NERB = the Net Eligible Receivables
Balance at such time; and
CA = the amount of Collections on
deposit in the Collection Account
at such time to be applied in
accordance with Section 2.05 on the
next Remittance Date minus the
portion of such Collections which
are required to be set aside for
the payment of accrued Yield
pursuant to Section 2.05(a) hereof.
"Cash Interest Expense" means, with respect to any Person for
any period, Interest Expense for such period less all non-cash items
constituting Interest Expense during such period (including, without limitation,
amortization of debt discounts, fees and expenses and payments of interest on
Debt by issuance of Debt).
"Certificate of Beneficial Interest" means a certificate of
beneficial interest, in the form attached hereto as Exhibit G, which evidences
an ONS Interval.
"Change in Control" means that at any time (i) SRI or any
successor to SRI by merger or consolidation shall own less than 100% of all
classes of capital stock of the Borrower, or (ii) the Borrower merges or
consolidates with any other Person (other than a merger or consolidation as to
which the Borrower is the surviving entity).
"Closing Date" means October 30, 2000.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, collectively, the Pledged Receivables and
all Mortgages related thereto, together with all accounts, chattel paper, and
general intangibles related thereto and the cash and non-cash proceeds thereof,
and all now owned or hereafter acquired right, title, and interest of the
Borrower in and to all Applicable Underlying Collateral for any and all of the
Pledged Receivables, Mortgages and all Applicable Underlying Collateral for any
and all Pledged Receivables, including but not limited to:
(7) The Assignment Documents;
(8) First priority Liens in and to all of Borrower's right,
title, and interest in and to all books, records, reports, computer tapes,
computer disks, and software relating to all or any portion of the Collateral;
and
(9) Extensions, additions, improvements, betterments,
renewals, substitutions, and replacements of, for, or to any of the Collateral,
wherever located, together with the
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products, proceeds, issues, rents, and profits thereof and any replacements,
additions, or accessions thereto or substitutions thereof, and all rights in or
under insurance policies and to the proceeds of any insurance policies covering
any of the other Collateral, all rights to unearned or refunded insurance
premiums, and the proceeds of any condemnation awards or any claims regarding
any of the other Collateral.
"Collateral Receipt" has the meaning assigned to that term in
the Custodial Agreement.
"Collection Account" means the special trust account (account
number ▇▇▇▇▇▇▇▇ at the Agent's Bank) in the name of and under the sole dominion
and control of the Agent for the benefit of the Lender; provided, that the funds
deposited in such account (including any interest and earnings thereon) from
time to time shall constitute the property and assets of the Borrower and the
Borrower shall be solely liable for any taxes payable with respect to the
Collection Account.
"Collection Account Securities Account Agreement" means that
certain Securities Account Agreement related to the Collection Account dated as
of the Closing Date among the Borrower, the Servicer, the Agent's Bank and the
Agent, as such agreement may from time to time be amended, supplemented or
otherwise modified in accordance with the terms thereof.
"Collection Date" means the date on which the aggregate
outstanding principal amount of the Loans have been repaid in full and all Yield
and Fees and all other Obligations have been paid in full and the Lender shall
have no further obligation to make any additional Loans.
"Collections" means, without duplication, with respect to any
Pledged Receivable, all cash receipts and proceeds in respect of such Pledged
Receivable, including, without limitation, all payments of any principal,
interest, fees, delinquent payments recovered in subsequent months which have
not been advanced by the Servicer, prepaid principal, Liquidation Proceeds or
any other proceeds from any disposition of any Collateral related to such
Pledged Receivable, late fees, redemption fees, other penalty fees and charges,
Servicer Advances, any payments under any insurance policies (including, without
limitation, any Acceptable Title Policy) related to such Pledged Receivable or
the related Interval or Unit under which SRI, the Borrower, the Agent or the
Lender are named as loss payee or insured, as applicable, all cash proceeds of
Related Security with respect to such Receivable, all cash proceeds of any other
Pledged Assets with respect to such Pledged Receivable, any amounts paid to the
Borrower under any Purchased Rate Cap, any interest earned on amounts on deposit
in the Collection Account, and any income from the investment in Permitted
Investments of amounts deposited into the Collection Account.
"Commercial Paper Remittance Report" means a report, in
substantially the form of Exhibit B, furnished by the Servicer to the Agent for
the Lender pursuant to Section 6.12(d).
"Commitment Percentage" has the meaning assigned to that term
in Section 9.04(b).
9
"Common Elements" means the common areas and facilities, as
defined or provided for in the Applicable Declaration and/or other Applicable
Timeshare Documents, including, without limitation, the Land and all
improvements thereto except for the Units that have been dedicated to a
timeshare regime or comparable form of ownership, as well as any limited common
elements, as those terms are defined and used in the Applicable Declaration.
"Common Furnishings" means all furniture, furnishings,
fixtures, appliances, carpeting, and equipment located in a Unit or elsewhere
within a Development and available for use by Obligors in accordance with the
terms and conditions of the Applicable Timeshare Documents.
"Computer Tape or Listing" means the computer tape or listing
(whether in electronic form or otherwise) generated by the Servicer on behalf of
the Borrower which provides information relating to the Receivables included in
the Net Eligible Receivables Balance.
"Consultant" means J & J Limited, Inc.
"Consulting Agreement" means the Consulting Agreement dated as
of the date hereof, by and between SRI and the Consultant, as such Consulting
Agreement may from time to time be amended, restated, supplemented and/or
otherwise modified in accordance with the terms thereof.
"Coupon Rate" means, with respect to any Receivable, the
annual percentage rate set forth in such Receivable.
"CP Disruption Event" means, at any time, the inability of the
Issuer to raise (whether as a result of a prohibition or any other event or
circumstance whatsoever) funds through the issuance of commercial paper notes in
the United States commercial paper market, including, without limitation, by
virtue of (i) any disruption in the commercial paper market, (ii) insufficient
availability under the liquidity or enhancement facility entered into by the
Issuer with respect to this Agreement or (iii) a downgrade of the rating of one
or more financial institutions extending credit to or for the account of the
Issuer or having a commitment to extend credit to the Lender under a liquidity
or enhancement facility which relates to this Agreement to a level lower than
that required by the Rating Agencies.
"CP Rate" means with respect to any Fixed Period for all Loans
allocated to such Fixed Period, (i) the per annum rate equivalent to the per
annum rate (or if more than one rate, the weighted average of the rates) at
which commercial paper notes of the Issuer having a term equal to such Fixed
Period and to be issued to fund, in whole or in part, the applicable Loans (and,
at the election of the Issuer, other loans by the Issuer) by the Issuer may be
sold by any placement agent or commercial paper dealer selected by the Issuer,
as agreed between each such agent or dealer and the Issuer and notified by the
Issuer to the Agent and the Servicer; provided, however, if the rate (or rates)
as agreed between any such agent or dealer and the Issuer with respect to any
Fixed Period for the applicable Loans is a discount rate (or rates), the CP Rate
for such Fixed Period shall be the rate (or if more than one rate, the weighted
average of the rates) resulting from converting such discount rate (or rates) to
an interest-bearing equivalent rate per
10
annum; provided, further, however, that such rate (or rates) shall reflect and
give effect to borrowings to fund small or odd dollar amounts that are not
easily accommodated in the commercial paper market to the extent that such
amounts are allocated, in whole or in part, to such Loans, plus (ii) the
Applicable Margin.
"CP Rollover Fixed Period" means any Fixed Period other than
any Fixed Period (i) applicable to the Loan arising as a result of the Borrowing
on the initial Borrowing Date, which shall have been requested in the Notice of
Borrowing delivered in connection with such Borrowing, (ii) applicable to any
new Loan arising as a result of a Borrowing on a Subsequent Borrowing Date which
shall have been requested in the Notice of Borrowing delivered in connection
with such Borrowing or (iii) applicable to any Loan accruing Yield at the Non-CP
Rate.
"Credit and Collection Policy" means the guidelines together
with all exhibits thereto as annexed hereto as Schedule II, as such policies may
hereafter be amended, modified or supplemented from time to time in compliance
with this Agreement.
"Custodial Agreement" means that certain Custodial Agreement,
dated as of the Closing Date, among the Borrower, the Agent and the Custodian,
together with all instruments, documents and agreements executed in connection
therewith, as such Custodial Agreement may from time to time be amended,
restated, supplemented and/or otherwise modified in accordance with the terms
thereof.
"Custodian" means U.S. Bank Trust National Association or any
substitute Custodian appointed by the Agent pursuant to the Custodial Agreement.
"Custodian's Fee" means, for any Remittance Period, an amount,
payable out of Collections on the Pledged Receivables and amounts applied to the
payment of, or treated as payments on, the Pledged Receivables, equal to the
aggregate fees listed in Exhibit F hereto which relate to such Remittance
Period.
"Debt" of any Person means (i) indebtedness of such Person for
borrowed money, (ii) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) obligations of such Person to pay the
deferred purchase price of property or services, (iv) all Capital Lease
Obligations of such Person, (v) obligations secured by an Adverse Claim upon
property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations and (vi) obligations of
such Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (i) through (v) above.
"Default Funding Rate" means an interest rate per annum equal
to two percent (2.00%), plus the Base Rate.
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"Default Rate" means, in respect of any Remittance Period and
as of any date of determination, an amount (expressed as a percentage) equal to
(i) the aggregate Outstanding Principal Balances of all Pledged Receivables
which became Defaulted Receivables during the immediately preceding Remittance
Period, divided by (ii) the aggregate Outstanding Principal Balances of all
Pledged Receivables as of the first day of the immediately preceding Remittance
Period.
"Defaulted Receivable" means, as of any time of determination,
any Pledged Receivable:
(10) with respect to which any amount payable under the terms
thereof (other than, in the case of Modified Receivables, amounts payable that
have been rescheduled such that they have become payable at the end of the term
of such Modified Receivable as such term may have been extended in accordance
with the Credit and Collection Policy) remains unpaid for more than one hundred
and twenty (120) days after the due date therefor set forth therein; or
(11) which has been or should be written off as a result of
the occurrence of a Bankruptcy Event with respect to the Obligor obligated to
pay such Pledged Receivable or which has been or should otherwise be deemed
uncollectible by the Servicer in accordance with the Credit and Collection
Policy.
"Delinquency Rate" means, in respect of any Remittance Period
and as of any date of determination, an amount (expressed as a percentage) equal
to (i) the aggregate Outstanding Principal Balances of all Pledged Receivables
which were Delinquent Receivables as of the last day of the immediately
preceding Remittance Period, divided by (ii) the aggregate Outstanding Principal
Balances of all Pledged Receivables as of the last day of the immediately
preceding Remittance Period.
"Delinquent Receivable" means, as of any time of
determination, any Pledged Receivable (i) with respect to which any amount
payable thereunder remains unpaid for thirty (30) or more days after the due
date therefor set forth therein and (ii) that is not a Defaulted Receivable.
"Depository Institution" means a depository institution or
trust company, incorporated under the laws of the United States or any State
thereof, that is subject to supervision and examination by federal and/or State
banking authorities.
"Development" means an interval ownership, condominium,
timeshare project, and/or vacation ownership project consisting of, among other
things, certain Land, Units, Common Elements, if any, and Intervals, whether now
existing or hereafter added, in one or more buildings or phases, and all related
Common Furnishings, if any, easements, licenses, rights, interests, and other
appurtenances, as more fully described in the Applicable Declaration and the
other Applicable Timeshare Documents, as the same may be amended from time to
time.
"Discount Amount" means at any time an amount equal to:
12
▇▇ - ▇▇
--
D
where: BL = the Borrowing Limit at such time.
D = 1.02.
"Downgraded" means the process by which an existing Pledged
Receivable is deemed to be paid in full in accordance with the Credit and
Collection Policy and a new Pledged Receivable in respect of an Interval
requiring lower monthly payments in replacement for the Interval relating to
such existing Pledged Receivable is created and the Obligor is permitted to make
reduced monthly payments in respect of such new Pledged Receivable.
"Downgraded Receivable" means a Receivable that has been
Downgraded.
"DZ Bank" has the meaning assigned to that term in the
preamble hereto.
"Early Amortization Commencement Date" means the earlier of
(i) the date of the declaration or automatic occurrence of the Early
Amortization Commencement Date pursuant to Section 7.01 or (ii) at the option of
the Lender in its sole discretion, upon written notice to the Borrower, the
occurrence of an Early Amortization Event.
"Early Amortization Event" means the occurrence of any of the
following events:
(12) the rolling average of the Delinquency Rates in respect
of any three consecutive Remittance Periods exceeds 13.0%;
(13) the rolling average of the Default Rates in respect of
any three consecutive Remittance Periods exceeds 1.25%.
(14) the rolling average of the Excess Spread Rates in respect
of any three consecutive Remittance Periods is less than 3.5%;
(15) an Event of Default has occurred and is continuing;
(16) a Change in Control has occurred and is continuing;
(17) a regulatory, tax or accounting body has ordered that the
activities of the Lender or any Affiliate of the Lender contemplated hereby be
terminated or, as a result of any other event or circumstance, the activities of
the Lender contemplated hereby will cause the Lender, the Person, if any, then
acting as the administrator or the manager for the Lender, or any of their
respective Affiliates to suffer materially adverse regulatory, accounting or tax
consequences;
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(18) the Facility Maturity Date shall have occurred;
(19) a Servicer Default has occurred and is continuing at any
time that the Servicer is SRI or an Affiliate thereof; or
(20) the Weighted Average FICO Score of the Obligors related
to all Eligible Receivables that are initially Pledged hereunder (such Weighted
Average FICO Score to be determined in respect of such Obligors at the time such
Obligors purchased the Intervals related to such Eligible Receivables) at any
time on or after the Amendment Date shall be less than 650.
"Early Amortization Funding Rate" means during the period
commencing on the date of the occurrence of an Early Amortization Event and
ending on the earlier of (i) the occurrence of an Event of Default or (ii) the
Collection Date, the Eurodollar Rate plus 2.00%.
"EBITDA" MEANS, WITH RESPECT TO ANY PERSON FOR ANY PERIOD, (a)
THE SUM OF (i) NET INCOME (BUT EXCLUDING any extraordinary gains or losses or
any gains or losses from the sale or disposition of assets other than in the
ordinary course of business), (ii) INTEREST EXPENSE, (iii) DEPRECIATION AND
AMORTIZATION AND OTHER NON-CASH ITEMS PROPERLY DEDUCTED IN DETERMINING NET
INCOME, AND (iv) FEDERAL, STATE AND LOCAL INCOME TAXES, IN EACH CASE FOR SUCH
PERSON FOR SUCH PERIOD, COMPUTED AND CALCULATED IN ACCORDANCE WITH GAAP MINUS
(b) NON-CASH ITEMS PROPERLY ADDED IN DETERMINING NET INCOME, IN EACH CASE FOR
THE CORRESPONDING PERIOD.
"Eligible Depository Institution" means a Depository
Institution, the short term unsecured senior indebtedness of which is rated at
least Prime-1 by Moody's and F1 by Fitch, if rated by Fitch.
"Eligible Development" means a Development which:
(21) is a property developed, owned and managed by SRI;
(22) is a Development which satisfies the Credit and
Collection Policy;
(23) is located in a State;
(24) is listed on the attached Schedule V or has been approved
in writing by the Agent;
(25) is affiliated with Resort Condominiums International,
Interval International or another comparable timeshare exchange company approved
by the Agent;
(26) is not bankrupt or insolvent;
(27) has not been suspended by Resort Condominiums
International, Interval International or any other timeshare exchange company
for more than 60 days or, if so suspended by any such entity, such suspension
has been revoked and such Development is presently in good standing with such
entity;
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(28) is not currently uninhabitable due to fire, natural
disaster or other causes without other satisfactory accommodations having been
put into place within 180 days of such occurrence; and
(29) maintains hazard insurance that covers not less than the
replacement cost value of the buildings and related common areas and amenities.
"Eligible Receivable" means a Pledged Receivable that
satisfies each of the following criteria:
(30) The relevant Obligor has no claim against SRI or the
Borrower, or any Affiliate thereof, or any defense, set-off, or counterclaim
with respect to such Pledged Receivable.
(31) The original of such Pledged Receivable (the terms of
which shall comply in all respects with all Applicable Laws) has been endorsed,
and all related documents and instruments (the terms of each of which shall
comply in all respects with all Applicable Laws) have been assigned by any party
with an interest therein to SRI, by SRI to the Borrower and from the Borrower to
the Agent (for the benefit of the Lender) in a manner acceptable to the Agent
and have been delivered to Custodian.
(32) Such Pledged Receivable represents the genuine, legal,
valid and binding payment obligation of the related Obligor, enforceable in
accordance with its terms and such Obligor had full legal capacity to execute
and deliver such Pledged Receivable, the related Mortgage (if such Pledged
Receivable arose in connection with the purchase by such Obligor of a Fee Simple
Interval), and any other documents related thereto; and such Pledged Receivable
has not been prepaid or repaid in full.
(33) Such Pledged Receivable was denominated in United States
Dollars and, at the time of its origination and at all times thereafter,
conformed to all requirements of the Credit and Collection Policy applicable to
such Pledged Receivable and, in any case, no such Pledged Receivable has been
specifically reserved against or would be required to be written-off pursuant to
the Credit and Collection Policy.
(34) All requirements of applicable federal, state and local
laws, and regulations thereunder (including, without limitation but only if and
to the extent applicable, usury laws, the Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's
Regulations "B" and "Z", the Soldiers' and Sailors' Civil Relief Act of 1940 and
state adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code, the Interstate Land Sales Full Disclosure Act, the Real Estate
Settlement Procedures Act and all other consumer credit laws and equal credit
opportunity and disclosure laws and any regulations promulgated thereunder) in
respect of such Pledged Receivable, the sale of the Intervals related to such
Pledged Receivable and the sale of credit life and credit accident and health
insurance and any extended service contracts in
15
connection with the sale of the Intervals related to such Pledged Receivable,
have been complied with in all material respects.
(35) Such Pledged Receivable is not a Defaulted Receivable
and, on the date on which such Pledged Receivable was Pledged hereunder, is not
a Delinquent Receivable.
(36) The Coupon Rate set forth in such Pledged Receivable
shall be not less than 10%.
(37) Such Pledged Receivable arises from a bona fide sale by
SRI of one or more Intervals to an Obligor.
(38) The Interval sale from which it arises has not been
canceled by the related Obligor, any statutory or other applicable cancellation
or rescission period with respect thereto has expired, and the Interval sale
otherwise complies fully with the terms, provisions, and conditions of this
Agreement, the other Transaction Documents and all Applicable Laws.
(39) If such Pledged Receivable is secured by a lien on a Fee
Simple Interval, a Mortgage covering such Fee Simple Interval is in full force
and effect and such Mortgage and assignments thereof from any Previous Lender to
SRI, from SRI to the Borrower, and from the Borrower to the Agent, for the
benefit of the Lender shall each have been duly recorded or registered in the
Applicable Jurisdiction in accordance with all Applicable Laws (and such
Mortgage has evidence thereon of payment of all required documentary stamps and
intangible taxes, if any are required).
(40) If such Pledged Receivable was executed in connection
with the related Obligor's purchase of an ONS Interval, Non-Disturbance
Arrangements are in effect with respect to such ONS Interval and an Opinion of
Counsel has been delivered to the Borrower and the Agent which shall contain an
opinion that such Non-Disturbance Arrangements shall remain in full force and
effect notwithstanding the occurrence of a Bankruptcy Event with respect to SRI,
the ONS Trust or any of their respective Affiliates.
(41) A down payment and/or other payments have been received
by SRI from the Obligor who is the maker of the Pledged Receivable in an amount
equal to at least ten percent (10%) of the original Purchase Price of the
relevant Interval and such Obligor has received no cash or other rebates of any
kind with respect to the Purchase Price of such Interval.
(42) Upon inclusion of such Pledged Receivable in the Net
Eligible Receivables Balance, the Excess Spread Rate shall be not less than
3.50%.
(43) Such Pledged Receivable (i) has not been Modified or
Downgraded more than one time since its origination and (ii) if such Pledged
Receivable results from a Downgraded Receivable, such Pledged Receivable has not
been Modified or Downgraded at any time.
(44) The Obligor who owns the relevant Interval has access to
a Unit within the
16
Development during any use period reserved by and/or assigned to such Obligor,
all in accordance with the Applicable Timeshare Documents.
(45) The Obligor who owns the relevant Interval (i) is the
maker of the related Pledged Receivable and an executed Allonge has been
permanently affixed thereto and (ii) is not an Affiliate of, or related to, or
employed by SRI or the Borrower.
(46) The maximum Outstanding Principal Balance of such Pledged
Receivable does not exceed $35,000.
(47) (i) The Unit which the relevant Obligor has the right to
occupy, pursuant to the Applicable Timeshare Documents, has been completed and
furnished in accordance with the terms and provisions of such Obligor's purchase
contract, the Development's public offering statement, and the other Applicable
Timeshare Documents, (ii) a certificate of occupancy for such Unit (or the
building in which the Unit is located) has been issued or the Borrower has
provided the Lender with other evidence satisfactory to the Lender that such
Unit is completed and available for occupancy, and (iii) such Unit is not
subject to any Lien (other than the lien created by the related Mortgage).
(48) The forms of promissory note, mortgage, if applicable,
federal truth-in-lending disclosure statement, if applicable, purchase contract,
and other documents and instruments relating to the Interval purchase
transaction giving rise to such Pledged Receivable have been approved in advance
by Lender in writing.
(49) Such Pledged Receivable has an original term of not more
than 120 months; provided that Pledged Receivables representing not more than
20% of the Eligible Receivables Balance on any day may have original terms of
120 months.
(50) Such Pledged Receivable had no material provision thereof
waived, amended, altered or modified in any respect (including, without
limitation, as a result of the application of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended) since its origination (other than in connection
with a Modification, Downgrade, or Upgrade permitted under this Agreement).
(51) Such Pledged Receivable (i) was originated by SRI in its
ordinary course of business and in accordance with its underwriting guidelines
(and SRI had all necessary licenses and permits to originate Pledged Receivables
in the jurisdiction where the related Eligible Development was located), (ii)
was sold by SRI to the Borrower under the Receivables Purchase Agreement (and
the Borrower has all necessary licenses and permits to own Pledged Receivables
under all applicable law), (iii) contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for
realization against the collateral security related thereto, (iv) provides for
level monthly payments (provided, that the payment in the first month and the
final month of the term of the Pledged Receivable may be different from the
level payment) which, if made when due, shall fully amortize the debt evidenced
by such Pledged Receivable over the original term of such Pledged Receivable and
(v) arises in respect of an
17
Interval with respect to a Unit located at an Eligible Development.
(52) Such Pledged Receivable was originated by SRI without any
fraud or material misrepresentation on the part of SRI or the related Obligor.
Such Pledged Receivable was sold by SRI to the Borrower under the Receivables
Purchase Agreement without any fraud or material misrepresentation on the part
of SRI or the Borrower.
(53) Such Pledged Receivable is payable by one or two
Obligors, at least one of whom is a natural (and not a corporate) Person, and if
a Pledged Receivable is payable by more than one Obligor, each such Obligor is
jointly and severally obligated to pay the full amount payable under such
Pledged Receivable.
(54) The criterion set forth in Schedule VII is true and
correct.
(55) No such Pledged Receivable is due from the United States
or any State or from any agency, department, subdivision or instrumentality
thereof.
(56) The information pertaining to each such Pledged
Receivable set forth in the Schedule of Receivables (as defined in the
Receivables Purchase Agreement), the related Assignment and each Borrowing Base
Certificate, Commercial Paper Remittance Report and Monthly Remittance Report is
true and correct.
(57) Each Assignment Document exists with respect to such
Pledged Receivable and is duly executed and enforceable in accordance with its
terms and has been delivered to the Custodian and duly recorded in the
Applicable Jurisdiction in accordance with all Applicable Laws.
(58) The Borrower shall have taken all steps necessary under
all applicable law in order to cause a valid, subsisting and enforceable first
priority ownership interest to exist in its favor in such Pledged Receivable,
the Applicable Underlying Collateral and all other Collateral related to such
Pledged Receivable (and, in each case, the proceeds thereof) on or before the
Borrowing Date that such Pledged Receivable is Pledged hereunder and immediately
prior to the Pledge of such Pledged Receivable by the Borrower to the Agent (for
the benefit of the Lender), there shall have existed in favor of the Borrower as
secured party, a valid, subsisting and enforceable first priority perfected
security interest in the Applicable Underlying Collateral and all other such
Collateral related to such Receivable (and, in each case, the proceeds thereof),
and such security interest is and shall be prior to all other liens upon and
security interests in such Applicable Underlying Collateral and other such
Collateral (and, in each case, the proceeds thereof) that now exist or may
hereafter arise or be created.
(59) The Borrower shall have taken all steps necessary under
all applicable law in order to cause to exist in favor of the Agent, for the
benefit of the Lender, a valid, subsisting and enforceable first priority
perfected lien in such Pledged Receivable, the Applicable Underlying Collateral
and all other Collateral related to each such Pledged Receivable (and the
proceeds thereof) on or before the Borrowing Date such Pledged Receivable is
Pledged hereunder and
18
upon the Pledge of such Receivable by the Borrower to the Agent (for the benefit
of the Lender), there shall exist in favor of the Agent (for the benefit of the
Lender) as secured party, a valid, subsisting and enforceable first priority
perfected security interest in such Pledged Receivable and in the Borrower's
first priority perfected security interest in the Applicable Underlying
Collateral and all other Collateral related to such Pledged Receivable (and, in
each case, the proceeds thereof) being Pledged hereunder on such Borrowing Date
and such security interest is and shall be prior to all other liens upon and
security interests therein that now exist or may hereafter arise or be created.
(60) SRI owned such Pledged Receivable free and clear of any
Adverse Claim immediately prior to its sale of such Pledged Receivable to the
Borrower and SRI has taken all steps necessary under all applicable law in order
to cause to exist in favor of the Agent, for the benefit of the Lender, a valid,
subsisting and enforceable first priority perfected security interest in such
Pledged Receivable and the Borrower's valid, subsisting and enforceable first
priority perfected security interest in the Applicable Underlying Collateral and
all other Collateral related to such Pledged Receivable (and, in each case, the
proceeds thereof).
(61) All filings (including, without limitation, UCC and real
property filings) required to be made by any Person and all other actions
required to be taken or performed by any Person in any jurisdiction to give the
Agent, for the benefit of the Lender, a first priority perfected lien on such
Pledged Receivables and the Borrower's valid, subsisting and enforceable first
priority perfected security interest in the Applicable Underlying Collateral and
all other Collateral related to such Pledged Receivable (and, in each case, the
proceeds thereof) have been made, taken or performed. (1)
(62) With respect to each such Pledged Receivable, there
exists a Receivable File and a copy of such Receivable File is in the possession
of the Custodian.
(63) No such Pledged Receivable has been satisfied,
subordinated or rescinded, and the Applicable Underlying Collateral securing
such Pledged Receivable has not been released from the lien of the Agent, for
the benefit of the Lender, in whole or in part.
(64) No such Pledged Receivable was originated in, or is
subject to the laws of, any jurisdiction the laws of which would make unlawful,
void or voidable the sale, transfer and assignment of such Pledged Receivable
and none of the related Obligor, SRI or the Borrower has entered into any
agreement with any Person that prohibits, restricts or conditions the assignment
of such Pledged Receivable.
(65) None of the related Obligor, SRI or the Borrower have
taken any action to convey any right to any Person that would result in such
Person having a right to payments due under such Pledged Receivable or payments
received under the related Acceptable Title Policy or otherwise to impair the
rights of the Borrower, the Agent or the Lender in such Pledged Receivable, the
Applicable Underlying Collateral securing such Pledged Receivable or the
proceeds thereof.
19
(66) No such Pledged Receivable is assumable by another Person
in a manner which would release the related Obligor from such Obligor's
obligations to SRI, the Borrower or the Lender.
(67) Such Pledged Receivable is in full force and effect and
constitutes the legal, valid and binding obligation of the related Obligor and
is not subject to any right of rescission, setoff, counterclaim or defense.
(68) There has been no default, breach, violation or event
permitting acceleration under the terms of such Pledged Receivable, and no
condition exists or event has occurred and is continuing that with notice, the
lapse of time or both would constitute a default, breach, violation or event
permitting acceleration under the terms of such Pledged Receivable, and there
has been no waiver of any of the foregoing.
(69) No selection procedures adverse to the Borrower, the
Agent or the Lender have been utilized in selecting such Pledged Receivable from
all other similar receivables originated by SRI.
(70) Upon inclusion of such Pledged Receivable in the Net
Eligible Receivables Balance, (i) the Weighted Average APR of all Eligible
Receivables shall be not less than 12.00% and (ii) the Weighted Average Original
Term of all Eligible Receivables shall be no more than 96 months.
(71) If such Pledged Receivable was executed in connection
with the related Obligor's purchase of an ONS Interval, a title policy in the
form of Exhibit J hereto is in effect in favor of the ONS Trust which (i) covers
the Oak N' Spruce Development and (ii) is at all times in an amount not less
than the acquisition costs incurred by SRI with respect to the Oak N' Spruce
Development.
(72) If such Pledged Receivable was executed in connection
with the related Obligor's purchase of a Fee Simple Interval, an Acceptable
Title Policy is in effect in favor of the Agent, for the benefit of the Lender,
which (i) covers such Fee Simple Interval and (ii) is at all times in an amount
of not less than the principal amount of the Loan in respect of such Pledged
Receivable.
(73) If such Pledged Receivable was executed in connection
with the related Obligor's purchase of an ONS Interval, (i) such Obligor was
delivered a Certificate of Beneficial Interest by SRI and such Certificate of
Beneficial Interest was (A) pledged and delivered by such Obligor to SRI to
secure such Pledged Receivable (and, if such Certificate of Beneficial Interest
was pledged and delivered by SRI to a Previous Lender, reassigned and
redelivered to SRI), (B) assigned by SRI to the Borrower pursuant to the
Receivables Purchase Agreement, (C) Pledged by the Borrower to the Agent, for
the benefit of the Lender, and (D) delivered to the Custodian, (ii) such Obligor
executed a Mortgage and Assignment of Beneficial Interest and such Mortgage and
Assignment of Beneficial Interest was (A) delivered by such Obligor to SRI, (B)
if such Mortgage and Assignment of Beneficial Interest was pledged by SRI to a
Previous Lender,
20
reassigned by any Previous Lender to SRI, (C) assigned by SRI to the Borrower
pursuant to the Receivables Purchase Agreement, (D) assigned by the Borrower to
the Agent, for the benefit of the Lender and (E) duly recorded or registered in
the Applicable Jurisdiction in accordance with all Applicable Laws and (iii)
proper financing statements in the forms attached hereto as Exhibit I have been
filed in the Commonwealth of Massachusetts and the jurisdiction of the residence
of the Obligor describing and reflecting the pledge of such Pledged Receivable,
Related Security and other Pledged Assets by the Obligor to SRI (and, if such
Pledged Receivable, Related Security and other Pledged Assets were pledged to a
Previous Lender, reassigning and pledging such Pledged Receivable, Related
Security and other Pledged Assets to SRI), the assignment thereof from SRI to
the Borrower and the Pledge thereof by the Borrower as debtor to the Agent, on
behalf of the Lender, as secured party, and other, similar instruments or
documents, as may be necessary or, in the opinion of the Agent or the Lender,
desirable under the UCC of all appropriate jurisdictions or any comparable law
to perfect the Lender's interest in such Pledged Receivable, Related Security
and other Pledged Assets.
(74) If such Pledged Receivable was executed in connection
with the related Obligor's purchase of a Fee Simple Interval, such Obligor was
delivered a deed with respect to such Fee Simple Interval and such deed was duly
recorded or registered in the Applicable Jurisdiction in accordance with all
Applicable Laws.
(75) An Acceptable Environmental Report has been obtained by
SRI covering the Development related to such Pledged Receivable.
(76) The Borrower has received certified copies of all
Acceptable Insurance Policies and endorsements thereto with respect to the
Development relating to such Pledged Receivable. In addition, SRI has obtained
and is maintaining or has caused the Applicable Timeshare Owners' Association to
obtain and maintain all policies of insurance required by and in accordance with
the terms of the Credit and Collection Policy and/or which are customary in the
timeshare industry in the Applicable Jurisdiction.
(77) Such Pledged Receivable constitutes a "general
intangible" or an "instrument" within the meaning of the UCC of all
jurisdictions which govern the perfection of the Borrower's interest therein.
(78) No notice of assessment has been issued to the related
Obligor in respect to any dues, fees or other charges payable by the related
Obligor in connection with the ownership and/or use of the Interval related to
such Pledged Receivable.
(79) Such Pledged Receivable arose in connection with the
purchase by the related Obligor of (i) an ONS Interval with respect to a Unit
located at the Oak N' Spruce Development or (ii) a Fee Simple Interval.
(80) If such Pledged Receivable was initially Pledged
hereunder at any time on or after the Amendment Date, the Obligor related to
such Pledged Receivable shall have had a FICO Score of at least 500 at the time
such Obligor purchased the Interval related to such
21
Pledged Receivable.
"Eligible Receivables Balance" means, at any time, the sum of
the Outstanding Principal Balances of all Eligible Receivables at such time.
"Encumbered Interval" means any Interval that is encumbered by
the lien of a Mortgage or which otherwise serves as collateral for the payment
of a Pledged Receivable.
"Environmental Laws" means, if and to the extent applicable,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time ("CERCLA"), the Resource Conservation and
Recovery Act of 1976, as amended from time to time ("RCRA"), the Superfund
Amendments and Reauthorization Act of 1986, as amended, the federal Clean Air
Act, the federal Clean Water Act, the federal Safe Drinking Water Act, the
federal Toxic Substances Control Act, the federal Hazardous Materials
Transportation Act, the federal Emergency Planning and Community Right to Know
Act of 1986, the federal Endangered Species Act, the federal Occupational Safety
and Health Act of 1970, the federal Water Pollution Control Act, and any and all
comparable statutes or ordinances enacted in an Applicable Jurisdiction
(including any Applicable Jurisdiction outside of the United States), as all of
the foregoing laws may be amended from time to time, and any rules or
regulations promulgated pursuant to the foregoing; together with any similar
local, state or federal statutes, ordinances, rules, or regulations, either in
existence as of the Closing Date or enacted or promulgated after the Closing
Date, that concern the management, control, storage, discharge, treatment,
containment, removal, and/or transport of Hazardous Materials or other
substances that are or may become a threat to public health or the environment;
together with any common law theory involving Hazardous Materials or substances
that are (or alleged to be) hazardous to human health or the environment, based
on nuisance, trespass, negligence, strict liability, or other tortious conduct,
or any other federal, state, or local statute, ordinance, regulation, rule,
policy, or determination pertaining to health, hygiene, the environment, or
environmental conditions.
"EPA" means the United States Environmental Protection Agency.
"ERISA" means the United States Employee Retirement Income
Security Act of 1974, as amended from time to time.
"Eurodollar Disruption Event" means any of the following: (i)
a determination by the Lender that it would be contrary to law or to the
directive of any central bank or other governmental authority (whether or not
having the force of law) to obtain United States dollars in the London interbank
market to make, fund or maintain any Loan, (ii) a determination by the Lender
that the rate at which deposits of United States dollars are being offered in
the London interbank market does not accurately reflect the cost to the Lender
of making, funding or maintaining any Loan or (iii) the inability of the Lender
to obtain United States dollars in the London interbank market to make, fund or
maintain any Loan.
"Eurodollar Rate" means with respect to any Fixed Period for
any Loan allocated to such Fixed Period, an interest rate per annum equal to the
average of the interest rates per
22
annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) reported during
such Fixed Period on Telerate Access Service Page 3750 (British Bankers
Association Settlement Rate) as the London Interbank Offered Rate for United
States dollar deposits having a term of thirty (30) days and in a principal
amount of $1,000,000 or more (or, if such page shall cease to be publicly
available or, if the information contained on such page, in the Lender's sole
judgment, shall cease to accurately reflect such London Interbank Offered Rate,
such rate as reported by any publicly available recognized source of similar
market data selected by the Lender that, in the Lender's reasonable judgment,
accurately reflects such London Interbank Offered Rate).
"Event of Default" has the meaning assigned to that term in
Section 7.01.
"Excess Spread Rate" means, as of any date of determination,
an amount (expressed as a percentage) equal to (i) the Weighted Average APR of
all Eligible Receivables on such date minus (ii) the sum of (a) a rate per annum
equal to a fraction (expressed as a percentage), the numerator of which is equal
to the aggregate amount of Yield accrued during the most recently ended
Remittance Period and the denominator of which shall be equal to the average
Facility Amount during such Remittance Period and (b) the Servicing Fee Rate and
(c) the Applicable Percentage (as defined in the Fee Letter) for the most
recently ended Remittance Period (as determined pursuant to the terms of the Fee
Letter).
"Facility Amount" means at any time, the sum of (i) the face
amount of outstanding commercial paper notes (net of the amount of all interest
scheduled to accrue thereon through their respective stated maturity if such
commercial paper notes are issued on a discount basis) of the Lender issued to
fund Loans hereunder, plus (ii) the aggregate Loans Outstanding hereunder
bearing interest at the Non-CP Rate, plus (iii) accrued Yield and Fees with
respect to the amounts described in the foregoing clauses (i) and (ii).
"Facility Financing Statements" has the meaning assigned to
that term in Schedule I.
"Facility Funding Rate" means, as of the last day of any
Remittance Period, a rate per annum equal to a fraction (expressed as a
percentage), the numerator of which is equal to the aggregate amount of Yield
and Fees accrued during such Remittance Period and the denominator of which
shall be equal to the average Facility Amount during such Remittance Period.
"Facility Maturity Date" means the fifth anniversary of the
Amendment Date.
"Fee Letter" has the meaning assigned to that term in Section
2.07(a).
"Fee Simple Interval" means an undivided fee simple timeshare
interest in a particular Unit or in an entire Development as a whole, as a
tenant in common with other owners of undivided interests in such Unit or
Development, together with all rights, benefits, privileges, and interests
appurtenant thereto, including but not limited to the right to use and occupy a
Unit within a Development and the Common Elements and Common Furnishings, if
any, appurtenant to such Unit and/or the Development during a reserved or
assigned use period, all as more
23
specifically described in the Applicable Declaration and/or other Applicable
Timeshare Documents.
"Fees" has the meaning assigned to that term in Section
2.07(a).
"FICO Score" means a nationally recognized credit rating
developed by Fair, ▇▇▇▇▇ and Co.
"Fitch" means Fitch, Inc. (or its successors in interest).
"Fixed Period" means for any outstanding Loans, (i) if Yield
in respect of all or any part thereof is computed by reference to the CP Rate, a
period of up to and including ninety (90) days as determined pursuant to Section
2.04, or (ii) if Yield in respect of all or any part thereof is computed by
reference to the Non-CP Rate, the applicable Remittance Period.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States.
"Government Entity" means the United States, any State, any
political subdivision of a State and any agency or instrumentality of the United
States or any State or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Materials" means "hazardous substances," "hazardous
waste," "hazardous constituents," "toxic substances," or "solid waste," as
defined in the Environmental Laws, and any other contaminant or any material,
waste, or substance that is petroleum or petroleum based, asbestos,
polychlorinated biphenyls, flammable explosives, or radioactive materials.
"Indemnified Amounts" has the meaning assigned to that term in
Section 8.01.
"Independent Accountants" has the meaning assigned to that
term in Section 6.12(b).
"Interest Coverage Ratio" means, with respect to any Person
for any fiscal quarter, the ratio of (i) EBITDA for such period less Capital
Expenditures for such period to (ii) the Cash Interest Expense for such period.
"Interest Expense" means, with respect to any Person for any
period, the interest expense of such Person during such period determined in
accordance with GAAP, and shall in any event include, without limitation, (i)
the amortization of debt discounts, (ii) the amortization of all fees payable in
connection with the incurrence of Debt to the extent included in interest
expense, (iii) the portion of any Capital Lease Obligation allocable to interest
expense, (iv) all fixed and all calculable dividend payments on preferred stock,
and (v) payments of interest expense in kind.
24
"Interval" means either a Fee Simple Interval or an ONS
Interval.
"Issuer" means, collectively, Autobahn and any presently
existing or future Person administered by DZ Bank whose principal business
consists of issuing commercial paper or other securities to fund its acquisition
and maintenance of receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets.
"Land" means the real property upon which any portion of a
Development is situated.
"Lender" means, collectively, Autobahn and/or any other Person
(including, without limitation, any present or future Affiliate of DZ Bank) that
agrees, pursuant to the pertinent Assignment and Acceptance, to make Loans
secured by Pledged Assets pursuant to Article II of this Agreement.
"Lien" means any mortgage, security interest, or other
interest in property securing an obligation owed to, or valid claim by, a Person
other than the owner of such property, whether such interest arises in equity or
is based on common law, statute, or contract.
"Liquidation Fee" means, for Loans allocated to any Fixed
Period during which such Loans are repaid (in whole or in part) prior to the end
of such Fixed Period, the amount, if any, by which (i) Yield (calculated without
taking into account any Liquidation Fee) which would have accrued on the amount
of the payment of such Loans during such Fixed Period (as so computed) if such
payment had not been made, as the case may be, exceeds (ii) the sum of (A) Yield
actually received by the Lender in respect of such Loans for such Fixed Period
and, if applicable, (B) the income, if any, received by the Lender from the
Lender's investing the proceeds of such payments on such Loans.
"Liquidation Proceeds" means with respect to a Receivable with
respect to which the related Interval has been foreclosed upon by the Servicer,
all amounts realized with respect to such Receivable net of reasonable expenses
of the Servicer incurred in connection with the collection, repossession and
disposition of the related Interval; provided, however, that the Liquidation
Proceeds with respect to any Receivable shall in no event be less than zero.
"Liquidity/Credit Enhancement Facility" means the Liquidity
Purchase Agreement, entered into on the Closing Date among the Issuer, the
financial institutions party thereto and the Agent, and/or any additional
Liquidity Purchase Agreements, entered into after the Closing Date among the
Issuer, the financial institutions party thereto and the Agent and/or a letter
of credit or similar instrument or agreement by the financial institutions party
thereto in favor of the Issuer, together with any related agreements.
"Loan" means a loan made by the Lender to the Borrower
pursuant to Article II.
"Loans Outstanding" means the sum of the principal amounts
loaned to the Borrower for the initial and any subsequent borrowings pursuant to
Sections 2.01 and 2.02,
25
reduced from time to time by Collections received and distributed on account of
such Loans outstanding pursuant to Section 2.05; provided, however, that such
Loans Outstanding shall not be reduced by any distribution of any portion of
Collections if at any time such distribution is rescinded or must be returned
for any reason.
"Lockbox" means a post office box to which Collections are
remitted for retrieval by the Lockbox Bank and for deposit by the Lockbox Bank
into the Lockbox Account.
"Lockbox Account" means the deposit account (initially,
account number 08896266431 at The Chase Manhattan Bank) in the name of and under
the sole dominion and control of the Agent for the benefit of the Lender;
provided, that the funds deposited in such account (including any interest and
earnings thereon) from time to time shall constitute the property and assets of
the Borrower and the Borrower shall be solely liable for any taxes payable with
respect to the Lockbox Account.
"Lockbox Agreement" means an agreement relating to lockbox
services in connection with the Lockbox and the Lockbox Account which is
satisfactory to the Agent in form and substance and among the Borrower, the
Agent and the Lockbox Bank, as such agreement may from time to time be amended,
supplemented and/or otherwise modified in accordance with the terms thereof.
"Lockbox Bank" means The Chase Manhattan Bank or any
replacement therefor.
"Material Adverse Effect" means a material adverse effect on
(i) the ability of the Borrower or SRI (in its capacity as Servicer or
otherwise) to conduct its business, (ii) the ability of the Borrower or SRI (in
its capacity as Servicer or otherwise) to perform its obligations under this
Agreement or any other Transaction Document to which it is a party, (iii) the
validity or enforceability of this Agreement or any other Transaction Document
to which the Borrower or SRI (in its capacity as Servicer or otherwise), as
applicable, is a party, (iv) the rights and remedies of the Lender or the Agent
under this Agreement or any of the Transaction Documents or (v) the validity,
enforceability or collectibility of all or any portion of the Pledged
Receivables.
"Modified" means the process by which the payment schedule in
respect of a Receivable is modified at any time in accordance with the Credit
and Collection Policy to defer the payment of not more than 4 monthly payments
until the end of the original term of such Receivable (which payments shall be
made either in one installment or in not more than 4 additional monthly
payments); provided, that, the related Obligor makes at least 2 monthly payments
in respect of past due amounts at such time.
"Modified Receivable" means a Receivable that has been
Modified.
"Monthly Remittance Report" means a report, in substantially
the form of Exhibit C, furnished by the Servicer to the Agent for the Lender
pursuant to Section 6.11(b).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. (or its
successors in interest).
26
"Mortgage" means a properly recorded or registered mortgage,
deed of trust, or other security instrument customary in the timeshare industry
in the Applicable Jurisdiction acceptable to the Lender, in its reasonable
discretion, that creates a valid and enforceable first priority Lien against the
Encumbered Interval identified therein in accordance with all Applicable Laws
(which Encumbered Interval relates to a Development) and secures the payment of
all principal, interest, and other amounts owed by an Obligor to SRI pursuant to
a Pledged Receivable.
"Mortgage and Assignment of Beneficial Interest" means, with
respect to any ONS Interval, that Mortgage and Assignment of Beneficial
Interest, in the form attached hereto as Exhibit H.
"Net Eligible Receivables Balance" has the meaning assigned to
that term in Schedule VI.
"Net Income" means, with respect to any Person for any period,
the aggregate income (or loss) of such Person for such period which shall be an
amount equal to net revenues and other proper items of income for such Person
less the aggregate for such Person of any and all items that are treated as
expenses under GAAP, and less federal, state and local income taxes, all
computed and calculated in accordance with GAAP.
"Non-CP Rate" means with respect to any Fixed Period for any
Loan allocated to such Fixed Period, an interest rate per annum equal to the
Adjusted Eurodollar Rate; provided, however, that if the Lender shall have
notified the Agent that a Eurodollar Disruption Event has occurred, the Non-CP
Rate shall be equal to the Base Rate until the Lender shall have notified the
Agent that such Eurodollar Disruption Event has ceased, at which time the Non-CP
Rate shall again be equal to the Adjusted Eurodollar Rate).
"Non-Disturbance Arrangements" means with respect to any ONS
Interval, an arrangement such that, by the recording of an appropriate
declaration in the appropriate public records of the Applicable Jurisdiction, by
operation of Applicable Law, or otherwise, all right, title and interest of the
related Obligor in, to and under such ONS Interval shall remain in full force
and effect notwithstanding the occurrence of a Bankruptcy Event with respect to
SRI, the ONS Trust or any of their respective Affiliates.
"Notice of Borrowing" has the meaning assigned to that term in
Section 2.02(b) hereof.
"Notice of Pledge" has the meaning assigned to that term in
the Custodial Agreement.
"Oak N' Spruce Development" means SRI's timeshare property
located in Lee, Massachusetts, known as Oak N' Spruce Resort.
27
"Obligations" means all present and future indebtedness and
other liabilities and obligations (howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, or due or to become due) of
the Borrower to the Lender or the Agent arising under this Agreement and the
other Transaction Documents and shall include, without limitation, all Fees
(including, without limitation, any unpaid portion of the Structuring Fee) all
liability for principal of and interest on the Loans, indemnifications and other
amounts due or to become due under this Agreement and such other documents,
including, without limitation, interest, fees and other obligations that accrue
after the commencement of an insolvency proceeding (in each case whether or not
allowed as a claim in such insolvency proceeding).
"Obligor" means any Person (or if more than one Person,
Obligor shall mean, collectively, each such Person) who purchases one or more
Intervals and is the maker of a Receivable.
"Officer's Certificate" means a certificate signed by the
president, the secretary, the chief financial officer or any vice president of
any Person.
"ONS Interval" means a timeshare interest with respect to a
Unit located at the Oak N' Spruce Development which is evidenced by a
Certificate of Beneficial Interest, together with all rights, benefits,
privileges, and interests appurtenant thereto, including but not limited to the
right to use and occupy a Unit at the Oak N' Spruce Development and the Common
Elements, if any, and Common Furnishings, if any, appurtenant to such Unit
and/or such Development during a reserved or assigned use period, all as more
specifically described in the Applicable Declaration and/or other Applicable
Timeshare Documents.
"ONS Trust" means the Oak N' Spruce Resort Trust, a
Massachusetts trust.
"Opinion of Counsel" means a written opinion of independent
counsel acceptable to the Agent in its reasonable discretion, which opinion, if
such opinion or a copy thereof is required by the provisions of this Agreement
or the Receivables Purchase Agreement to be delivered to the Borrower or the
Agent, is reasonably acceptable in form and substance to the Agent.
"Original RLSA" has the meaning assigned to that term in the
preamble hereto.
"Outstanding Principal Balance" means, as of any date, with
respect to a Pledged Receivable, the aggregate amount lent to the related
Obligor by SRI under the terms of such Pledged Receivable minus that portion of
all amounts paid by such Obligor with respect to such Pledged Receivable on or
prior to such date which were allocable to principal in accordance with the
terms of such Pledged Receivable and any related loan documents.
"Overconcentration Amount" means, at any time, without
duplication, the sum of:
(81) the amount by which the sum of the Outstanding Principal
Balances of all Eligible Receivables related to any one Eligible Development at
such time exceeds (i) in the case of an Eligible Development at which at such
time at least 70% of the completed inventory has
28
been sold, 30% or (ii) in the case of an Eligible Development at which at such
time less than 70% of the completed inventory has been sold, 25% (or such higher
percentage as the Agent may agree to in writing in respect of such Eligible
Development at such time) of the Eligible Receivables Balance at such time;
(82) the amount by which the sum of the Outstanding Principal
Balances of all Eligible Receivables related to Developments in any one state at
such time exceeds 20% (or 50%, in the case of Texas and 50% in the case of
Missouri) of the Eligible Receivables Balance at such time;
(83) the amount by which the sum of the Outstanding Principal
Balances of (i) all Modified Receivables and (ii) all Eligible Receivables
resulting from Downgraded Receivables, exceeds 15% of the Eligible Receivables
Balance at such time;
(84) the amount by which the sum of the Outstanding Principal
Balances of all Eligible Receivables related to the Oak N' Spruce Development at
such time exceeds 15% of the Eligible Receivables Balance at such time; and
(85) the amount by which the sum of the Outstanding Principal
Balances of each Eligible Receivable initially Pledged hereunder at any time on
or after the Amendment Date the Obligor of which shall have had a FICO Score of
at least 500 but not greater than 539 at the time such Obligor purchased the
Interval related to such Eligible Receivable exceeds 10% of the Eligible
Receivables Balance at such time.
"Permitted Investments" means any one or more of the
following:
(86) direct obligations of, or obligations fully guaranteed as
to principal and interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and credit of
the United States;
(87) repurchase obligations (the collateral for which is held
by a third party) with respect to any security described in clause (a) above,
provided that the long-term unsecured obligations of the party agreeing to
repurchase such obligations are at the time rated by ▇▇▇▇▇'▇ and S&P in one of
their two highest long-term rating categories and if rated by Fitch, in one of
its two highest long-term rating categories;
(88) certificates of deposit, time deposits, demand deposits
and bankers' acceptances of any bank or trust company incorporated under the
laws of the United States or any State thereof, provided that the short-term
commercial paper of such bank or trust company (or, in the case of the principal
depository institution in a depository institution holding company, the
long-term unsecured debt obligations of the depository institution holding
company) at the date of acquisition thereof has been rated by ▇▇▇▇▇'▇ and S&P in
their highest short-term rating category, and if rated by Fitch, in its highest
short-term rating category;
(89) commercial paper (having original maturities of not more
than 270 days) of
29
any corporation incorporated under the laws of the United States or any State
thereof, having a rating, on the date of acquisition thereof, of no less than
A-1 by ▇▇▇▇▇'▇, P-1 by S&P and F-1 if rated by Fitch; and
(90) money market mutual funds registered under the Investment
Company Act of 1940, as amended, having a rating, at the time of such
investment, of no less than Aaa by ▇▇▇▇▇'▇, AAA by S&P and AAA if rated by
Fitch;
provided, that no such instrument shall be a Permitted Investment if such
instrument evidences the right to receive either (a) interest only payments with
respect to the obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument where the
principal and interest payments with respect to such instrument provide a yield
to maturity exceeding 120% of the yield to maturity at par of such underlying
obligation. Each Permitted Investment may be purchased by the Agent's Bank or
through an Affiliate of the Agent's Bank and may be Permitted Investments for
which the Agent's Bank or its Affiliate is an investment advisor or distributor
or for which it derives a fee for support services in relation thereto.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture, government (or any agency or
political subdivision thereof) or other entity.
"Personal Property" means, to the extent applicable, all
furniture, furnishings, fixtures, appliances, equipment, inventory, supplies,
accounts, chattel paper, and general intangibles at any time located at, arising
out of the use of, and/or used or useful in connection with the management or
operation of any Encumbered Interval, whether now owned or hereafter acquired by
the Borrower, together with all improvements and accessions thereto and
replacements thereof and the cash and non-cash proceeds thereof.
"Phase I Environmental Inspection" means a Phase I
environmental assessment of a Development, including, without limitation, the
relevant Land and all improvements thereto which is acceptable to the Agent in
its reasonable discretion.
"Pledge" means the pledge of any Receivable pursuant to
Article II.
"Pledged Assets" has the meaning assigned to that term in
Section 2.10.
"Pledged Lender" means any party to which SRI had pledged a
Pledged Receivable relating to an ONS Interval prior to the Closing Date.
"Pledged Receivables" has the meaning assigned to that term in
Section 2.10(a).
"Previous Lender" means a Person to which SRI had pledged a
Pledged Receivable prior to the Closing Date.
30
"Purchase Date" has the meaning set forth in the Receivables
Purchase Agreement.
"Purchase Price" means the total purchase price of an
Interval, as set forth in the purchase contract pursuant to which the related
Obligor agrees to purchase and SRI agrees to sell such Interval.
"Purchased Rate Cap" has the meaning assigned thereto in the
Sinking Fund Agreement.
"Put" has the meaning assigned to that term in Section
2.17(a).
"Put Date" means the second anniversary of the Amendment Date
or, if such day is not a Business Day, the first Business Day thereafter.
"Put Payment" has the meaning assigned to that term in Section
2.17(a).
"Rating Agencies" mean ▇▇▇▇▇'▇ and Fitch, if and so long as
they have rated and are continuing to rate commercial paper notes of the Lender
at any time that the Lender is an Issuer, or such other nationally recognized
statistical rating organizations as may be designated by the Agent.
"Receivable" means a promissory note made and executed by an
Obligor in favor of SRI in connection with such Obligor's acquisition of an
Interval.
"Receivable File" means a file containing each of the
following items with respect to each Pledged Receivable:
(91) the related original, fully executed Receivable;
(92) an original or a true and complete photocopy of the
related, fully executed agreement pursuant to which the related Obligor acquired
the related Interval;
(93) that was generated in connection with an Obligor's
purchase of a Fee Simple Interval, within ninety (90) days of such Pledged
Receivable being Pledged hereunder, the related original, fully executed
Mortgage and original assignments thereof from any Previous Lender to SRI, from
SRI to the Borrower and from the Borrower to the Agent together, in each case,
with evidence of the recordation thereof in the appropriate public records of
the Applicable Jurisdiction in accordance with all Applicable Laws;
(94) that was generated in connection with an Obligor's
purchase of an ONS Interval, (i) an original, executed Certificate of Beneficial
Interest duly pledged (in a manner approved by the Agent) by such Obligor to SRI
(and, if such Certificate of Beneficial Interest was pledged by SRI to a
Previous Lender, reassigned to SRI), SRI to the Borrower and the Borrower to the
Agent; (ii) an original, executed Mortgage and Assignment of Beneficial interest
duly executed by such Obligor in favor of SRI, reassigned by any Previous Lender
to SRI, assigned by SRI to the Borrower and by the Borrower to the Agent, for
the benefit of the Lender; (iii) an
31
acknowledgment copy of proper financing statements describing and reflecting the
pledge of such Pledged Receivable, Related Security and other Pledged Assets by
the Obligor to SRI (and, if such Pledged Receivable, Related Security and other
Pledged Assets were pledged to a Previous Lender, the reassignment and pledge
thereof to SRI), the assignment thereof from SRI to the Borrower and the Pledge
thereof by the Borrower as debtor to the Agent, on behalf of the Lender, as
secured party, and other, similar instruments or documents, as may be necessary
or, in the opinion of the Agent or the Lender, desirable under the UCC of all
appropriate jurisdictions or any comparable law to perfect the Lender's interest
in such Pledged Receivable, Related Security and other Pledged Assets and (iv) a
true and complete updated copy of the title report issued in respect of the Oak
N'Spruce Development.
(95) (i) within sixty (60) days of the receipt by the Servicer
of the Mortgage referred to in paragraph (c) above, an original or a true and
complete photocopy of the related, fully executed Acceptable Title Policy and
(ii) at all times prior to the related, fully executed Acceptable Title Policy,
if any, being included in the Receivable File, a marked up title commitment, a
pro forma title policy or an endorsement of a title insurance commitment
deleting standard exceptions which, in each case, provides the same coverage as
shall be provided by, and commits the title insurance company to deliver, such
related, fully executed Acceptable Title Policy, if any;
(96) an original or a true and complete photocopy of the
related truth-in-lending disclosure statements delivered to the related Obligor
(which may be included as part of item (b) of this definition);
(97) an original or a true and complete photocopy of the fully
executed credit/loan application delivered by the related Obligor; and
(98) the related original, fully executed Allonge.
"Receivables Purchase Agreement" means that certain Purchase
and Contribution Agreement dated as of the Closing Date between SRI, as seller,
and the Borrower, as purchaser, together with all instruments, documents and
agreements executed in connection therewith, as such Receivables Purchase
Agreement may from time to time be amended, restated, supplemented and/or
otherwise modified in accordance with the terms hereof.
"Receivables Schedule" has the meaning assigned to that term
in the Custodial Agreement.
"Records" means all documents, books, records and other
information (including, without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights)
maintained with respect to Receivables and the related Obligors which the
Borrower has itself generated, in which the Borrower has acquired an interest
pursuant to the Receivables Purchase Agreement or in which the Borrower has
otherwise obtained an interest.
"Related Security" means with respect to any Receivable:
32
(99) any and all security interests or liens and property
subject thereto (including, without limitation, the related Interval) from time
to time purporting to secure payment of such Receivable;
(100) all guarantees, indemnities, warranties, letters of
credit, insurance policies and proceeds and premium refunds thereof and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Receivable; and
(101) all proceeds of the foregoing.
"Release Price" means with respect to a Pledged Receivable to
be released pursuant to Section 2.13(a), an amount equal to the Outstanding
Principal Balance of such Pledged Receivable plus all accrued but unpaid
interest and fees thereon.
"Remittance Date" means the fifteenth day of each month or, if
such date is not a Business Day, the next succeeding Business Day; provided,
that the final Remittance Date shall occur on the Collection Date.
"Remittance Period" means, (i) as to the initial Remittance
Date, the period beginning on the Closing Date and ending on the last day of the
calendar month in which such date occurred and (ii) as to any subsequent
Remittance Date, the period beginning on the first day of the most recently
ended calendar month and ending on the last day of the most recently ended
calendar month; provided, that the final Remittance Period shall begin on the
first day of the most recently ended calendar month and shall end on the
Collection Date.
"S&P" means Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. (or its successors in interest).
"Servicer" means at any time the Person then authorized,
pursuant to Section 6.01, to service, administer and collect Pledged
Receivables.
"Servicer Advance" has the meaning assigned to such term in
Section 6.20.
"Servicer Default" means the occurrence of any of the
following events:
(102) the failure of the Servicer to deliver any payments,
collections or proceeds which it is obligated to deliver under the terms hereof
or of any other Transaction Document at the times it is obligated to make such
deliveries under the terms hereof or of any other Transaction Document;
(103) the inability or failure of the Servicer to satisfy any
of its reporting, certification, notification or documentation requirements
under the terms hereof or of any other Transaction Document;
33
(104) the failure of the Servicer to observe or perform any
covenant under the terms hereof or of any other Transaction Document other than
as set forth in clauses (a) or (b) above;
(105) any representation, warranty or statement of the
Servicer made herein or in any other Transaction Document shall prove to be
incorrect;
(106) the occurrence of an Early Amortization Event described
in clause (a), (b), (c), (d) or (g) of the definition of Early Amortization
Events; or
(107) the occurrence of any Bankruptcy Event in respect of the
Servicer.
"Servicing Fee" means, for any Remittance Period, an amount,
payable out of Collections on the Pledged Receivables and amounts applied to the
payment of, or treated as payments on, the Pledged Receivables, equal to (i) the
Servicing Fee Rate multiplied by (ii) the Net Eligible Receivables Balance as of
the first day of such Remittance Period.
"Servicing Fee Rate" means with respect to the Pledged
Receivables, the per annum rate of 1.00%.
"Servicing Officer" means any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Pledged
Receivables, whose name appears on a list of servicing officers furnished to the
Agent by the Servicer, as such list may from time to time be amended.
"Sinking Fund Account" has the meaning assigned thereto in the
Sinking Fund Agreement.
"Sinking Fund Account Securities Account Agreement" means that
certain Securities Account Agreement related to the Sinking Fund Account dated
the Closing Date among the Borrower, the Servicer, the Agent's Bank and the
Agent, as such agreement may from time to time be amended, supplemented or
otherwise modified in accordance with the terms thereof.
"Sinking Fund Agreement" means that certain Sinking Fund
Account Agreement dated the Closing Date among the Borrower, SRI, the Agent's
Bank and the Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Sinking Fund Collateral" has the meaning assigned thereto in
the Sinking Fund Agreement.
"SRI" has the meaning assigned to that term in the preamble
hereto.
"Standby Backup Servicer's Fee" means, for any Remittance
Period or portion thereof prior to the occurrence of a Servicer Default and the
appointment of the Backup Servicer
34
as Servicer hereunder, an amount, payable out of Collections on the Pledged
Receivables and amounts applied to the payment of, or treated as payments on,
the Pledged Receivables, equal to the greater of (i) the result obtained by
multiplying (A) .0005 times (B) the Net Eligible Receivables Balance as of the
first day of such Remittance Period and then dividing such amount by (C) twelve
or (ii) $2,500.
"State" means one of the fifty states of the United States or
the District of Columbia.
"Structuring Fee" has the meaning ascribed thereto in the Fee
Letter.
"Subsequent Borrowing" means a Borrowing which occurs on a
Subsequent Borrowing Date.
"Subsequent Borrowing Date" means each Business Day occurring
after the initial Borrowing Date on which the Borrower determines to request an
additional Borrowing from the Lender.
"Swap Documents" has the meaning assigned thereto in the
Sinking Fund Agreement.
"Take-Out Securitization" means a financing transaction
undertaken by the Borrower involving the direct or indirect sale or other
conveyance of Receivables related thereto to a Person that shall privately or
publicly sell securities, notes or certificates backed by such Receivables.
"Tangible Net Worth" means with respect to any Person, the
amount calculated in accordance with GAAP as (i) the consolidated net worth of
such Person and its consolidated subsidiaries, plus (ii) to the extent not
otherwise included in such consolidated net worth, unsecured subordinated Debt
of such Person and its consolidated subsidiaries the terms and conditions of
which are reasonably satisfactory to the Agent, plus (iii) to the extent not
considered an asset under GAAP, deferred sales arising from any such Person's
conversion to the cash basis of accounting for sales, minus (iv) the
consolidated intangibles of such Person and its consolidated subsidiaries,
including, without limitation, goodwill, trademarks, tradenames, copyrights,
patents, patent allocations, licenses and rights in any of the foregoing and
other items treated as intangibles in accordance with GAAP.
"Transaction Documents" means this Agreement, the Receivables
Purchase Agreement, the Lockbox Agreement, the Fee Letter, the Custodial
Agreement, the Assignment Agreements, the Bailee Agreements, the Sinking Fund
Account Securities Account Agreement, the Collection Account Securities Account
Agreement and the Sinking Fund Agreement and each document and instrument
related to any of the foregoing.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
35
"Unit" means an apartment, condominium unit, or other
structure that is affixed to real property at a Development and designed and
available, pursuant to applicable law, for use and occupancy as a vacation
residence by one (1) or more individuals, together with all related Common
Elements, if any, and Common Furnishings, if any, easements, and other
appurtenances thereto.
"United States" means the United States of America (including
the States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"Unmatured Event of Default" means any event that, if it
continues uncured, will, with lapse of time or notice or lapse of time and
notice, constitute an Event of Default.
"Upgraded" means the process by which an existing Pledged
Receivable is deemed to be paid in full in accordance with the Credit and
Collection Policy and a new Pledged Receivable in respect of an Interval
requiring higher monthly payments in replacement for the Interval relating to
such existing Pledged Receivable is created and the Obligor is required to make
increased monthly payments in respect of such new Pledged Receivable.
"Upgraded Receivable" means a Receivable that has been
upgraded.
"Weighted Average APR" means at any time an amount equal to
the weighted average (weighted solely based on the Outstanding Principal
Balances of the Eligible Receivables at such time) Coupon Rates set forth in the
Pledged Receivable at such time.
"Weighted Average FICO Score" means, at any time, an amount
equal to the weighted average (weighted solely based on the Outstanding
Principal Balances of the Eligible Receivables which were initially Pledged
hereunder at any time on or after the Amendment Date and which are included in
the Eligible Receivables Balance at such time) FICO Score of the Obligors
related to the Eligible Receivables which were initially Pledged hereunder at
any time on or after the Amendment Date and which are included in the Eligible
Receivables Balance at such time.
"Weighted Average Original Term" means at any time an amount
equal to the weighted average (weighted solely based on the Outstanding
Principal Balances of the Eligible Receivables at such time) of the original
number of monthly payments owed in respect of the Pledged Receivables at such
time.
"Yield" means with respect to any Fixed Period for any Loan
allocated to such Fixed Period, the product of:
YR x L x ED
---
360
where: YR = the Yield Rate for such Fixed Period;
36
L = the principal amount of Loans Outstanding
allocated to such Fixed Period; and
ED = the actual number of days elapsed during
such Fixed Period;
provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the maximum permitted by
applicable law and (ii) Yield shall not be considered paid by any distribution
if at any time such distribution is required to be rescinded by the Lender to
the Borrower or any other Person for any reason including, without limitation,
such distribution becoming void or otherwise avoidable under any statutory
provision or common law or equitable action, including, without limitation, any
provision of the Bankruptcy Code.
"Yield Rate" means with respect to any Fixed Period for any
Loan allocated to such Fixed Period:
(108) to the extent the Lender will be funding the applicable
Loan on the first day of such Fixed Period through the issuance of commercial
paper, a rate equal to the CP Rate for such Fixed Period; and
(109) to the extent the Lender will not be funding the
applicable Loan through the issuance of commercial paper, (x) a rate equal to
the Non-CP Rate for such Fixed Period or (y) such other rate as the Agent and
the Borrower shall agree to in writing.
SECTION 1.2 Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of
New York, and not specifically defined
herein, are used herein as defined in such Article 9.
SECTION 1.3 Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
ARTICLE II. THE RECEIVABLES FACILITY
SECTION 2.1 Borrowings. On the terms and conditions
hereinafter set forth, the Lender shall make loans ("Loans") to the Borrower
secured by Pledged Assets from time to time during the period from the Closing
Date until the earlier of the Early Amortization Commencement Date, the Put Date
or the Facility Maturity Date. Under no circumstances shall the Lender make any
Loan if, after giving effect to the Borrowing of such Loan, either (a) an Early
Amortization Event or an event that but for notice or lapse of time or both
would constitute an Early Amortization Event has occurred and is continuing or
(b) the aggregate Facility Amount hereunder would exceed the lesser of (i) the
Borrowing Limit minus the Discount Amount and (ii) the Capital Limit. In
addition to the foregoing, under no circumstances shall the Lender make
37
any Loan if, after giving effect to the Borrowing of such Loan, the aggregate
face amount of all commercial paper issued by the Lender to fund Loans hereunder
exceeds the Borrowing Limit.
SECTION 2.2 The Initial Borrowing and Subsequent Borrowings.
(a) Until the occurrence of the earlier of the Early Amortization Commencement
Date, the Put Date and the Facility Maturity Date, the Lender will make Loans on
any Business Day (but not more than once on any Business Day) at the request of
the Borrower, subject to and in accordance with the terms and conditions of
Sections 2.01 and 2.02 and subject to the provisions of Article III hereof.
After the Collection Date has occurred, the Lender and the Agent, in accordance
with their respective interests, shall re-assign and transfer to the Borrower,
for no consideration but at the sole expense of the Borrower, their respective
remaining interests in the Pledged Assets, free and clear of any Adverse Claim
resulting solely from an act by the Lender or the Agent, but without any other
representation or warranty, express or implied, by or recourse against the
Lender or the Agent.
(110) (i) The initial Borrowing and each Subsequent Borrowing
shall be made on at least two Business Day's irrevocable written notice from the
Borrower to the Agent (any such written notice, a "Notice of Borrowing"),
provided that such Notice of Borrowing is received by the Agent no later than
1:00 P.M. (
New York City time) on the Business Day of receipt. Each such Notice
of Borrowing shall specify (A) the aggregate amount of such Borrowing, which
shall be in an amount equal to or greater than $500,000, (B) the date of such
Borrowing, (C) the requested Fixed Period(s) for such Borrowing and the
allocations of Loans to each such requested Fixed Period and (D) the Eligible
Receivables to be Pledged in connection with such Borrowing (and upon such
Borrowing, such Receivables shall be Pledged Receivables hereunder). The Agent
shall notify the Borrower whether the duration of the Fixed Period(s) described
in such Notice of Borrowing is acceptable or, if not acceptable, the Agent shall
advise the Borrower of such Fixed Period(s) as may be acceptable. On the date of
each Borrowing, the Lender shall, upon satisfaction of the applicable conditions
set forth in Article III, make available to the Borrower on the applicable
Borrowing Date no later than 4:00 P.M. (
New York City time) in same day funds,
the amount of such Borrowing (net of amounts payable to or for the benefit of
the Lender) by payment into the account which the Borrower has designated in
writing.
(1) The Notice of Borrowing for each Borrowing delivered to
the Agent pursuant to this Section 2.02(b) shall be accompanied by a copy of the
Notice of Pledge (and the Receivables Schedule attached thereto) which was sent
to the Custodian pursuant to the terms of the Custodial Agreement in connection
with the pledge of Eligible Receivables to be made in connection therewith.
(111) The Loans shall bear interest at the Yield Rate.
(112) Subject to Section 2.15 and the other terms, conditions,
provisions and limitations set forth herein, the Borrower may borrow, repay or
prepay and reborrow Loans, on and after the Closing Date and prior to the
earlier to occur of the Facility Maturity Date, the Put Date and the Early
Amortization Commencement Date.
(113) Determinations by the Lender of the existence of any CP
Disruption Event,
38
or of the effect of any CP Disruption Event on its making or maintaining Loans
at the CP Rate, shall be conclusive absent manifest error.
(114) Determinations by the Lender of the existence of any
Eurodollar Disruption Event, or of the effect of any Eurodollar Disruption Event
on its making or maintaining Loans at the Adjusted Eurodollar Rate, shall be
conclusive absent manifest error.
(115) Only one Borrowing shall be permitted on any Business
Day.
SECTION 2.3 Facility Maturity Date. Any Loans outstanding on
the Facility Maturity Date shall mature on such date. Notwithstanding any other
provision hereof, on the Facility Maturity Date, the outstanding principal of
all outstanding Loans, if any, and all Yield and all Fees accrued thereon and
all other Obligations shall be immediately due and payable (and the Borrower
shall pay all such amounts immediately).
SECTION 2.4 Selection of Fixed Periods. (a) At all times
until the earlier to occur of the Early Amortization Commencement Date and the
Facility Maturity Date, the Borrower shall, subject to the Agent's and the
Lender's approval and the limitations described below, request Fixed Periods and
allocations of a portion of the outstanding Loans to each selected Fixed Period,
so that all such outstanding Loans are at all times allocated to one or more
Fixed Periods. Subject to Section 2.04(c), the Yield Rate to apply to all Loans
outstanding shall be the CP Rate. The requested initial Fixed Period applicable
to any new Loan arising as a result of a Borrowing shall be requested in the
Notice of Borrowing which shall be delivered in connection with the applicable
Subsequent Borrowing. Subject to the next sentence of this Section 2.04, each CP
Rollover Fixed Period shall commence on the last day of the immediately
preceding Fixed Period, and the duration of such CP Rollover Fixed Period shall
be such as the Borrower shall request in a Commercial Paper Remittance Report
and the Agent shall approve; provided that such Commercial Paper Remittance
Report was received by the Agent not later than 12:30 P.M. (
New York City time)
on a day at least one Business Day prior to such last day, except that if the
Agent shall not have received such report before 12:30 P.M. on such day or the
Agent and the Borrower shall not have so mutually agreed before 2:00 P.M. (
New
York City time) on such day, such CP Rollover Fixed Period shall be one day and
the applicable Yield Rate shall be the CP Rate; provided that, notwithstanding
the foregoing, upon the occurrence of any Early Amortization Event, the
applicable Yield Rate for all Fixed Periods in effect at the time of such
occurrence shall convert to, and for all Fixed Periods that come into effect
thereafter (but prior to the occurrence of any Event of Default) shall be, the
Early Amortization Funding Rate and provided further that, notwithstanding the
foregoing, upon the occurrence and during the continuance of any Event of
Default, the Lender shall cease to issue commercial paper notes to fund and
maintain Loans hereunder and the applicable Yield Rate for all Fixed Periods in
effect at the time of such occurrence shall convert to, and for all Fixed
Periods that come into effect during the continuance of any Event of Default
shall be, the Default Funding Rate. Any Fixed Period (other than a Fixed Period
with respect to Loans which accrue Yield at the Non-CP Rate) which would
otherwise end on a day which is not a Business Day shall be extended to the next
succeeding Business Day. Any Fixed Period which commences before the Early
Amortization Commencement Date and would otherwise end on a date occurring after
the Early Amortization
39
Commencement Date shall end on the Early Amortization Commencement Date. On and
after the Early Amortization Commencement Date, the Agent shall have the right
to allocate outstanding Loans, if any, to Fixed Periods of such duration as
shall be selected by the Agent. The Lender shall, on the first day of each Fixed
Period with respect to Loans which accrue Yield at the CP Rate, notify the Agent
of the Yield Rate for such Loans.
(116) References herein to Loans which accrue Yield at the
Non-CP Rate being allocated to a Fixed Period shall mean all such Loans that are
outstanding during such Fixed Period or a portion thereof.
(117) Each of the Lender and the Agent shall make reasonable
efforts to allow Loans to accrue Yield at the CP Rate; provided that neither the
Lender nor the Agent shall have any obligation to allow Loans to accrue (or
continue to accrue) Yield at the CP Rate upon the occurrence of a CP Disruption
Event or upon the occurrence of an Event of Default or Early Amortization Event
or event or circumstance which, with the giving of notice or the passage of
time, or both, would constitute an Event of Default or Early Amortization Event.
SECTION 2.5 Remittance Procedures. The Servicer, as agent for
the Agent and the Lender, shall instruct the Agent's Bank, and the Agent may
instruct the Agent's Bank, to apply funds on deposit in the Collection Account
as described in this Section 2.05, provided, however, that if the Agent's Bank
receives a notice from the Lockbox Bank (so long as the Lockbox Bank shall be
The Chase Manhattan Bank) that the Lockbox Bank has been unable to recover the
amount of any Permitted Debits (as defined in the Lockbox Agreement with The
Chase Manhattan Bank) from the Lockbox Account or that the Lockbox Account
contains insufficient available balances at the time of any attempted Permitted
Debit (the amount of any such unrecovered Permitted Debits, the "Unrecovered
Permitted Debits"), the Agent's Bank shall disburse to such Lockbox Bank within
15 days of the receipt of such notice, from amounts then on deposit in the
Collection Account, the amount of any such Unrecovered Permitted Debits (without
any interest accrued thereon) prior to the disbursement by the Agent's Bank of
any of the amounts provided for in Section 2.05.
(118) Yield and Liquidation Fees. On each Business Day
(including any Remittance Date), the Servicer shall, and the Agent may, direct
the Agent's Bank to set aside in the Collection Account for transfer at the
further direction of the Lender or the Agent or any other duly authorized agent
of the Lender (whether on such day or on a subsequent day) collected funds in an
amount equal to Yield through such day on the Loans not so previously set aside
and the amount of any unpaid Liquidation Fees owed to the Lender on such day. On
the last day of each Fixed Period, the Agent shall notify the Servicer of, and
direct the Agent's Bank to pay, such collected funds set aside in respect of
Yield pursuant to this Section 2.05(a) to the Lender (or the designee of the
Lender) in respect of payment of accrued Yield for such Fixed Period; provided,
however, that (i) in the case of any Loan accruing Yield at the CP Rate, the
portion of such Yield attributable to the Applicable Margin, and (ii) in the
case of any Loan accruing Yield at the Non-CP Rate, all such Yield, shall remain
set aside in the Collection Account until the next Remittance Date, at which
time, it shall be disbursed pursuant to Section 2.05(c). On any Business Day on
which an amount is set aside in respect of Liquidation Fees pursuant to this
Section 2.05(a), the
40
Agent shall direct the Agent's Bank to pay such funds to the Lender in payment
of such Liquidation Fees.
(119) Fixed Period Loan Principal Repayment. The Servicer
shall, and the Agent may, on the last day of each Fixed Period that is not a
Remittance Date, direct the Agent's Bank to transfer collected funds held by the
Agent's Bank in the Collection Account on such date, to pay the Agent for the
account of the Lender in payment of the outstanding principal amount of all
Loans allocated to such Fixed Period, an amount equal to the lesser of (i) the
amount of such collected funds held in the Collection Account or (ii) the
aggregate outstanding principal amount of Loans allocated to such Fixed Period
or, if no Early Amortization Event shall have occurred and be continuing, if
lower, an amount equal to the excess, if any, of the aggregate outstanding
principal amount of Loans immediately prior to such distribution over the
Capital Limit (after giving effect to any Borrowing made on such date and any
distributions of amounts on deposit in the Collection Account made on such
date).
(120) Remittance Date Transfers from Collection Account. The
Servicer shall and the Agent may, on each Remittance Date, direct the Agent's
Bank to transfer collected funds held by the Agent's Bank in the Collection
Account (in excess of the aggregate amounts (except amounts described in clauses
(B) and (C) of sub-paragraph (ii) below) set aside and/or paid on such
Remittance Date pursuant to Section 2.05(a)), in the following amounts and
priority:
(1) to the Custodian in an amount equal to the Custodian's
Fees which are accrued and unpaid as of the last day of the preceding
month (and expenses of the Custodian which are reimbursable under the
terms of the Custodial Agreement and are unpaid as of the last day of
the preceding month);
(2) to the Agent for the account of the Lender in an amount
equal to (and for the pro rata payment of) (A) the Fees which are due
and payable on such Remittance Date pursuant to the terms of the Fee
Letter, (B) any Yield on any Loan accruing Yield at the CP Rate which
is attributable to the Applicable Margin and which is accrued and
unpaid as of the last day of the preceding month and (C) any Yield on
any Loan accruing Yield at the Non-CP Rate which is accrued and unpaid
as of the last day of the preceding month;
(3) (A) at any time after the occurrence of a Servicer Default
and the appointment of the Backup Servicer as the Servicer hereunder,
to the Backup Servicer in an amount equal to the sum of (1) the Backup
Servicer's Fees which are accrued and unpaid as of the last day of the
preceding month, (2) any documented expenses and allocated cost of
personnel reasonably incurred by the Backup Servicer in connection with
a transfer of servicing from the Servicer to the Backup Servicer as the
successor Servicer (up to a cumulative limit of $50,000) and (3) the
reasonable expenses incurred by the Backup Servicer in connection with
(a) the foreclosure and disposition of any Interval (at the direction
of the Agent) in excess of the costs associated with taking back the
deed in respect of such Interval in lieu of foreclosure and (b)
enforcing or collecting upon the Acceptable Title Policies in
accordance with Section 6.04(b) and (B) at any time prior to
41
the occurrence of a Servicer Default and the appointment of the Backup
Servicer as the Servicer hereunder, to the Backup Servicer in an amount
equal to the Standby Backup Servicer's Fees which are accrued and
unpaid as of the last day of the preceding month;
(4) to the Servicer (if the Servicer is SRI or any Affiliate
thereof), the amount of any Servicer Advances not previously reimbursed
to the Servicer;
(5) to the Agent for the account of the Lender in an amount
equal to the aggregate amount of all other obligations of the Borrower
then due to the Lender, the Agent or any Affected Party hereunder
(other than those specified in clauses (vi) and (xi) below);
(6) to the Agent for the account of the Lender in an amount
equal to the Borrowing Base Deficiency (if any) as of such Remittance
Date;
(7) to the Sinking Fund Account in the amount of any
Additional Deposit required pursuant to Section 2.1(d) of the Sinking
Fund Account Agreement;
(8) without limiting the obligation of the Borrower under the
Sinking Fund Agreement, to the Agent for the account of the Agent in an
amount equal to (and for repayment of) any funds expended by the Agent
to purchase any Purchased Rate Caps which the Borrower failed to
purchase in breach of its obligation to do so under the terms of the
Sinking Fund Agreement;
(9) without limiting the obligation of the Borrower under the
Sinking Fund Agreement and at the election of the Agent, to the
applicable counterparty (as set forth in the Sinking Fund Agreement) in
an amount equal to (and for payment of) any Purchased Rate Caps which
the Borrower failed to purchase in breach of its obligation to do so
under the terms of the Sinking Fund Agreement;
(10) to the Servicer (if the Servicer is SRI or any Affiliate
thereof) in an amount equal to the Servicing Fee which is accrued and
unpaid as the last day of the preceding month;
(11) on or after the occurrence of the Early Amortization
Commencement Date, to the Agent for the account of the Lender for the
repayment of Loans outstanding in an amount equal to the lesser of (i)
all remaining funds in the Collection Account and (ii) an amount
necessary to repay the outstanding principal amount of all Loans in
full; and
(12) to the Borrower, any remaining amounts.
Upon its receipt of funds pursuant to clauses (i), (v), (vi) and (xi), the Agent
shall apply such funds as directed by the Lender or as otherwise provided in
this Agreement.
(121) Transfers from Collection Account Related to the Sinking
Fund
42
Agreement. The Servicer (with the approval of the Agent) shall, and if the
Servicer fails to do so the Agent may, on any Borrowing Date, direct the Agent's
Bank to transfer collected funds held by the Agent's Bank in the Collection
Account in the following amounts and priority:
(1) to the Sinking Fund Account in the amount of any
Additional Deposit required pursuant to Section 2.1(d) of the Sinking
Fund Account Agreement;
(2) without limiting the obligation of the Borrower under the
Sinking Fund Agreement, to the Agent for the account of the Agent in an
amount equal to (and for repayment of) any funds expended by the Agent
to purchase any Purchased Rate Caps which the Borrower failed to
purchase notwithstanding its obligation to do so under the terms of the
Sinking Fund Agreement;
(3) without limiting the obligation of the Borrower under the
Sinking Fund Agreement and at the election of the Agent, to the
applicable counterparty (as set forth in the Sinking Fund Agreement) in
an amount equal to (and for payment of) any Purchased Rate Caps which
the Borrower failed to purchase notwithstanding its obligation to do so
under the terms of the Sinking Fund Agreement; and
(4) without limiting the obligation of the Borrower under
Section 3.2 of the Sinking Fund Agreement, to the Swap Counterparty (as
defined in the Sinking Fund Agreement), in an amount equal to (and for
payment of) any Swap Obligations (as defined in the Sinking Fund
Agreement).
(122) Borrower Deficiency Payments. Notwithstanding anything
to the contrary contained in this Section 2.05 or in any other provision in this
Agreement, if, on any day prior to the Collection Date, the Facility Amount
shall exceed the lesser of (i) the Borrowing Limit minus the Discount Amount and
(ii) the Capital Limit, then the Borrower shall remit to the Agent, prior to any
Borrowing and in any event no later than the close of business of the Agent on
such day (or if such day is not a Business Day, no later than the close of
business of the Agent on the next succeeding Business Day), a payment (to be
applied by the Agent to repay Loans selected by the Agent, in its sole
discretion) in such amount as may be necessary to reduce the Facility Amount to
an amount less than or equal to the lesser of (x) the Borrowing Limit minus the
Discount Amount and (y) the Capital Limit.
(123) Instructions to the Agent's Bank. All instructions and
directions given to the Agent's Bank by the Servicer or the Agent pursuant to
this Section 2.05 shall be in writing (including instructions and directions
transmitted to the Agent's Bank by telecopy) and such written instructions and
directions shall be delivered with a written certification that such
instructions and directions are in compliance with the provisions of this
Section 2.05. A copy of all instructions and directions given to the Agent's
Bank by the Servicer pursuant to this Section 2.05, shall be immediately
transmitted to the Agent by telecopy. A copy of all instructions and directions
given to the Agent's Bank by the Agent pursuant to this Section 2.05, shall be
immediately transmitted to the Servicer and the Borrower by telecopy.
43
SECTION 2.6 Payments and Computations, Etc. (a) All amounts
to be paid or deposited by the Borrower or the Servicer hereunder shall be paid
or deposited in accordance with the terms hereof no later than 1:00 P.M. (
New
York City time) on the day when due in lawful money of the United States in
immediately available funds to the Collection Account or such other account as
is designated by the Lender. The Borrower shall, to the extent permitted by law,
pay to the Agent interest on all amounts not paid or deposited when due
hereunder (whether owing by the Borrower or the Servicer) at the Default Funding
Rate, payable on demand; provided, however, that such interest rate shall not at
any time exceed the maximum rate permitted by applicable law. Such interest
shall be for the account of, and distributed by the Agent to, the Lender. Any
Obligation hereunder shall not be reduced by any distribution of any portion of
Collections if at any time such distribution is rescinded or returned by the
Lender to the Borrower or any other Person for any reason. All computations of
interest and all computations of Yield, Liquidation Fee and other fees hereunder
(including, without limitation, the Fees, the Backup Servicer's Fee and the
Servicing Fee) shall be made on the basis of a year of 360 days for the actual
number of days (including the first but excluding the last day) elapsed.
(124) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of Yield, interest or any fee payable
hereunder, as the case may be.
(125) If any Borrowing requested by the Borrower and approved
by the Lender and the Agent pursuant to Section 2.02 or any selection of any
Fixed Period requested by the Borrower and approved by the Agent pursuant to
Section 2.04 is not for any reason whatsoever, except as a result of the gross
negligence or wilful misconduct of the Lender and/or the Agent, made or
effectuated, as the case may be, on the date specified therefor, the Borrower
shall indemnify the Lender against any loss, cost or expense incurred by the
Lender (other than any such loss, cost or expense solely due to the gross
negligence or willful misconduct of the Lender or the Agent), including, without
limitation, any loss (including cost of funds and out-of-pocket expenses), cost
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Lender to fund Loans or maintain Loans during such
Fixed Period.
SECTION 2.7 Fees. (a) The Borrower shall pay the Lender
(either directly or through the Agent) certain fees (the "Fees") in the amounts
and on the dates set forth in a fee letter (the "Fee Letter"), dated the Closing
Date, among SRI, the Borrower, the Agent, and the Lender.
(126) All of the Fees payable pursuant to this Section 2.07
(other than the "Structuring Fee" as defined in the Fee Letter) shall be payable
solely from amounts available for application pursuant to, and subject to the
priority of payment set forth in, Section 2.05.
SECTION 2.8 Increased Costs; Capital Adequacy. (a) If, due to
either (i) the introduction of or any change (including, without limitation, any
change by way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
44
(whether or not having the force of law), there shall be any increase in the
cost to the Agent, the Lender, or any Affiliate, successor or assign thereof
(each of which shall be an "Affected Party") of agreeing to make or making,
funding or maintaining any Loan, as the case may be, the Borrower shall, from
time to time, upon written demand by such Affected Party (with a copy to the
Agent), immediately pay to such Affected Party (as a third party beneficiary, in
the case of an Affected Party that is not also the Lender hereunder), additional
amounts sufficient to compensate such Affected Party for such increased costs.
(127) If either (i) the introduction of or any change in or in
the interpretation of any law, guideline, rule or regulation, directive or
request or (ii) the compliance by any Affected Party with any law, guideline,
rule, regulation, directive or request from any central bank or other
governmental authority or agency (whether or not having the force of law),
including, without limitation, compliance by an Affected Party with any request
or directive regarding capital adequacy, has or would have the effect of
reducing the rate of return on the capital of any Affected Party as a
consequence of its obligations hereunder or arising in connection herewith to a
level below that which any such Affected Party could have achieved but for such
introduction, change or compliance (taking into consideration the policies of
such Affected Party with respect to capital adequacy) by an amount deemed by
such Affected Party to be material, then from time to time, within ten days
after demand by such Affected Party (which demand shall be accompanied by a
statement setting forth the basis of such demand), such Affected Party shall be
paid (from Collections pursuant to, and subject to the priority of payment set
forth in, Section 2.05) such additional amounts as will compensate such Affected
Party for such reduction.
(128) In determining any amount provided for in this Section
2.08, the Affected Party may use any reasonable averaging and attribution
methods. Any Affected Party making a claim under this Section 2.08 shall submit
to the Borrower a certificate setting forth in reasonable detail the
computations of such additional or increased costs, which certificate shall be
conclusive absent demonstrable error.
(129) If, as a result of any event or circumstance similar to
those described in Section 2.08(a) or 2.08(b), any Affected Party (that is an
Issuer) is required to compensate a bank or other financial institution
providing liquidity support, credit enhancement or other similar support to such
Affected Party in connection with this Agreement, then, upon demand by such
Affected Party, the Borrower shall pay to such Affected Party such additional
amount or amounts as may be necessary to reimburse such Affected Party for any
amounts paid by it.
SECTION 2.9 Collateral Assignment of Agreements. The Borrower
hereby collaterally assigns to the Agent, for the benefit of the Lender, all of
the Borrower's right, title and interest in, to and under the Receivables
Purchase Agreement and all Certificates of Beneficial Interest, all Assignment
Documents, all Pledged Receivables, all Mortgages, and all Acceptable Title
Policies related to any Pledged Receivable, all other agreements, documents and
instruments comprising Collateral or Applicable Underlying Collateral and all
other agreements, documents and instruments evidencing, securing or guarantying
any Pledged Receivable and all other agreements, documents and instruments
related to any of the foregoing (the "Assigned Documents"). The Borrower
confirms and agrees that the Agent (or any designee thereof) shall
45
have, following an Event of Default or an Early Amortization Event, the sole
right to enforce the Borrower's rights and remedies under each Assigned
Document, but without any obligation on the part of the Agent, the Lender or any
of their respective Affiliates to perform any of the obligations of the Borrower
under any such Assigned Document. In addition, each of the Servicer and the
Borrower confirms and agrees that the Servicer or the Borrower will send to the
Agent a notice of (i) any breach of any representation, warranty, agreement or
covenant under any such Assigned Document or (ii) any event or occurrence that,
upon notice to SRI, or upon the passage of time or both, would constitute such a
breach. The Borrower further confirms and agrees that such assignment to the
Agent shall terminate upon the Collection Date.
SECTION 2.10 Grant of a Security Interest. To secure the
prompt and complete payment when due of the Obligations and the performance by
the Borrower of all of the covenants and obligations to be performed by it
pursuant to this Agreement, the Borrower hereby (i) collaterally assigns and
pledges to the Agent, on behalf of the Lender (and its successors and assigns)
and (ii) grants a security interest to the Agent, on behalf of the Lender (and
its successors and assigns), in all of the following property and interests in
property, whether tangible or intangible and whether now owned or existing or
hereafter arising or acquired and wheresoever located (collectively, the
"Pledged Assets") and all of the Borrower's right, title and interest in, to and
under the Pledged Assets:
(130) all Receivables purchased by (or purportedly purchased
by) the Borrower under the Receivables Purchase Agreement (collectively, the
"Pledged Receivables"), together with all Collateral and all Related Security
related to the Pledged Receivables, all Collections and other monies due and to
become due to the Borrower in respect of any Pledged Receivable and any security
therefor received on or after the date such Pledged Receivables were purchased
by (or purportedly purchased by) the Borrower under the Receivables Purchase
Agreement;
(131) the Assigned Documents, including in each case, without
limitation, all monies due and to become due to the Borrower under or in
connection therewith, and all legal opinions delivered or rendered in connection
with any item included in clause (a) above or this clause (b) or any transaction
related to any of the foregoing;
(132) the Lockbox, the Lockbox Account, the Collection
Account, the Sinking Fund Account, and all other bank and similar accounts
relating to the collection of Pledged Receivables (whether now existing or
hereafter established) and all funds held therein or in such other accounts, and
all investments in and all income from the investment of such funds in the
Lockbox Account (if any), the Collection Account, the Sinking Fund Account, and
such other accounts;
(133) the Records relating to any Pledged Receivables;
(134) all UCC financing statements filed by the Borrower
against SRI under or in connection with the Receivables Purchase Agreement;
(135) the Sinking Fund Agreement;
46
(136) all Purchased Rate Caps;
(137) all Swap Documents;
(138) all Liquidation Proceeds relating to any Pledged
Receivables;
(139) all Acceptable Environmental Reports and similar
environmental reports certified or assigned to the Borrower which are related to
Pledged Receivables; and
(140) all proceeds of the foregoing property described in
clauses (a) through (j) above, including interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for or on account of the sale or other
disposition of any or all of the then existing Pledged Assets.
SECTION 2.11 Evidence of Debt. The Lender shall maintain an
account or accounts evidencing the indebtedness of the Borrower to the Lender
resulting from each Loan owing to the Lender from time to time, including the
amounts of principal and interest payable and paid to the Lender from time to
time hereunder. The entries made in such account(s) of the Lender shall be
conclusive and binding for all purposes, absent manifest error.
SECTION 2.12 Survival of Representations and Warranties;
Repayment Obligations. It is understood and agreed that the representations and
warranties set forth in Section 4.01 are made on the Closing Date, on the
Amendment Date, at the time of the initial Borrowing, and on each Subsequent
Borrowing Date and Remittance Date thereafter. If, as a result of the breach of
any of the representations and warranties in Section 4.01 or for any other
reason there exists or would exist a Borrowing Base Deficiency, the Borrower
shall promptly (and, in any case, within one Business Day) prepay to the Agent,
for the account of the Lender, the portion of the Loans as is necessary to cure
such Borrowing Base Deficiency. The Borrower shall promptly reimburse the Agent
and the Lender for any reasonable out-of-pocket expenses incurred by the Agent
and the Lender, respectively, in respect of any such prepayment including,
without limitation, Liquidation Fees.
SECTION 2.13 Release of Pledged Receivables. (a) In connection
with the consummation of any Take-Out Securitization, any pay off by the related
Obligor or liquidation by the Servicer of any Receivable, or any required
repurchase by SRI of Pledged Receivables pursuant to the Receivables Purchase
Agreement, the Borrower shall be entitled to obtain the release of any Pledged
Receivable subject to any such transaction, pay off, liquidation or repurchase
at any time after the Closing Date by depositing into an account designated by
the Agent the Release Price therefor on any Remittance Date and upon such
deposit the Agent shall execute and deliver, within a reasonable period of time
and at the sole expense of the Borrower, such documents as the Borrower
determines in its reasonable discretion to be necessary to effect such release;
provided, that the foregoing release shall only be available if, at the time of
the request for such release and after giving effect thereto and the application
of the proceeds thereof in accordance with the terms hereof, there shall not be
a Borrowing Base Deficiency, an Early
47
Amortization Event or a default under any Transaction Document. The Borrower
shall notify the Agent of any Release Price to be paid pursuant to this Section
2.13(a) on the Business Day on which such Release Price shall be paid specifying
the Pledged Receivables to be released and the Release Price.
(141) The Borrower shall be entitled to obtain the release of
any Defaulted Receivable at any time after the Closing Date and the Agent shall
execute and deliver, within a reasonable period of time and at the sole expense
of the Borrower, such documents as the Borrower determines in its reasonable
discretion to be necessary to effect such release; provided, that such release
shall only be available if, at the time of the request for such release and
after giving effect to any such release, there shall not be a Borrowing Base
Deficiency, an Early Amortization Event or a default under any Transaction
Document.
SECTION 2.14 Treatment of Amounts Paid by the Borrower.
Amounts paid by the Borrower pursuant to Section 2.13(a) on account of Pledged
Receivables shall be treated as payments on Pledged Receivables hereunder.
SECTION 2.15 Termination. The Borrower shall not terminate
this Agreement or any other Transaction Document or reduce the Borrowing Limit,
in each instance, prior to the Facility Maturity Date without the Agent's prior
written consent, which consent may be withheld in the Agent's sole discretion.
SECTION 2.16 Lockbox Arrangements. No later than the date
that any Receivable is Pledged hereunder, the Servicer shall (i) direct and
otherwise cause the Obligor obligated under such Receivable to mail payments of
all monies due under such Receivable to the Lockbox and (ii) to cause the
Lockbox Bank to (A) deposit on each Business Day all payments of Collections
received in the Lockbox into the Lockbox Account and (B) to remit all
Collections deposited into the Lockbox Account to the Collection Account within
one (1) Business Day of the deposit of such Collections into the Lockbox
Account. Neither SRI, the Servicer nor the Borrower shall change any payment
directions referred to in the previous sentence without the prior written
consent of the Agent.
SECTION 1.2 Put of Pledged Assets.
(2) On the Put Date, the Agent, on behalf of the Lender (and
its successors and assigns), shall have the right, in its sole discretion, to
put, transfer and assign to the Borrower all of the Agent's and Lender's right,
title and interest in and to all of the Pledged Assets (the "Put"). On the Put
Date, the Borrower shall pay to the Agent, for the benefit of the Lender, an
amount (the "Put Payment") equal to the outstanding principal of all outstanding
Loans, if any, and all Yield and all Fees accrued thereon and all other
Obligations due and payable. The Borrower hereby agrees to accept such Put on
the Put Date and to pay the Put Payment on such Put Date to an account
designated by the Agent.
(3) Upon the indefeasible payment by the Borrower to the Agent
of the Put Payment, all such Loans, Yield and Fees accrued thereon and other
Obligations due and payable
48
shall be deemed paid in full, and all right, title and interest of the Agent and
the Lender in, to and under such Pledged Assets shall terminate and revert to
the Borrower and the right, title and interest of the Agent and the Lender in
such Pledged Assets shall thereupon cease, terminate and become void; and, upon
the request of the Borrower, its successors or assigns, the Agent, if required,
shall execute and deliver, within a reasonable period of time and at the sole
expense of the Borrower, such UCC-3 financing statements and releases as the
Borrower determines in its reasonable discretion to be necessary to effect such
release.
(4) This Agreement shall survive the Put Date; provided, that,
notwithstanding any other provision hereof, the Lender shall have no further
obligation to make any additional Loans on or after the Put Date.
ARTICLE III. CONDITIONS OF LOANS
SECTION 3.1 Conditions Precedent to Initial Borrowing. The
initial Borrowing hereunder on the Closing Date was subject to the conditions
precedent that:
(5) all acts and conditions (including, without limitation,
the obtaining of any necessary regulatory approvals and the making of any
required filings, recordings or registrations) required to be done and performed
and to have happened prior to the execution, delivery and performance of the
Original RLSA and all related documents and to constitute the same legal, valid
and binding obligations, enforceable in accordance with their respective terms,
were done and performed and happened in due and strict compliance with all
applicable laws;
(6) the Agent received on or before the date of such Borrowing
the items listed in Schedule I, each in form and substance satisfactory to the
Agent and the Lender; and
(7) the Sinking Fund Account Agreement was duly executed by
each of the parties thereto.
SECTION 3.2 Conditions Precedent to All Borrowings. Except
as otherwise expressly provided below, each Borrowing (including the initial
Borrowing) by the Borrower from the Lender shall be subject to the further
conditions precedent that:
(8) With respect to any such Borrowing (other than the initial
Borrowing), on or prior to the date of such Borrowing, the Servicer shall have
delivered to the Agent, in form and substance satisfactory to the Agent, the
most recent Monthly Remittance Report required by the terms of Section 6.11(b);
(9) With respect to such Borrowing, at least one Business Day
prior to the date of such Borrowing, the Servicer shall have delivered to the
Agent, in form and substance satisfactory to the Agent, a certificate signed by
an officer of the Borrower having responsibility for financial matters of the
Borrower which shall demonstrate that, after giving effect to such Borrowing
requested by the Borrower, the Facility Amount will not exceed the lesser of the
49
(i) Borrowing Limit minus the Discount Amount and (ii) the Capital Limit;
(10) On the Borrowing Date of such Borrowing, the following
statements shall be true, and the Borrower by accepting the amount of such
Borrowing shall be deemed to have certified that:
(1) the representations and warranties contained in Section
4.01 are true and correct in all material respects, before and after
giving effect to the Borrowing to take place on such Borrowing Date and
to the application of proceeds therefrom, on and as of such day as
though made on and as of such date;
(2) no event has occurred and is continuing, or would result
from such Borrowing, which constitutes an Early Amortization Event
hereunder, or an event that but for notice or lapse of time or both
would constitute an Early Amortization Event;
(3) on and as of such day, after giving effect to such
Borrowing, the Facility Amount does not exceed the lesser of (x) the
Borrowing Limit minus the Discount Amount and (y) the Capital Limit;
(4) (A) the Borrower has delivered to the Agent a timely copy
of the Notice of Borrowing and the Notice of Pledge (together with the
attached Receivables Schedule) pursuant to Section 2.02, each
appropriately completed and executed by the Borrower, (B) (1) the
Borrower has delivered or caused to have been delivered to the
Custodian the Notice of Pledge (together with the attached Receivables
Schedule) related to the Receivables being Pledged hereunder on such
Borrowing Date and the Receivable File with respect to each Pledged
Receivable being Pledged hereunder on such Borrowing Date, (2) the
Pledged Receivables being Pledged hereunder on such Borrowing Date are
duly endorsed and duly assigned by any Previous Lender to SRI, by SRI
to the Borrower and duly endorsed and duly assigned by the Borrower to
the Agent and (3) the Mortgages related to each Receivable being
Pledged hereunder on such Borrowing Date, assignments thereof by any
Previous Lender to SRI, by SRI to the Borrower and assignments thereof
by the Borrower to the Agent have all been duly recorded in the
appropriate recording offices, and (C) the Custodian has delivered to
the Agent by 11:30 A.M. (
New York City time) on such Borrowing Date, a
Collateral Receipt from the Custodian confirming that, inter alia, the
Receivable Files received on such Borrowing Date conform with the
Receivables Schedule delivered to the Custodian and the Agent on such
Borrowing Date;
(5) all terms and conditions of the Receivables Purchase
Agreement required to be satisfied in connection with the transfer and
sale of each Receivable being Pledged hereunder on such Borrowing Date,
including, without limitation, the perfection of the Borrower's
interests therein shall have been satisfied in full, and all filings
(including, without limitation, real property and UCC filings) required
to be made by any Person and all actions required to be taken or
performed by any Person in any jurisdiction to give the Agent, for the
benefit of the Lender, a first priority perfected security interest in
such Receivables and the proceeds thereof shall have been made, taken
or performed;
50
(6) the Borrower shall have taken all steps necessary under
all applicable law in order to cause a valid, subsisting and
enforceable first priority security interest to exist in its favor in
the Applicable Underlying Collateral and all other Collateral related
to each Receivable (and the proceeds thereof) being Pledged hereunder
on such Borrowing Date and immediately prior to the Pledge of such
Receivable by the Borrower to the Agent (for the benefit of the
Lender), there shall have existed in favor of the Borrower as secured
party, a valid, subsisting and enforceable first priority perfected
lien in the Applicable Underlying Collateral and all other such
Collateral related to such Receivable (and the proceeds thereof), and
such security interest is and shall be prior to all other liens upon
and security interests in such the Applicable Underlying Collateral and
other such Collateral (and the proceeds thereof) that now exist or may
hereafter arise or be created;
(7) the Borrower shall have taken all steps necessary under
all applicable law in order to cause a valid, subsisting and
enforceable first priority ownership interest to exist in its favor in
the Pledged Receivable (and the proceeds thereof) related to any
Receivable being Pledged hereunder on such Borrowing Date and
immediately prior to the Pledge of such Receivable by the Borrower to
the Agent (for the benefit of the Lender), there shall have existed in
favor of the Borrower as secured party, a valid, subsisting and
enforceable first priority ownership interest in the Pledged Receivable
(and the proceeds thereof) related to any such Receivable which is and
free of all liens and security interests;
(8) the Borrower shall have taken all steps necessary under
all applicable law in order to cause to exist in favor of the Agent,
for the benefit of the Lender, a valid, subsisting and enforceable
first priority perfected lien in (A) the Borrower's perfected security
interest in the Applicable Underlying Collateral and all other
Collateral (other than the Pledged Receivables) related to each
Receivable (and the proceeds thereof) being Pledged hereunder on such
Borrowing Date and (B) the Pledged Receivables and any other Pledged
Assets related to each Receivable (and the proceeds thereof) being
Pledged hereunder on such Borrowing Date, and upon the Pledge of such
Receivable by the Borrower to the Agent (for the benefit of the
Lender), there shall exist in favor of the Agent (for the benefit of
the Lender) as secured party, a valid, subsisting and enforceable first
priority perfected security interest in (A) the Borrower's perfected
security interest in the Applicable Underlying Collateral and all other
Collateral (other than the Pledged Receivables) related to each
Receivable (and the proceeds thereof) being Pledged hereunder on such
Borrowing Date and (B) the Pledged Receivables and any other Pledged
Assets related to each Receivable (and the proceeds thereof) being
Pledged hereunder on such Borrowing Date, and such security interest is
and shall be prior to all other liens upon and security interests
therein that now exist or may hereafter arise or be created; and
(9) each of (A) a Non-Disturbance Arrangement and (B) an
Opinion of Counsel that such Non-Disturbance Arrangement shall remain
in full force and effect notwithstanding the occurrence of a Bankruptcy
Event with respect to SRI, the ONS Trust or any of their respective
Affiliates, remains in effect in respect of the Pledged
51
Receivables relating to each ONS Interval;
(11) All Mortgages related to all Receivables (which were
originated in connection with the sales of Fee Simple Intervals) being Pledged
hereunder on such Borrowing Date and collateral assignments thereof from SRI to
the Borrower, and from the Borrower to the Agent, for the benefit of the Lender
shall each have been duly recorded or registered in the Applicable Jurisdiction
in accordance with all Applicable Laws. All such Mortgages must have evidence
thereon of payment of all required documentary stamps and intangible taxes, if
any are required;
(12) The Borrower has delivered or caused to have been
delivered to the Custodian the Notice of Pledge (together with the attached
Receivables Schedule) related to the Receivables being Pledged hereunder on the
related Borrowing Date and the Receivable File with respect to each Pledged
Receivable being Pledged hereunder on such Borrowing Date;
(13) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental body,
agency or instrumentality shall prohibit or enjoin, the making of such Loans by
the Lender in accordance with the provisions hereof;
(14) After giving effect to such Borrowing, the Sinking Fund
Account shall be funded in the amount required under the Sinking Fund Account
Agreement;
(15) The following statements shall be true:
(1) The Borrower has received no notice of any asserted or
threatened defense, offset, counterclaim, discount, or allowance in
respect of any Pledged Receivables being Pledged hereunder on such
Borrowing Date; and
(2) The Borrower has received such additional items as the
Agent shall reasonably require, including, without limitation, an aging
report and delinquency reports of any Pledged Receivables being Pledged
hereunder on such Borrowing Date; and
(16) On the date of each Borrowing that is secured, in part or
in whole, by Pledged Receivables relating to Units located at a particular
Development, the following conditions shall have been satisfied:
(1) Title Policies. If such Borrowing is secured, in part or
in whole, by Pledged Receivables related in whole or in part to Fee
Simple Intervals relating to Units located at such Development, the
Agent, for the benefit of the Lender, has been delivered an Acceptable
Title Policy.
(2) Background Documents. The Borrower and the Servicer shall
have received and approved each of the following:
(1) Subdivision Plat. The approved and recorded
subdivision
52
plat for all phases of the Developments in which the
Encumbered Intervals are located.
(2) Environmental Report. An Acceptable Environmental
Report covering such Development, including all real property
which constitutes part of such Development.
(3) Evidence of Insurance. The Borrower and the Servicer have
received policies or binders therefor (provided that the Agent shall
not be deemed to have knowledge of the contents thereof) of all
Acceptable Insurance Policies and endorsements thereto relating to such
Development, including but not limited to the Encumbered Intervals. In
addition, Borrower and the Servicer have received written evidence that
SRI has obtained and is maintaining or has caused the Applicable
Timeshare Owners' Association to obtain and maintain all policies of
insurance required by and in accordance with the terms of the Credit
and Collection Policy hereof and all additional policies of insurance
which are customary in the timeshare industry in the Applicable
Jurisdiction, together with copies of the most current paid insurance
premium invoices for such policies and all other supporting information
and documentation.
(4) Applicable Laws. Borrower and the Servicer have received
evidence satisfactory to Borrower that all Encumbered Intervals at such
Development are and will be in compliance with all applicable zoning,
building, and other Applicable Laws in connection with the
construction, development, establishment, and operation of such
Development and the sale, use, marketing, and occupancy of Units and
Intervals thereat.
(5) Litigation. Borrower and the Servicer have received
evidence satisfactory to Borrower, the Servicer and Lender that there
exists no pending bankruptcy, foreclosure, or other material litigation
or judgments outstanding against or with respect to such Development,
the Person managing such Development or SRI (each a "Material Party").
The term "other material litigation" as used herein shall not include
matters in which (i) a Material Party is a plaintiff and no
counterclaim is pending; or (ii) Borrower and Agent determine, in their
reasonable discretion, that such litigation is immaterial due to
settlement, insurance coverage, frivolity, or amount or nature of
claim. Borrower shall have obtained an independent search, at
Borrower's or SRI's expense, confirming that no such bankruptcy,
foreclosure action, or other material litigation or judgment exists.
(6) Code/Other Searches. Borrower and the Servicer have
obtained such searches of the applicable public records as they deem
necessary under all Applicable Laws to verify that the Borrower has a
first and prior perfected lien and security interest covering all of
the Applicable Underlying Collateral with respect to Receivables
related to such Development.
(7) Taxes and Assessments. Borrower and the Servicer have
received copies of the most current tax bills related to the related
Development, together with evidence satisfactory to them that all real
estate and personal property taxes and
53
assessments owed with respect to such Development by SRI or the
Applicable Timeshare Owners' Association, or for which SRI or the
Applicable Timeshare Owners' Association is responsible for collection,
have been paid except for such taxes as are being disputed in good
faith and with respect to which adequate reserves have been
established.
(8) Miscellaneous. Such other matters as Lender shall
reasonably require.
True copies or, to the extent required hereby,
originals of all of the above-referenced documents, instruments, forms,
opinions, and other materials shall be delivered to the Servicer,
either prior to or contemporaneously with Borrower's execution and
delivery to the Lender of the Notice of Borrowing with respect to a
proposed Loan secured by the Receivables related thereto. The delivery
by the Borrower of any Notice of Borrowing shall be deemed to be the
Borrower's and the Servicer's written representation and acknowledgment
of receipt and approval of each item referred to in the previous
sentence which are related to the Receivables being Pledged to secure
the Loan being requested pursuant to such Notice of Borrowing.
SECTION 3.3 Advances Do Not Constitute a Waiver. No advance
of a Loan hereunder shall constitute a waiver of any condition to the Lender's
obligation to make such an advance unless such waiver is in writing and executed
by the Lender.
SECTION 1.3 Conditions to Effectiveness of this Agreement. The
effectiveness of this Agreement is subject to the satisfaction of each of the
conditions set forth in the letter agreement dated December 12, 2001 among the
Borrower, SRI, the Agent and the Lender.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of the Borrower
and the Servicer. Each of the Servicer and the Borrower (each as to itself)
hereby represents and warrants, as of the Closing Date, the Amendment Date, on
each Borrowing Date, on each Remittance Date and on the first day of each CP
Rollover Fixed Period, as follows:
(2) Each Pledged Receivable designated as an Eligible
Receivable on any Borrowing Base Certificate, Monthly Remittance Report or
Commercial Paper Remittance Report is an Eligible Receivable.
(3) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the power and all licenses necessary to own its assets and
to transact the business in which it is presently engaged, and is duly qualified
and in good standing under the laws of each jurisdiction where its ownership of
the Pledged Receivables requires such qualification.
(4) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the power and all licenses
54
necessary to own its assets and to transact the business in which it is
presently engaged (which includes servicing Receivables on behalf of third
parties and itself), and is duly qualified and in good standing under the laws
of each jurisdiction where its servicing of the Pledged Receivables requires
such qualification.
(5) Each of the Servicer and the Borrower has the power,
authority and legal right to make, deliver and perform this Agreement and each
of the Transaction Documents to which it is a party and all of the transactions
contemplated hereby and thereby, and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement and each of the
Transaction Documents to which it is a party, and, in the case of the Borrower,
to grant to the Agent, for the benefit of the Lender, a first priority perfected
security interest in the Pledged Assets on the terms and conditions of this
Agreement. This Agreement and each of the Transaction Documents to which the
Servicer or the Borrower is a party constitutes the legal, valid and binding
obligation of the Servicer and the Borrower, as applicable, enforceable against
them in accordance with their respective terms except as the enforceability
hereof and thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws of general application affecting
creditors' rights generally and by general principles of equity (whether such
enforceability is considered in a proceeding in equity or at law). No consent of
any other party and no consent, license, approval or authorization of, or
registration or declaration with, any governmental authority, bureau or agency
is required in connection with the execution, delivery or performance by the
Borrower or the Servicer of this Agreement or any Transaction Document to which
it is a party, or the validity or enforceability of this Agreement or any such
Transaction Document or the Pledged Receivables, other than such as have been
met or obtained.
(6) The execution, delivery and performance of this Agreement,
the other Transaction Documents and all other agreements and instruments
executed and delivered or to be executed and delivered pursuant hereto or
thereto will not (i) create any Adverse Claim on the Pledged Assets other than
as contemplated herein or (ii) violate any provision of any existing law or
regulation or any order or decree of any court, regulatory body or
administrative agency or the certificate of incorporation or by-laws of the
Servicer or the Borrower or any mortgage, indenture, contract or other agreement
to which the Servicer or the Borrower is a party or by which the Servicer or the
Borrower or any property or assets of the Servicer or the Borrower may be bound.
(7) Except as set forth on Schedule IV hereto, no litigation
or administrative proceeding of or before any court, tribunal or governmental
body is presently pending or, to the knowledge of the Servicer and the Borrower,
threatened against the Servicer or the Borrower or any properties of the
Servicer or the Borrower or with respect to this Agreement (x) which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect or (y) which purports to affect the legality, validity or enforceability
of this Agreement, any Transaction Document to which the Borrower or Servicer is
a party, or any of the other applicable documents forming part of the Pledged
Assets.
(8) In selecting the Receivables to be Pledged pursuant to
this Agreement, no selection procedures were employed which are intended to be
adverse to the interests of the
55
Lender.
(9) The grant of the security interest in the Pledged Assets
by the Borrower to the Agent for the benefit of the Lender pursuant to this
Agreement is in the ordinary course of business for the Borrower and is not
subject to the bulk transfer or any similar statutory provisions in effect in
any applicable jurisdiction. No such Pledged Assets have been sold, transferred,
assigned or pledged by the Borrower to any Person other than the Pledge of such
Assets to the Agent, for the benefit of the Lender, pursuant to the terms of
this Agreement.
(10) The Borrower has no Debt or other indebtedness, other
than Debt incurred under (or contemplated by) the terms of this Agreement and
the Receivables Purchase Agreement.
(11) The Borrower has been formed solely for the purpose of
engaging in transactions of the types contemplated by this Agreement and the
Receivables Purchase Agreement.
(12) No injunction, writ, restraining order or other order of
any nature adversely affects the Servicer's or the Borrower's performance of
their respective obligations under this Agreement or any Transaction Document to
which the Servicer or the Borrower is a party.
(13) Each of the Servicer and the Borrower has filed (on a
consolidated basis or otherwise) on a timely basis all federal, state and other
material tax returns required to be filed, is not liable for taxes payable by
any other Person and has paid or made adequate provisions for the payment of all
taxes, assessments and other governmental charges due from the Servicer or the
Borrower, as applicable. No tax lien or similar adverse claim has been filed,
and, to the best of the Servicer's and the Borrower's knowledge, no claim is
being asserted, with respect to any such tax, assessment or other governmental
charge. Any taxes, fees and other governmental charges payable by the Servicer
or the Borrower, as applicable in connection with the execution and delivery of
the Original RLSA and this Agreement and the other Transaction Documents and the
transactions contemplated hereby or thereby have been paid, if due, or shall
have been paid prior to delinquency.
(14) The chief executive office of the Servicer (and the
location of the Servicer's records regarding the Pledged Receivables) is located
at Dallas, Texas. The chief executive office of the Borrower (and the location
of the Borrower's records regarding the Pledged Receivables) is located at
Dallas, Texas.
(15) Each of the Servicer's and the Borrower's legal names is
as set forth in this Agreement; other than as disclosed on Schedule III hereto
(as such schedule may be updated from time to by the Agent upon receipt of a
notice delivered to the Agent pursuant to Section 6.19), each of the Servicer
and the Borrower has not changed its name since its incorporation; each of the
Servicer and the Borrower does not have tradenames, fictitious names, assumed
names or "doing business as" names other than as disclosed on Schedule III
hereto (as such schedule may be updated from time to by the Agent upon receipt
of a notice delivered to the Agent pursuant to
56
Section 6.19).
(16) Each of the Servicer and the Borrower is solvent and will
not become insolvent after giving effect to the transactions contemplated
hereby; each of the Servicer and the Borrower is paying its debts as they become
due; and each of the Servicer and the Borrower, after giving effect to the
transactions contemplated hereby, will have adequate capital to conduct its
business.
(17) The Borrower has no subsidiaries.
(18) The Borrower has given fair consideration and reasonably
equivalent value in exchange for the sale of the Pledged Receivables by SRI
under the Receivables Purchase Agreement.
(19) No Monthly Remittance Report, Borrowing Base Certificate
or Commercial Paper Remittance Report (each if prepared by the Borrower or the
Servicer, or to the extent that information contained therein is supplied by the
Borrower or the Servicer), information, exhibit, financial statement, document,
book, record or report furnished or to be furnished by the Borrower or the
Servicer to the Agent or the Lender in connection with this Agreement is or will
be inaccurate as of the date it is or shall be dated or (except as otherwise
disclosed in writing to the Agent or the Lender, as the case may be, at such
time) as of the date so furnished, and no such document contains or will contain
any material misstatement of fact or omits or shall omit to state a material
fact or any fact necessary to make the statements contained therein not
misleading.
(20) No proceeds of any Loans will be used by the Borrower to
acquire any security in any transaction which is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended.
(21) There are no agreements in effect adversely affecting the
rights of the Borrower to make, or cause to be made, the grant of the security
interest in the Pledged Assets contemplated by Section 2.10.
(22) The Borrower is not an "investment company" or an
"affiliated person" of or "promoter" or "principal underwriter" for an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended, nor is the Borrower otherwise subject to regulation
thereunder.
(23) No Event of Default or Unmatured Event of Default has
occurred and is continuing.
(24) Each of the Pledged Receivables was underwritten and is
being serviced in conformance with SRI's, the Servicer's and the Borrower's
standard underwriting, credit, collection, operating and reporting procedures
and systems (including, without limitation, the Credit and Collection Policy).
57
(25) Each of the Servicer and the Borrower is in compliance
with ERISA and has not incurred and does not expect to incur any liabilities
(except for premium payments arising in the ordinary course of business) to the
Pension Benefit Guaranty Corporation (or any successor thereto) under ERISA.
(26) There is not now, nor will there be at any time in the
future, any agreement or understanding between the Servicer and the Borrower
(other than as expressly set forth herein) providing for the allocation or
sharing of obligations to make payments or otherwise in respect of any taxes,
fees, assessments or other governmental charges.
(27) (i) All filings (including, without limitation, UCC and
real property filings) required to be made by any Person and all other actions
required to be taken or performed by any Person in any jurisdiction to give the
Borrower a first priority perfected lien on all Applicable Underlying Collateral
and all other collateral security for all Pledged Receivables and the proceeds
thereof have been made, taken or performed; (ii) all filings (including, without
limitation, UCC and real property filings) required to be made by any Person and
all other actions required to be taken or performed by any Person in any
jurisdiction to give the Borrower a first priority perfected ownership interest
in all Pledged Receivables and the proceeds thereof have been made, taken or
performed; and (iii) all filings (including, without limitation, UCC and real
property filings) required to be made by any Person and all other actions
required to be taken or performed by any Person in any jurisdiction to give the
Agent, for the benefit of the Lender, a first priority perfected lien on all
Pledged Assets have been made, taken or performed.
(28) There has been no material change made to the Credit and
Collection Policy.
(29) Since the Amendment Date (in the case of representations
and warranties made as of the Amendment Date, each Borrowing Date after the
Amendment Date, each Remittance Date after the Amendment Date and the first day
of each CP Rollover Fixed Period after the Amendment Date), there has been no
material adverse change in the business, operations or financial condition of
the Servicer.
(30) The Servicer has directed the Obligor in respect of each
Pledged Receivable to make all payments in respect of such Pledged Receivable to
the Lockbox.
(31) The Servicer is in compliance with all laws applicable to
its business; including, without limitation, all consumer lending laws.
(32) Each Assignment Document (i) has been duly executed and
delivered, (ii) is enforceable in accordance with its terms and (iii) has been
delivered to the Custodian.
(33) No Previous Lender or other Person has any right, title
or interest in any Pledged Receivables or Applicable Underlying Collateral
Pledged hereunder from time to time.
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ARTICLE V. GENERAL COVENANTS OF THE BORROWER AND THE SERVICER
SECTION 5.1 General Covenants. (a) The Borrower will observe
all corporate procedures required by its Certificate of Incorporation, Bylaws
and the laws of its jurisdiction of incorporation. The Borrower will maintain
its corporate existence in good standing under the laws of its jurisdiction of
incorporation and will promptly obtain and thereafter maintain qualifications to
do business as a foreign corporation in any other state in which it does
business and in which it is required to so qualify in accordance with applicable
law.
(34) The Borrower will at all times ensure that (i) its
directors act independently and in its interests, (ii) it shall at all times
maintain at least one independent director (x) who is not currently and has not
been during the five years preceding the Closing Date an officer, director or
employee of the Borrower or an Affiliate thereof (other than a limited purpose
corporation, business trust, partnership or other entity organized for the
purpose of acquiring, financing or otherwise investing, directly or indirectly,
in assets or receivables originated, owned or serviced by SRI or an Affiliate
thereof), (y) who is not a current or former officer or employee of the Borrower
and (z) who is not a stockholder of the Borrower or an Affiliate thereof, (iii)
its assets are not commingled with those of SRI or any other Affiliate of the
Borrower, (iv) its board of directors duly authorizes all of its corporate
actions, (v) it maintains separate and accurate records and books of account and
such books and records are kept separate from those of SRI and any other
Affiliate of the Borrower, and (vi) it maintains minutes of the meetings and
other proceedings of the stockholders and the board of directors. Where
necessary, the Borrower will obtain proper authorization from its shareholders
for corporate action.
(35) The Borrower will pay its operating expenses and
liabilities from its own assets; provided, however, that the Borrower's
organizational expenses and the expenses incurred in connection with the
negotiation and execution of this Agreement and the other Transaction Documents
may be paid by SRI.
(36) The Borrower will not have any of its indebtedness
guaranteed by SRI or any Affiliate of SRI. Furthermore, the Borrower will not
hold itself out, or permit itself to be held out, as having agreed to pay or as
being liable for the debts of SRI or any Affiliate of SRI and the Borrower will
not engage in business transactions with SRI or any Affiliate of SRI, except on
an arm's-length basis. The Borrower will not hold SRI or any Affiliate of SRI
out to third parties as other than an entity with assets and liabilities
distinct from the Borrower. The Borrower will cause any financial statements
consolidated with those of SRI or any Affiliate of SRI to state that the
Borrower is a separate corporate entity with its own separate creditors who, in
any liquidation of the Borrower, will be entitled to be satisfied out of the
Borrower's assets prior to any value in the Borrower becoming available to the
Borrower's equity holders. The Borrower will not act in any other matter that
could foreseeably mislead others with respect to the Borrower's separate
identity.
(37) In its capacity as Servicer, SRI will, to the extent
necessary, maintain separate records on behalf of and for the benefit of the
Agent and the Lender, will act in
59
accordance with instructions and directions, delivered in accordance with the
terms hereof, from the Borrower, the Agent and/or the Lender in connection with
its servicing of the Pledged Receivables hereunder, and will ensure that, at all
times when it is dealing with or in connection with the Pledged Receivables in
its capacity as Servicer, it holds itself out as Servicer, and not in any other
capacity.
(38) The Servicer shall, to the extent required by applicable
law, disclose all material transactions associated with this transaction in
appropriate regulatory filings and public announcements. The annual financial
statements of SRI (including any consolidated financial statements) shall
disclose the effects of the transactions contemplated by the Receivables
Purchase Agreement as a sale of Receivables and the annual financial statements
of the Borrower shall disclose the effects of the transactions contemplated by
this Agreement as a loan to the extent required by and in accordance with GAAP.
(39) Each of the Servicer and the Borrower shall take all
other actions necessary to maintain the accuracy of the factual assumptions set
forth in the legal opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, special counsel to SRI and
the Borrower, issued in connection with the Receivables Purchase Agreement and
relating to the issues of substantive consolidation and true sale of the Pledged
Receivables.
(40) Except as otherwise provided herein or in any other
Transaction Document, neither the Borrower nor the Servicer shall (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, any Pledged
Receivable, any Collections related thereto or any other Pledged Assets related
thereto, or upon or with respect to any account to which any Collections of any
Receivable are sent, or assign any right to receive income in respect thereof or
(ii) create or suffer to exist any Adverse Claim upon or with respect to any of
the Borrower's assets.
(41) The Borrower will not merge or consolidate with, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions), all or substantially all of its assets (whether
now owned or hereafter acquired) or acquire all or substantially all of the
assets or capital stock or other ownership interest of any Person.
(42) The Borrower will not account for or treat (whether in
financial statements or otherwise) the transactions contemplated by the
Receivables Purchase Agreement in any manner other than the sale of Receivables
by SRI to the Borrower.
(43) The Borrower will not amend, modify, waive or terminate
any terms or conditions of the Receivables Purchase Agreement (including,
without limitation, any eligibility criteria thereunder) without the written
consent of the Agent (which consent shall not be unreasonably withheld in the
case of an amendment curing an ambiguity or correcting any inconsistent
provisions of the Receivables Purchase Agreement), and shall perform its
obligations thereunder.
(44) The Borrower will not amend, modify or otherwise make any
change to its
60
Certificate of Incorporation without the consent of the Agent.
(45) Neither the Borrower nor the Servicer will make or allow
to be made any amendment to the Credit and Collection Policy without the prior
written consent of the Agent which would materially negatively impact the
collectibility of any Pledged Receivable.
(46) If the Borrower or the Servicer receive any Collections,
the Borrower or the Servicer, as applicable, will remit such Collections to the
Collection Account within two (2) Business Days of the Borrower's or the
Servicer's receipt thereof.
(47) The Borrower shall deliver or cause to be delivered to
the Custodian on or before each Borrowing Date the Receivable File with respect
to each Pledged Receivable being Pledged hereunder on such Borrowing Date.
(48) The Borrower shall deliver to the Agent on each Purchase
Date a copy of the Assignment delivered to it on such Purchase Date.
(49) Each of the Servicer and the Borrower shall, at their
expense, cooperate and take all actions reasonably requested by the Agent in
connection with obtaining a shadow rating with respect to the financing facility
provided for hereunder, including, without limitation providing to each of the
Rating Agencies all information requested by such Rating Agencies.
(50) The Servicer shall provide prompt notice to the Agent of
(i) the occurrence of any Event of Default, Servicer Default or Early
Amortization Event or any Unmatured Event of Default or other event that, if it
continues uncured, will, with the lapse of time or notice or the lapse of time
and notice, constitute a Servicer Default or Early Amortization Event, (ii) any
amendment or change to the Credit and Collection Policy, (iii) the commencement
of any litigation or administrative proceeding described in Section 4.01(f) in
respect of the Servicer or the Borrower or (iv) the revocation of or amendment
to any Acceptable Title Policy.
(51) Subject to Section 6.14, each of the Servicer and the
Borrower shall comply in all material respects with (i) the Credit and
Collection Policy and (ii) all material agreements to which it is a party.
(52) Neither SRI nor the Borrower shall engage, directly or
indirectly, in any line of business other than the businesses in which it was
engaged on the Closing Date.
(53) Each of SRI and the Borrower shall maintain proper and
accurate records and books of account.
(54) Each of the Servicer and the Borrower shall cause each
Obligor to make all payments in respect of Pledged Receivables to the Lockbox.
(55) SRI shall at all times have and maintain a Tangible Net
Worth in an amount which shall not be less than an amount equal to (A) the
greater of (1) $100,000,000 or (2) an
61
amount equal to 90% of the Tangible Net Worth of SRI as of September 30, 2001
plus (B) seventy-five percent (75%) of the aggregate amount of proceeds received
by SRI after January 1, 2002 in connection with (1) each issuance by SRI of any
class or classes of capital stock after January 1, 2002 and (2) each incurrence
of Debt after January 1, 2002, other than Debt which shall be the most senior
Debt of SRI plus (C) fifty percent (50%) of the aggregate amount of net income
(calculated in accordance with GAAP) of SRI after January 1, 2002.
(56) (i) For the fiscal quarter of SRI ending June 30, 2002,
the Interest Coverage Ratio for SRI shall be at least 1.1:1; (ii) for the fiscal
quarter of SRI ending September 30, 2002, the average of the Interest Coverage
Ratio of SRI for such fiscal quarter and the Interest Coverage Ratio for the
immediately preceding fiscal quarter shall be at least 1.1:1, (iii) for the
fiscal quarter of SRI ending December 31, 2002, the average of the Interest
Coverage Ratio of SRI for such fiscal quarter and the Interest Coverage Ratios
for the two immediately preceding fiscal quarters shall be at least 1.1:1; (iv)
for the fiscal quarter of SRI ending March 31, 2003, the average of the Interest
Coverage Ratio of SRI for such fiscal quarter and the Interest Coverage Ratios
for the three immediately preceding fiscal quarters shall be at least 1.1:1 and
(v) for each fiscal quarter of SRI beginning with, and including, the fiscal
quarter ending June 30, 2003 and for each fiscal quarter of SRI thereafter, the
average of the Interest Coverage Ratio of SRI for such fiscal quarter and the
Interest Coverage Ratios for each of the three immediately preceding fiscal
quarters shall be at least 1.25:1.
(57) Neither SRI nor the Borrower shall, and each of SRI and
the Borrower shall cause each of its Affiliates (including, in the case of SRI,
the Silverleaf Club) to not, permit the creation of any lien (other than liens
in favor of a Senior Lender (as defined in the letter agreement dated as of
December 12, 2001 among the Borrower, SRI, the Agent and the Lender) under
financing facilities contemplated under Section 3(v) of such letter agreement)
in respect of any of the following:
(1) SRI's or the Borrower's or any of their Affiliates' right,
title, and interest in all furniture, furnishings, and fixtures of
every kind and description (and all improvements and accessions
thereto, including, without limitation, the Common Furnishings, if
any,) located in or on or used in connection with any Encumbered
Interval;
(2) SRI's or the Borrower's or any of their Affiliates' right,
title, and interest in all other agreements to which any of SRI, the
Borrower or any of their Affiliates is or becomes a party or holds any
interest and which in any way relate to the use, occupancy,
maintenance, or enjoyment of any Encumbered Intervals or Personal
Property, including, but not limited to, utility contracts, maintenance
agreements, management agreements, service contracts, and any agreement
guaranteeing the performance of the obligations contained in any of the
foregoing agreements;
(3) SRI's or the Borrower's right, title, and interest in and
to any and all easements, contracts, leasehold interests (whether as
lessor or lessee), permits, licenses, and approvals in respect of all
or any portion of a Development; and
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(4) SRI's or the Borrower's right, title, and interest in and
to any rights inuring to an Obligor related to easements, leasehold
interests (whether as lessor or lessee), franchises, permits,
approvals, licenses, facilities, and amenities on, affecting, or
appurtenant to the Developments and rights to occupy, use, and enjoy
any such facilities or amenities and any Encumbered Intervals.
(58) SRI shall be in material compliance with the Business
Model (as defined in the letter agreement dated as of December 12, 2001 among
the Borrower, SRI, the Agent and the Lender).
ARTICLE VI. ADMINISTRATION AND SERVICING; CERTAIN COVENANTS
SECTION 6.1 Appointment and Designation of the Servicer. (a)
The Borrower, the Lender and the Agent hereby appoint the Person designated by
the Agent from time to time (with the approval of the Lender) pursuant to this
Section 6.01 (the "Servicer"), as their agent to service, administer and collect
the Pledged Receivables and otherwise to enforce their respective rights and
interests in and under the Pledged Receivables and the other Pledged Assets.
Subject to Section 6.14, the Servicer shall collect such Pledged Receivables
under the conditions referred to above by means of the collection procedures as
set forth in the Credit and Collection Policy, to the extent consistent with the
provisions of this Article VI. The Servicer's authorization under this Agreement
shall terminate on the Collection Date. Until the Agent gives notice to the
Borrower of a designation of a new Servicer upon the occurrence and during the
continuance of any Servicer Default, or consents to the appointment by the
Borrower of a new Servicer, SRI is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Servicer pursuant to the terms hereof
at all times until the earlier of the Agent's designation of a new Servicer upon
the occurrence and during the continuance of any Servicer Default, the delivery
by the Agent of its consent to the appointment by the Borrower of a new Servicer
or the Collection Date. Upon the occurrence and during the continuance of any
Servicer Default, the Agent may at any time (with the approval of the Lender)
designate as Servicer any Person to succeed SRI or any successor Servicer, on
the condition in each case that any such Person so designated shall agree to
perform the duties and obligations of the Servicer pursuant to the terms hereof.
Each of the Borrower and SRI hereby grants to any successor Servicer an
irrevocable power of attorney and license to take any and all steps in the
Borrower's, SRI's or the Servicer's name, as applicable, and on behalf of the
Borrower or SRI, necessary or desirable, in the determination of such successor
Servicer, to service, administer or collect any and all Pledged Receivables.
(59) The Servicer is hereby authorized to act for the Borrower
and the Agent and in such capacity shall manage, service, administer and make
collections on the Pledged Receivables, and perform the other actions required
by the Servicer under this Agreement for the benefit of the Agent and the
Lender. The Servicer agrees that its servicing of the Pledged Receivables shall
be carried out in accordance with customary and usual procedures of institutions
which service comparable receivables and, to the extent more exacting, the
degree of skill and attention that the Servicer exercises from time to time with
respect to all comparable receivables
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that it services for itself or others (and in the case of SRI, in accordance
with the Credit and Collection Policy) and, to the extent more exacting, the
requirements of this Article VI. The Servicer's duties shall include, without
limitation, collection and posting of all payments, responding to inquiries of
Obligors on the Pledged Receivables, investigating delinquencies, sending
payment statements or payment books to Obligors, reporting any required tax
information to Obligors, policing the collateral, complying with the terms of
the Lockbox Agreement, accounting for collections, furnishing monthly and annual
statements to the Agent with respect to distributions and performing the other
duties specified herein.
(60) To the extent consistent with the standards, policies and
procedures otherwise required hereby, the Servicer shall have full power and
authority, acting alone, to do any and all things in connection with such
managing, servicing, administration and collection that it may deem necessary or
desirable. The Servicer is authorized to release Liens on Intervals in order to
collect insurance and condemnation proceeds with respect thereto and to
liquidate such Intervals in accordance with its customary standards, policies
and procedures; provided, however, that notwithstanding the foregoing, the
Servicer shall not, (i) except pursuant to an order from a court of competent
jurisdiction, release an Obligor from payment of any unpaid amount under any
Pledged Receivable or (ii) waive the right to collect the unpaid balance of any
Pledged Receivable from such Obligor, except that, subject to Section 6.02(a),
the Servicer may forego collection efforts if the amount which the Servicer, in
its reasonable judgment, expects to realize in connection with such collection
efforts is determined by the Servicer in its reasonable judgment to be less than
the reasonably expected costs of pursuing such collection efforts, and if the
Servicer would forego such collection efforts in accordance with its customary
procedures. The Servicer is hereby authorized to commence, in its own name or in
the name of the Borrower, the Agent or the Lender (provided that if the Servicer
is acting in the name of the Borrower, the Agent or the Lender, the Servicer
shall have obtained the Borrower's, the Agent's or the Lender's consent, as the
case may be, which consent shall not be unreasonably withheld), a legal
proceeding to enforce a Pledged Receivable or to commence or participate in any
other legal proceeding (including, without limitation, a bankruptcy proceeding)
relating to or involving a Pledged Receivable, an Obligor or an Interval. If the
Servicer commences or participates in such a legal proceeding in its own name,
the Borrower, the Agent or the Lender, as the case may be, shall thereupon be
deemed to have automatically assigned such Pledged Receivable to the Servicer
solely for purposes of commencing or participating in any such proceeding as a
party or claimant, and the Servicer is authorized and empowered by the Borrower,
the Agent or the Lender, as the case may be, to execute and deliver in the
Servicer's name any notices, demands, claims, complaints, responses, affidavits
or other documents or instruments in connection with any such proceeding. The
Borrower, the Agent or the Lender, as the case may be, shall furnish the
Servicer with any powers of attorney and other documents which the Servicer may
reasonably request in writing and which the Servicer deems necessary or
appropriate and take any other steps which the Servicer may deem necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement.
(61) The Servicer shall not resign from the obligations and
duties hereby imposed on it hereunder except upon determination that (i) the
performance of its duties hereunder is no longer permissible under applicable
law and (ii) there is no reasonable action
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which can be taken to make the performance of its duties hereunder permissible
under applicable law. Any such determination permitting the resignation of the
Servicer pursuant to clause (i) of the previous sentence hereof shall be
evidenced by an Opinion of Counsel to such effect delivered to the Agent. Unless
otherwise required by applicable law, no such resignation shall be effective
until a successor Servicer designated by the Agent and the Lender shall have
assumed the responsibilities and obligations of the Servicer hereunder.
SECTION 6.02 Collection of Receivable Payments; Modification
and Amendment of Receivables. (a) Consistent with the standards, policies and
procedures required by this Agreement, the Servicer shall make reasonable
efforts to collect all payments called for under the terms and provisions of the
Pledged Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable receivables
that it services for itself or others (or that it formerly serviced for itself
or others) and otherwise act with respect to the Pledged Receivables and the
applicable Acceptable Title Policy in such manner as will, in the reasonable
judgment of the Servicer, maximize the amount to be received by the Borrower and
the Lender with respect thereto.
(2) The Servicer may at any time agree to a modification or
amendment of a Pledged Receivable in order to re-amortize the scheduled payments
on the Pledged Receivable following a partial prepayment of principal but the
Servicer may not grant payment extensions on a Pledged Receivable or permit any
other modifications or amendments to a Pledged Receivable except as may be
permitted by the Credit and Collection Policy; provided that a Pledged
Receivable may only be Modified or Downgraded if it has not previously been
Modified or Downgraded since its origination.
(3) The Servicer shall remit all payments by or on behalf of
the Obligors received directly by the Servicer to the Collection Account,
without deposit into any intervening account as soon as practicable, but in no
event later than two (2) Business Days after receipt thereof.
SECTION 6.03 Realization Upon Receivables. Subject to the
provisions of Section 2.13 and consistent with the standards, policies and
procedures required by this Agreement, the Servicer shall use its best efforts
to foreclose upon (or otherwise comparably convert the ownership of) and
liquidate any Interval or other Collateral securing a Pledged Receivable with
respect to which the Servicer has determined that payments thereunder have
ceased and are not likely to be resumed, as soon as is practicable after default
on such Pledged Receivable but in no event later than thirty (30) days after
such determination or an earlier date that would be customary under the
circumstances involved and, in any case, in a manner as will, in the reasonable
judgment of the Servicer, maximize the amount to be received by the Borrower and
the Lender with respect thereto; provided that in the case of the foreclosure
upon any Interval or other Collateral securing a Pledged Receivable by the
Backup Servicer, such Backup Servicer shall take such action only upon the
direction of the Agent. The Servicer is authorized to follow such customary
practices and procedures as it shall deem necessary or advisable, consistent
with the standard of care required by Section 6.01, which practices and
procedures may include selling the related Interval or other Collateral at
public or private sale, the submission of claims under an
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Acceptable Title Policy, if applicable, and other actions by the Servicer in
order to realize upon such Pledged Receivable. In the event the Servicer elects
to liquidate at a public or private sale any Interval or Intervals foreclosed
upon or otherwise reacquired on behalf of the Borrower from Obligors of
Defaulted Receivables, SRI shall not be precluded from bidding on such Intervals
so long as SRI pays an amount equal to the net fair market value of such
Intervals, as determined by the next following sentence of this Section 6.03;
provided that SRI shall only be permitted to bid on such Intervals if, at such
time, there shall not be a Borrowing Base Deficiency, an Early Amortization
Event or a default under any Transaction Document. In this regard, the Servicer
shall establish, from time to time, a net value for Intervals so liquidated
based upon such market data as Servicer deems relevant; provided that in no
event will the Liquidation Proceeds derived from an Interval acquired by SRI at
public or private sale be less than fifteen percent (15%) of the original
acquisition price paid for the Interval by the Obligor under the Defaulted
Receivable associated with the Interval. The foregoing is subject to the
provision that, in any case in which the related Unit shall have suffered
damage, the Servicer shall not expend funds in connection with any repair or
towards the foreclosure of such Interval unless it shall determine in its
discretion that such repair and/or foreclosure shall increase the proceeds of
liquidation of the related Pledged Receivable by an amount greater than the
amount of such expenses. All Liquidation Proceeds shall be remitted directly by
the Servicer to the Collection Account without deposit into any intervening
account as soon as practicable, but in no event later than two (2) Business Days
after receipt thereof. The Servicer shall pay on behalf of the Borrower any
personal property taxes assessed on foreclosed Intervals, and the Servicer shall
be entitled to reimbursement of any such tax as a Servicer Advance.
SECTION 6.04 Insurance Regarding Intervals. (a) Without
limiting the effect of any other provision hereof, the Servicer shall monitor
the status of the Acceptable Title Policies related to the Pledged Receivables
in accordance with the Credit and Collection Policy and its customary servicing
procedures. If the Servicer shall determine that SRI has failed to obtain or
maintain Acceptable Title Policies covering all Mortgages securing all Pledged
Receivables related to Fee Simple Intervals, the Servicer shall take all
necessary steps to ensure that SRI obtains such Acceptable Title Policy.
(2) The Servicer may and, upon the request of the Agent, shall
▇▇▇ to enforce or collect upon the Acceptable Title Policies, in its own name,
if possible, or as agent of the Borrower, the Agent and the Lender. If the
Servicer elects to commence a legal proceeding to enforce an Acceptable Title
Policy, the act of commencement shall be deemed to be an automatic assignment of
the rights of the Borrower, the Agent and the Lender under such Acceptable Title
Policy to the Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce an Acceptable Title Policy on the grounds that it is not a real party in
interest or a holder entitled to enforce the Acceptable Title Policy, the
Borrower shall take such steps as the Servicer deems necessary to enforce such
Acceptable Title Policy, including bringing suit in its name.
SECTION 6.05 Maintenance of Security Interests in Intervals.
(a) If the Borrower has failed to, the Servicer shall take all steps necessary
under all applicable law in order to cause a valid, subsisting and enforceable
first priority security interest to exist in the Borrower's favor in
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the Applicable Underlying Collateral and all other Collateral (other than the
Pledged Receivables) related to each Receivable (and the proceeds thereof) being
Pledged hereunder on any Borrowing Date and immediately prior to the Pledge of
such Receivable by the Borrower to the Agent (for the benefit of the Lender),
there shall have existed in favor of the Borrower as secured party, a valid,
subsisting and enforceable first priority perfected lien in the Applicable
Underlying Collateral and all other such Collateral related to such Receivable
(and the proceeds thereof), and such security interest is and shall be prior to
all other liens upon and security interests in such Applicable Underlying
Collateral and other such Collateral (and the proceeds thereof) that now exist
or may hereafter arise or be created.
(2) If the Borrower has failed to, the Servicer shall take all
steps necessary under all applicable law in order to cause a valid, subsisting
and enforceable first priority ownership interest to exist in the Borrower's
favor in the Pledged Receivable (and the proceeds thereof) related to any
Receivable being Pledged hereunder on any Borrowing Date and immediately prior
to the Pledge of such Receivable by the Borrower to the Agent (for the benefit
of the Lender), there shall have existed in favor of the Borrower as secured
party, a valid, subsisting and enforceable first priority ownership interest in
the Pledged Receivable (and the proceeds thereof) related to any such Receivable
which is and free of all liens and security interests.
(3) If the Borrower has failed to, the Servicer shall take all
steps necessary under all applicable law in order to cause to exist in favor of
the Agent, for the benefit of the Lender, a valid, subsisting and enforceable
first priority perfected lien in (A) the Borrower's perfected security interest
in the Applicable Underlying Collateral and all other Collateral (other than the
Pledged Receivables) related to each Receivable (and the proceeds thereof) being
Pledged hereunder on such Borrowing Date and (B) the Pledged Receivables and any
other Pledged Assets related to each Receivable (and the proceeds thereof) being
Pledged hereunder on any Borrowing Date, and upon the Pledge of such Receivable
by the Borrower to the Agent (for the benefit of the Lender), there shall exist
in favor of the Agent (for the benefit of the Lender) as secured party, a valid,
subsisting and enforceable first priority perfected security interest (A) the
Borrower's first priority perfected security interest in the Applicable
Underlying Collateral and all other Collateral (other than the Pledged
Receivables) related to each Receivable (and the proceeds thereof) being Pledged
hereunder on such Borrowing Date and (B) the Pledged Receivables and any other
Pledged Assets related to each Receivable (and the proceeds thereof) being
Pledged hereunder on such Borrowing Date, and such security interest is and
shall be prior to all other liens upon and security interests therein that now
exist or may hereafter arise or be created.
SECTION 6.06 Pledged Receivable Receipts. The Servicer shall
promptly make a deposit or cause the Borrower or any Affiliate thereof to make a
deposit into the Collection Account in an amount equal to the Collections
received or made by or on behalf of it, the Borrower or any Affiliate thereof,
as the case may be, within two (2) Business Days of receiving any such
Collections.
SECTION 6.07 Unidentified Payments; Lender's Right of
Presumption.
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The Borrower agrees and consents that the Servicer and/or the Agent may apply
any payment it receives (or any such payment the Servicer deposits into the
Collection Account) from an Obligor to any Loan secured by a Pledged Receivable
if the Servicer and/or the Agent is unable in good faith to determine whether
such payment from an Obligor relates to such Pledged Receivable; provided that
each of the Borrower, the Agent and the Lender agrees that any payment it
receives (or any such payment the Servicer deposits into the Collection Account)
from an Obligor which is specifically identifiable as a payment in respect of
any dues, fees or other charges payable by the related Obligor in connection
with the ownership and/or use of the related Interval shall be paid to SRI.
SECTION 6.08 No Rights of Withdrawal. Until the Collection
Date, the Borrower shall have no rights of direction or withdrawal with respect
to amounts held in the Collection Account, the Lockbox Account or the Lockbox,
except as provided for herein.
SECTION 6.09 Permitted Investments. The Borrower shall,
pursuant to written instruction, direct the Agent's Bank (and if the Borrower
fails to do so, the Agent may, pursuant to written instruction, direct the
Agent's Bank) to invest, or cause the investment of, funds on deposit in the
Collection Account, in Permitted Investments, from the Closing Date until the
Collection Date. Absent any such written instruction, the Agent's Bank shall
invest, or cause the investment of, such funds in Permitted Investments
described in clause (e) of the definition thereof. A Permitted Investment
acquired with funds deposited in the Collection Account shall mature not later
than the Business Day immediately preceding the last day of the next ending
Fixed Period, and shall not be sold or disposed of prior to its maturity. All
such Permitted Investments shall be registered in the name of the Agent (in its
capacity as such) or its nominee for the benefit of the Lender. All income and
gain realized from any such investment as well as any interest earned on
deposits in the Collection Account shall be distributed in accordance with the
provisions of Article II hereof. The Servicer shall deposit in the Collection
Account (with respect to investments made hereunder of funds held therein), an
amount equal to the amount of any actual loss incurred in respect of any such
investment immediately upon realization of such loss. Neither the Agent's Bank
nor the Agent shall be liable for the amount of any loss incurred in respect of
any investment, or lack of investment, of funds held in the Collection Account.
SECTION 6.10 Servicing Compensation. As compensation for its
activities hereunder, the Servicer shall be entitled to be paid the Servicing
Fee from the Collection Account as provided in Section 2.05(c). Subject to
Section 6.14, the Servicer shall be required to pay all expenses incurred by it
in connection with its servicing activities hereunder and shall not be entitled
to reimbursement therefor, except with respect to reasonable expenses of the
Servicer incurred in connection with the foreclosure and disposition of any
Interval (which the Servicer may retain from the proceeds of the disposition of
such Interval) and any Servicer Advances made by the Servicer pursuant hereto.
The Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all the Servicer's responsibilities and
obligations under this Agreement.
SECTION 6.11 Reports to the Agent; Account Statements;
Servicing Information. (a) The Borrower will deliver to the Agent (i) on the
Early Amortization
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Commencement Date, a report identifying the Pledged Receivables (and any
information with respect thereto requested by the Agent) on the day immediately
preceding the Early Amortization Commencement Date and (ii) upon the Agent's
reasonable request and upon reasonable notice, on any other Business Day, a
report identifying the Pledged Receivables (and any information with respect
thereto reasonably requested by the Agent) on such day.
(4) On the tenth day of each calendar month or, if such day is
not a Business Day, the immediately preceding Business Day, the Servicer shall
prepare and deliver or have delivered to the Agent for the Lender, (i) a Monthly
Remittance Report and any other information reasonably requested by the Agent
relating to all Pledged Receivables (including if requested, a Computer Tape or
Listing), all information in the Monthly Remittance Report (including, without
limitation, the calculation of Weighted Average APR, the Default Rate, the
Delinquency Rate and the Excess Spread Rate) and all other such information to
be accurate as of the last day of the immediately preceding Remittance Period
and (ii) in an electronic format mutually acceptable to the Servicer and the
Agent, all information reasonably requested by the Agent relating to all Pledged
Receivables. If any Monthly Remittance Report indicates the existence of a
Borrowing Base Deficiency, the Borrower shall on the date of delivery of such
Monthly Remittance Report prepay to the Agent, for the account of the Lender, a
portion of the Loans as is necessary to cure such Borrowing Base Deficiency (or
otherwise cure such Borrowing Base Deficiency).
(5) By no later than 1:00 P.M. (
New York City time) on the
Business Day immediately preceding a Borrowing, the Servicer shall also prepare
and deliver to the Agent for the Lender a Borrowing Base Certificate containing
information accurate as of the date of delivery of such Borrowing Base
Certificate. If any Borrowing Base Certificate indicates the existence of a
Borrowing Base Deficiency, the Borrower shall on the date of delivery of such
Borrowing Base Certificate prepay to the Agent, for the account of the Lender, a
portion of the Loans as is necessary to cure such Borrowing Base Deficiency (or
otherwise cure such Borrowing Base Deficiency).
(6) On the Business Day immediately preceding the last day of
each Fixed Period, the Servicer shall prepare and deliver or have delivered to
the Agent for the Lender, a Commercial Paper Remittance Report containing
information accurate as of the date of delivery of such Commercial Paper
Remittance Report.
(7) On the tenth day of each calendar month or, if such day is
not a Business Day, the immediately preceding Business Day (each such day, a
"Backup Servicer Delivery Date"), the Servicer shall prepare and deliver or have
delivered to the Backup Servicer, (i) a Monthly Remittance Report in respect of
the immediately-preceding Remittance Period and (ii) a computer tape or a
diskette or any other electronic transmission in a format acceptable to the
Backup Servicer containing the information with respect to the Pledged
Receivables during such Remittance Period which was necessary for preparation of
such Monthly Remittance Report.
(8) The Borrower shall deliver to the Agent all reports it
receives pursuant to the Receivables Purchase Agreement within one (1) Business
Day of the receipt thereof.
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SECTION 6.12 Statements as to Compliance; Financial
Statements. (a) The Servicer shall deliver to the Agent, the Borrower and the
Lender on or before January 15 of each year, beginning with January 15, 2001, an
Officers Certificate stating, as to each signatory thereof, that (x) a review of
the activities of the Servicer during the preceding calendar year (or the
portion thereof commencing on the Closing Date, in the case of the calendar year
ending December 31, 2000) and of its performance under this Agreement has been
made under such officer's supervision, and (y) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such calendar year (or portion
thereof, as the case may be) or, if there has been a default in the fulfillment
of any such obligation, specifying each such default known to such officer and
the nature and status thereof and the action being taken to cure such default.
(9) The Servicer shall, at its expense, cause Deloitte &
Touche or another firm of independent certified public accountants reasonably
acceptable to the Agent (the "Independent Accountants"), who may also render
other services to the Servicer or to the Borrower to deliver to the Borrower and
the Agent, on or before March 31 of each year, beginning on March 31, 2001, with
respect to the twelve (12) months ended the immediately preceding December 31, a
statement (the "Accountants' Report") addressed to the Board of Directors of the
Servicer and to the Agent, to the effect that such firm has performed procedures
to be agreed upon by the Servicer and the Agent, solely to assist with
evaluating compliance with the Borrowing Base Certificates, Monthly Remittance
Reports and Commercial Paper Remittance Reports prepared by the Servicer during
the twelve (12) months ended the immediately preceding December 31 and that such
agreed upon procedures were performed in accordance with standards established
by the American Institute of Certified Public Accountants. The Accountants'
Report shall further state that (i) it performed procedures in accordance with
such agreed upon procedures; (ii) except as disclosed in the Accountant's
Report, no exceptions or errors in the Borrowing Base Certificates, Monthly
Remittance Reports and Commercial Paper Remittance Reports examined were found.
The Accountants' Report shall also indicate that the firm is independent of the
Borrower and the Servicer within the meaning of the Code of Professional Ethics
of the American Institute of Certified Public Accountants.
(10) As soon as available and no later than forty-five (45)
days after the end of each calendar quarter in each fiscal year of SRI, SRI
shall deliver to the Lender and the Agent two copies of:
(1) a consolidated and consolidating balance sheet of SRI and
its consolidated subsidiaries (excluding the Borrower) as of the end of
such calendar quarter setting forth in comparative form the
corresponding figures for the most recent year-end for which an audited
balance sheet has been prepared, which such balance sheet shall be
prepared and presented in accordance with, and provide all necessary
disclosure required by, GAAP and shall be accompanied by a certificate
signed by the financial vice president, treasurer, chief financial
officer or controller of SRI stating that such balance sheet presents
fairly the financial condition of the companies being reported upon and
has been prepared in accordance with GAAP consistently applied; and
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(2) consolidated and consolidating statements of income,
stockholders' equity and cash flow of SRI and its consolidated
subsidiaries (excluding the Borrower) for such calendar quarter, in
each case and for the portion of the fiscal year ending with such
calendar quarter setting forth in comparative form the corresponding
figures for the comparable period one year prior thereto (subject to
normal year-end adjustments), which such statements shall be prepared
and presented in accordance with, and provide all necessary disclosure
required by, GAAP and shall be accompanied by a certificate signed by
the financial vice president, treasurer, chief financial officer or
controller of SRI, stating that such financial statements present
fairly the financial condition and results of operations of the
companies being reported upon and have been prepared in accordance with
GAAP consistently applied.
(11) As soon as available and no later than ninety (90) days
after the end of each fiscal year of SRI, SRI shall deliver to the Lender and
the Agent two copies of:
(1) a consolidated and consolidating balance sheet of SRI and
its consolidated subsidiaries (excluding the Borrower), all as of the
end of the fiscal year, setting forth in comparative form the figures
for the previous fiscal year and accompanied by an opinion of the
Independent Accountants stating that such balance sheet presents fairly
the financial condition of the companies being reported upon and has
been prepared in accordance with GAAP consistently applied (except for
changes in application in which such accountants concur); and
(2) consolidated and consolidating statements of income,
stockholders' equity and cash flow of SRI and its consolidated
subsidiaries (excluding the Borrower), for such fiscal year; in each
case setting forth in comparative form the figures for the previous
fiscal year and accompanied by an opinion of the Independent
Accountants stating that such financial statements present fairly the
financial condition of the companies being reported upon and have been
prepared in accordance with GAAP consistently applied (except for
changes in application in which such accountants concur).
(12) As soon as available and no later than ninety (90) days
after the end of each fiscal year of the Borrower, SRI shall deliver to the
Lender and the Agent two copies of:
(1) a balance sheet of the Borrower, as of the end of the
fiscal year, setting forth in comparative form the figures for the
previous fiscal year and accompanied by an opinion of the Independent
Accountants stating that such balance sheet presents fairly the
financial condition of the Borrower and has been prepared in accordance
with GAAP consistently applied (except for changes in application in
which such accountants concur);
(2) statements of income, stockholders' equity and cash flow
of the Borrower for such fiscal year; setting forth in comparative form
the figures for the previous fiscal year and accompanied by an opinion
of the Independent Accountants stating that such financial statements
present fairly the financial condition of the Borrower and have been
prepared in accordance with GAAP consistently applied (except for
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changes in application in which such accountants concur); and
(3) any reports or filings made by SRI to or with the United
States Securities and Exchange Commission.
SECTION 6.13 Access to Certain Documentation; Obligors. (a)
The Lender or the Agent (and their respective agents or professional advisors)
shall at the expense of the Borrower, have the right under this Agreement, once
during each calendar year, upon reasonable prior notice to the Servicer, to
examine and audit, during business hours or at such other times as might be
reasonable under applicable circumstances, any and all of the books, records, or
other information of the Servicer, or held by another for the Servicer or on its
behalf, concerning this Agreement. The Lender and the Agent (and their
respective agents and professional advisors) shall treat as confidential any
information obtained during such examination which is not already publicly known
or available; provided, however, the Lender or the Agent may disclose such
information if required to do so by law or by any regulatory authority. Without
limitation of the foregoing, the Servicer and the Borrower acknowledge and agree
that at least four (4) times during each calendar year the Agent (and its
respective agents or professional advisors) shall, at the Agent's own expense,
upon reasonable prior notice to the Servicer and the Borrower, examine and
audit, during business hours or at such other times as might be reasonable under
applicable circumstances, any and all of the books, records or other information
of the Servicer and/or the Borrower or held by another for the Servicer and/or
the Borrower or on its behalf concerning this Agreement and compliance
therewith.
(13) The Lender or the Agent (and their respective agents or
professional advisors) shall, at their own expense, have the right under this
Agreement to, not more frequently than once each calendar quarter, contact the
Obligors with respect to any Receivables which are Pledged hereunder in order to
procure such information related to such Obligors and the related Receivables as
the Lender or the Agent deems reasonable under the circumstances. The Servicer
and the Borrower hereby agree to cooperate with the Lender and the Agent (and
their respective agents or professional advisors) in connection with any attempt
thereby to contact any such Obligor and shall provide to the Lender and the
Agent such information as is needed in order to facilitate such contact. The
Lender and the Agent (and their respective agents and professional advisors)
shall treat as confidential any information obtained during any such contact
with any such Obligor which is not already publicly known or available;
provided, however, the Lender or the Agent (and their respective agents or
professional advisors) may disclose such information if required to do so by law
or by any regulatory authority.
SECTION 6.14 Backup Servicer. If a Servicer Default shall
occur and is continuing, then the Agent may, by notice to the Servicer, the
Borrower and the Backup Servicer, terminate all of the rights and obligations of
the Servicer under this Agreement. Upon the delivery to the Servicer and the
Backup Servicer of such notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Pledged Assets or otherwise, shall
pass to and be vested in the Backup Servicer pursuant to and under this Section,
and, without limitation, the Backup Servicer is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other
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instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination or to perform
the duties of the Servicer under this Agreement. The Servicer agrees to
cooperate with the Agent and the Backup Servicer in effecting the termination of
the Servicer's responsibilities and rights hereunder, including, without
limitation, notification to the Obligors of the assignment of the servicing
function, providing the Backup Servicer with all records, in electronic or other
form, reasonably requested by it to enable the Backup Servicer to assume the
servicing functions hereunder and the transfer to the Backup Servicer for
administration by it all cash amounts which at the time should be or should have
been deposited by the Servicer in the Collection Account or thereafter be
received by the Servicer with respect to the Pledged Receivables. Neither the
Agent nor the Backup Servicer shall be deemed to have breached any obligation
hereunder as a result of a failure to make or delay in making any distribution
as and when required hereunder caused by the failure of the Servicer to remit
any amounts received by it or to deliver any documents held by it with respect
to the Pledged Assets.
The Backup Servicer's Fees and other expenses of the Backup
Servicer reimbursable hereunder for any successor Servicer shall be paid out of
Collections as set forth in Section 2.05(c) on and after the date, if any, that
the Backup Servicer assumes the responsibilities of the Servicer pursuant to
this Section. The Backup Servicer shall be required to pay all expenses incurred
by it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement therefor, except with respect to reasonable
out-of-pocket expenses of the Backup Servicer incurred in connection with (i)
the foreclosure and disposition of any Interval in excess of the costs
associated with the taking back of the deed relating to such Interval in lieu of
foreclosure and (ii) enforcing or collecting upon Acceptable Title Policies.
Any obligations of SRI hereunder other than in its capacity as
Servicer shall continue in effect notwithstanding SRI's termination as Servicer.
On and after the time the Servicer receives a notice of
termination pursuant to this Section 6.14, the Backup Servicer shall be (and the
Backup Servicer hereby agrees to be) the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and the transactions
set forth or provided for herein and shall have all the rights and powers and be
subject thereafter to all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions hereof; provided,
however, that any failure to perform such duties or responsibilities caused by
the Servicer's failure to provide information required by this Section 6.14
shall not be considered a default by the Backup Servicer hereunder. The Backup
Servicer shall have (i) no liability with respect to any obligation which was
required to be performed by the terminated Servicer prior to the date that the
Backup Servicer becomes the successor to the Servicer or any claim of a third
party based on any alleged action or inaction of the terminated Servicer, (ii)
no obligation to perform any repurchase or advancing obligations, if any, of the
Servicer, (iii) no obligation to pay any taxes required to be paid by the
Servicer (provided that the Backup Servicer shall pay any income taxes for which
it is liable), (iv) no obligation to pay any of the fees and expenses of any
other party to the transactions contemplated hereby, (v) no liability or
obligation with respect to any Servicer indemnification obligations of any prior
Servicer, including the original Servicer and (vi) no obligation, when the
Backup Servicer is ▇▇▇▇▇ Fargo, to comply with the collection procedures set
forth in the Credit and
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Collection Policy, but rather shall service the Pledged Receivables in
accordance with the provisions of Section 6.01(b). The indemnification
obligations of the Backup Servicer, upon becoming a successor Servicer, are
expressly limited to those arising on account of its failure to act in good
faith and with reasonable care under the circumstances. In addition, the Backup
Servicer shall have no liability relating to the representations and warranties
of the Servicer contained in Article IV. Notwithstanding the above, the Agent
may, if the Backup Servicer shall be unwilling to so act, or shall, if the
Backup Servicer is unable to so act, or if the Lender so requests in writing to
the Agent, appoint itself, or appoint any established servicing institution
acceptable to the Agent, as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder. Pending appointment of a successor to the Servicer
hereunder, and after the Agent notifies the Servicer to discontinue performing
servicing functions under this Agreement, the Backup Servicer (or the Agent if
there is no Backup Servicer) shall act in such capacity as hereinabove provided.
In connection with such appointment and assumption, the Agent may make such
arrangements for the compensation of such successor out of payments on Pledged
Receivables as it and such successor shall agree; provided, however, that,
except as provided herein, no such compensation shall be in excess of that
permitted the Servicer hereunder, unless otherwise agreed to by the Lender. The
Borrower, the Agent and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
The Backup Servicer may perform any of its duties hereunder
either directly or through an agent reasonably acceptable to the Agent provided
that the Backup Servicer shall be responsible to the other parties to this
Agreement for the performance of any such agent and such appointment shall in no
way affect the primary performance obligation of the Backup Servicer hereunder
to the other parties to this Agreement.
Prior to each Remittance Date, the Backup Servicer shall
compare the information on the computer tape or diskette (or other means of
electronic transmission acceptable to the Backup Servicer) most recently
delivered to the Backup Servicer by the Servicer pursuant to Section 6.11(e) to
the Monthly Remittance Report most recently delivered to the Backup Servicer by
the Servicer pursuant to Section 6.11(e) and shall:
(14) confirm that such Monthly Remittance Report is complete
on its face;
(15) confirm the Remittance Date distributions to be made on
the next Remittance Date pursuant to Section 2.05(c) hereof.
(16) verify the mathematical accuracy of the following fields
on such Monthly Remittance Report: (i) "Net Eligible Receivables Balance," (ii)
"Delinquency Rate," (iii) "Default Rate," (iv) "Excess Spread Rate" and (v)
"Weighted Average APR;" and
(17) deliver to the Agent a certification letter with respect
to the above substantially in the form of Exhibit E hereto on or before such
Remittance Date.
In the event of any discrepancy between the information set
forth in subpara-
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graphs (b) or (c) above as calculated by the Servicer from that determined or
calculated by the Backup Servicer, the Backup Servicer shall promptly report
such discrepancy to the Servicer and the Agent. In the event of a discrepancy as
described in the preceding sentence, the Servicer and the Backup Servicer shall
attempt to reconcile such discrepancies prior to the related Remittance Date,
but in the absence of a reconciliation, distributions on the related Remittance
Date shall be made consistent with the information calculated by the Servicer,
the Servicer and the Backup Servicer shall attempt to reconcile such
discrepancies prior to the next Remittance Date, and the Servicer shall promptly
report to the Agent regarding the progress, if any, which shall have been made
in reconciling such discrepancies. If the Backup Servicer and the Servicer are
unable to reconcile such discrepancies with respect to such Monthly Remittance
Report by the next Remittance Date that falls in April, July, October or
January, the Servicer shall cause independent accountants acceptable to the
Agent, at the Servicer's expense, to examine such Monthly Remittance Report and
attempt to reconcile such discrepancies at the earliest possible date (and the
Servicer shall promptly provide the Agent with a report regarding such events).
The effect, if any, of such reconciliation shall be reflected in the Monthly
Remittance Report for the next succeeding Remittance Date.
Other than as set forth in this Section 6.14, the Backup
Servicer shall have no obligation to supervise, verify, monitor or administer
the performance of the Servicer.
The Backup Servicer may not resign except upon sixty (60)
day's prior written notice to the Agent, the Servicer and the Borrower. In
addition, the Backup Servicer may be removed by the Agent or the Lender with or
without cause at any time. In the event of any such resignation or removal, the
Backup Servicer may be replaced by a new Backup Servicer selected by the Agent
upon notice to the Servicer and the Borrower, such new Backup Servicer to be
compensated in accordance with the second to last sentence of the fourth
paragraph of this Section 6.14.
SECTION 6.15 Additional Remedies of Agent Upon Event of
Default. During the continuance of any Event of Default, the Agent, in addition
to the rights specified in Section 7.01, shall have the right, in its own name
and as agent for the Lender, to take all actions now or hereafter existing at
law, in equity or by statute to enforce its rights and remedies and to protect
the interests, and enforce the rights and remedies, of the Lender (including the
institution and prosecution of all judicial, administrative and other
proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.
SECTION 6.16 Waiver of Defaults. Upon consent of the Lender,
the Agent may waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall be effective unless it shall be in writing and
signed by the
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Agent on the Lender's behalf and no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived.
SECTION 6.17 Maintenance of Certain Insurance. During the
term of its service as Servicer, the Servicer shall maintain in force an "errors
and omissions" and an employee fidelity insurance policy, in each case, in an
amount not less than $2,000,000 in a form that would cover any loss of
Collections by the Servicer hereunder caused by employee dishonesty, and with an
insurance company reasonably acceptable to the Lender and the Agent. The
Servicer shall prepare and present, on behalf of itself, the Agent and the
Lender, claims under any such policy in a timely fashion in accordance with the
terms of such policy, and upon the filing of any claim on any policy described
in this Section, the Servicer shall promptly notify the Agent of such claim.
SECTION 6.18 Segregation of Collections. The Servicer shall
not commingle funds constituting Collections with any other funds of the
Servicer.
SECTION 6.19 UCC Matters; Protection and Perfection of Pledged
Assets. The Borrower will not make any change to its corporate name or use any
tradenames, fictitious names, assumed names, "doing business as" names or other
names (other than those listed on Schedule III hereto, as such schedule may be
revised from time to time to reflect name changes and name usage permitted under
the terms of this Section 6.19 after compliance with all terms and conditions of
this Section 6.19 related thereto) unless prior to the effective date of any
such name change or use, the Borrower notifies the Agent of such change in
writing and delivers to the Agent such executed financing statements as the
Agent may reasonably request to reflect such name change or use, together with
such other documents and instruments as the Agent may reasonably request in
connection therewith. The Borrower will not change the location of its chief
executive office or the location of its records regarding the Pledged
Receivables unless prior to the effective date of any such change of location,
the Borrower notifies the Agent of such change of location in writing and
delivers to the Agent such executed financing statements as the Agent may
reasonably request to reflect such change of location, together with such
Opinions of Counsel, documents and instruments as the Agent may reasonably
request in connection therewith. The Borrower agrees that from time to time, at
its expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that the Agent may reasonably request in
order to perfect, protect or more fully evidence the Lender's interest in the
Pledged Assets acquired hereunder, or to enable the Lender or the Agent to
exercise or enforce any of their respective rights hereunder. Without limiting
the generality of the foregoing, the Borrower will upon the request of the
Agent: (i) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate or as the Agent may request
(provided that the Borrower shall not be required to execute and file such any
financing statements against individual Obligors), and (ii) ▇▇▇▇ its master data
processing records evidencing such Pledged Receivables with a legend acceptable
to the Agent, evidencing that the Lender has acquired an interest therein as
provided in this Agreement. The Borrower hereby authorizes the Agent to file one
or more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Pledged Receivables and the
Related Security related thereto and the proceeds of the foregoing now existing
or hereafter arising without the signature of the Borrower where permitted by
law.
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Subject to applicable law, a carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Pledged Receivables, or any
part thereof shall be sufficient as a financing statement. The Borrower shall,
upon the request of the Agent at any time after the occurrence of an Event of
Default and at the Borrower's expense, notify the Obligors obligated to pay any
Pledged Receivables, or any of them, of the security interest of the Lender in
the Pledged Assets. If the Borrower fails to perform any of its agreements or
obligations under this Section 6.19, the Agent may (but shall not be required
to) itself perform, or cause performance of, such agreement or obligation, and
the expenses of the Agent incurred in connection therewith shall be payable by
the Borrower upon the Agent's demand therefor. For purposes of enabling the
Agent to exercise its rights described in the preceding sentence and elsewhere
in this Article VI, the Borrower and the Lender hereby authorize each of the
Agent and its successors and assigns to take any and all steps in the Borrower's
name and on behalf of the Borrower and the Lender necessary or desirable, in the
determination of the Agent, to collect all amounts due under any and all Pledged
Receivables, including, without limitation, endorsing the Borrower's name on
checks and other instruments representing Collections and enforcing such Pledged
Receivables and, if any, the related guarantees.
SECTION 6.20 Servicer Advances. The Servicer may, in its sole
discretion, make an advance in respect of any payment due on a Pledged
Receivable to the extent such payment has not been received by the Servicer as
of its due date and the Servicer reasonably expects such payment will be
ultimately recoverable (a "Servicer Advance"). The Servicer shall deposit into
the Collection Account in immediately available funds the aggregate of all
Servicer Advances to be made during a Remittance Period on or prior to the
Business Day immediately preceding the related Remittance Date. The Servicer
shall be entitled to reimbursement for such Servicer Advances from monies in the
Collection Account as provided in Section 2.05(c) hereof.
SECTION 6.21 Repurchase of Receivables Upon Breach of Covenant
or Representation and Warranty by SRI. (a) The Borrower or the Servicer, as the
case may be, shall inform the other parties to this Agreement promptly, in
writing, upon the discovery of any breach of SRI's representations, warranties
and/or covenants pursuant to Section 6.05 or Article V; provided, however, that
the failure to provide any such notice shall not diminish, in any manner
whatsoever, any obligation of SRI hereunder to repurchase any Pledged
Receivable. Unless such breach shall have been cured by the last day of the
first full calendar month following the discovery by or notice to SRI of such
breach, SRI shall have an obligation, and the Borrower shall and the Agent may,
enforce such obligation of SRI, to repurchase any Pledged Receivable materially
and adversely affected by such breach. The Borrower shall notify the Agent
promptly, in writing, of any failure by SRI to so repurchase any such Pledged
Receivable. In consideration of the repurchase of such Pledged Receivable, SRI
shall remit funds in an amount equal to the Release Price for such Pledged
Receivable to the Collection Account on the date of such repurchase.
(18) In addition to the foregoing and notwithstanding whether
any Pledged Receivable shall have been repurchased by SRI pursuant to Section
6.21(a), SRI hereby indemnifies the Borrower, the Agent and the Lender against
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted
77
against or incurred by any of them in connection with any of the events or facts
giving rise to a breach of SRI's representations, warranties, agreements and/or
covenants set forth in Article V or Article VI.
SECTION 6.22 Compliance with Applicable Law. The Servicer and
the Borrower shall at all times comply in all material respects with all
requirements of applicable federal, state and local laws, and regulations
thereunder (including, without limitation but only if and to the extent
applicable, usury laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's Regulations "B" and "Z",
the Soldiers' and Sailors' Civil Relief Act of 1940 and state adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code, the Interstate
Land Sales Full Disclosure Act, the Real Estate Settlement Procedures Act and
all other consumer credit laws and equal credit opportunity and disclosure laws
and any regulations promulgated thereunder) in the conduct of its business.
SECTION 6.23 The Consulting Agreement. SRI:
(19) agrees (i) to faithfully abide by, perform and discharge
each and every obligation, covenant and agreement of the Consulting Agreement to
be performed by SRI thereunder at no cost or expense to the Agent or the Lender,
(ii) to enforce or secure the performance of each and every obligation,
covenant, condition and agreement of the Consultant thereunder and (iii) not to
terminate, modify, extend or in any way alter the terms of the Consulting
Agreement or accept a surrender thereof, or to waive, excuse, condone or in any
manner release or discharge the Consultant of or from the obligations,
covenants, conditions and agreements to be performed by the Consultant in the
manner and at the place and time specified thereunder;
(20) hereby expressly releases, relinquishes and surrenders
unto the Agent all its right, power and authority to amend, modify, cancel,
terminate, or in any way alter the terms or provisions of the Consulting
Agreement without the prior written consent of the Agent;
(21) at no cost or expense to the Agent or the Lender, shall
appear in and defend any action or proceeding arising under, growing out of or
in any manner connected with the Consulting Agreement or the obligations, duties
or liabilities of SRI thereunder, and shall pay all costs and expenses of the
Agent or the Lender, including attorneys' fees, in any action or proceeding
concerning the Consulting Agreement in which the Agent or the Lender may appear;
(22) agrees that if SRI fails to make any payment or to do any
act as herein provided or under the Consulting Agreement, the Agent shall have
the right, but without the obligation to do so and without notice to or demand
on SRI, and without releasing SRI from any obligation hereunder or under the
Consulting Agreement, to make such payment or do such act in such manner and to
such extent as the Agent may deem necessary to protect the security hereof or
the rights or powers of the Agent or the Lender hereunder or under the
Consulting Agreement, including, without limitation, the right to appear in and
defend any action or proceeding
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purporting to affect the security hereof or the rights or powers of the Agent or
the Lender hereunder or under the Consulting Agreement, to perform and discharge
each and every obligation, covenant and agreement of SRI contained in the
Consulting Agreement, and, in exercising any such rights or powers, to pay
necessary costs and expenses, employ counsel and incur and pay reasonable
attorneys' fees (such amounts to be reimbursed to the Agent and the Lender by
SRI); and
(23) agrees that upon the occurrence of an Event of Default or
Early Amortization Event and the declaration by the Agent that the Early
Amortization Commencement Date shall have occurred, the Agent shall have the
right to direct the Consultant to assume management control of the operations of
the Developments.
ARTICLE VII. EVENTS OF DEFAULT
SECTION 7.1 Events of Default. If any of the following events
("Events of Default") shall occur:
(24) the Facility Amount shall at any time be greater than the
lesser of (i) the Capital Limit or (ii) the Borrowing Limit minus the Discount
Amount; or
(25) the occurrence of any Bankruptcy Event with respect to
the Borrower or SRI; or
(26) any representation or warranty made or deemed to be made
by the Borrower or SRI (or any of their respective officers) under or in
connection with this Agreement, any remittance report or other information or
report delivered pursuant hereto or any other Transaction Document shall prove
to have been false or incorrect when made (including, without limitation, any
representation or warranty made or deemed to be made by SRI (or any of its
officers or agents) under or in connection with the Receivables Purchase
Agreement); provided, however, that if any breach described above is cured by
the repurchase of Receivables pursuant to Article VI of the Receivables Purchase
Agreement or by a repayment pursuant to Section 2.12 or a repurchase pursuant to
Section 6.21 hereof, such breach shall cease to constitute an Event of Default;
or
(27) (i) the Borrower or SRI shall fail to perform or observe
any term, covenant or agreement hereunder or under any other Transaction
Document (including the failure to make any payment or deposit to be made by it
hereunder or under the Fee Letter) when due and such failure remains unremedied
for two (2) Business Days after written notice thereof is provided by the Agent;
or
(28) the Borrower or SRI shall fail to pay any principal of or
premium or interest on any Debt (in the case of SRI, in an amount in excess of
$250,000) when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration,
79
demand or otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such Debt;
or any other default under any agreement or instrument relating to any Debt or
any other event, shall occur and shall continue after the applicable grace
period, if any, specified in such agreement or instrument if the effect of such
default or event is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and payable
or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; or
(29) the occurrence of any default under any of the terms of,
or otherwise in respect of, any agreement, security, note or certificate related
to any Take-Out Securitization or other outstanding term securitization serviced
by the Servicer and the passage of any applicable grace period without the cure
thereof; or
(30) (i) the Lender shall at any time fail to have a valid,
perfected, first priority security interest in any of the Pledged Assets or (ii)
any purchase by the Borrower of a Receivable under the Receivables Purchase
Agreement shall, for any reason, cease to create in favor of the Borrower a
perfected ownership interest in such Receivable; provided, however, that if an
event described in the foregoing clause (i) or (ii) is cured by the repurchase
of Receivables pursuant to Article VI of the Receivables Purchase Agreement or
by a repayment pursuant to Section 2.12 or a repurchase pursuant to Section 6.21
hereof, such event shall cease to constitute an Event of Default; or
(31) the Borrower or SRI shall have suffered any material
adverse change to its financial condition or operations which would adversely
affect the collectibility of the Pledged Receivables or the Borrower's or SRI's
ability to conduct its business; or
(32) SRI or the Borrower can no longer conduct business for
any reason; or
(33) the Receivables Purchase Agreement shall cease to be in
full force and effect; or
(34) the occurrence of a Servicer Default (if the Servicer is
SRI or an Affiliate thereof); or
(35) SRI has at any time a Tangible Net Worth in an amount
which shall be less than an amount equal to (A) the greater of (1) $100,000,000
or (2) an amount equal to 90% of the Tangible Net Worth of SRI as of September
30, 2001 plus (B) seventy-five percent (75%) of the aggregate amount of proceeds
received by SRI after January 1, 2002 in connection with (1) each issuance by
SRI of any class or classes of capital stock after January 1, 2002 and (2) each
incurrence of Debt after January 1, 2002, other than Debt which shall be the
most senior Debt of SRI plus (C) fifty percent (50%) of the aggregate amount of
net income (calculated in accordance with GAAP) of SRI after January 1, 2002; or
(36) any failure shall have occurred on the part of the
Borrower or SRI duly to observe or perform in any material respect any covenant
or agreement related to any Purchased
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Rate Cap or any covenant or agreement under the Sinking Fund Agreement; or
(37) the Servicer shall fail to deliver to the Agent within 90
days after the Amendment Date, audited financial statements of the type
described in Section 6.12(d) and (e) with respect to SRI and the Borrower for
the year ended December 31, 2000, in each case, accompanied by Independent
Accountants' opinions reasonably acceptable to the Agent and which are otherwise
satisfactory to the Agent; or
(38) the Consulting Agreement and the letter agreement dated
as of the date hereof, by and among the Agent, the Lender, SRI, the Borrower,
Textron Financial Corp., ▇▇▇▇▇▇ Financial, Inc., Sovereign Bank and the
Consultant, or a replacement consulting agreement acceptable to the Agent, shall
cease to be in full force and effect for greater than 30 days; or
(39) (i) For the fiscal quarter of SRI ending June 30, 2002,
SRI shall fail to have for such fiscal quarter an Interest Coverage Ratio of at
least 1.1:1; (ii) for the fiscal quarter of SRI ending September 30, 2002, the
average of the Interest Coverage Ratio of SRI for such fiscal quarter and the
Interest Coverage Ratio for the immediately preceding fiscal quarter shall fail
to be at least 1.1:1; (iii) for the fiscal quarter of SRI ending December 31,
2002, the average of the Interest Coverage Ratio of SRI for such fiscal quarter
and the Interest Coverage Ratios for the two immediately preceding fiscal
quarters shall fail to be at least 1.1:1; (iv) for the fiscal quarter of SRI
ending March 31, 2003, the average of the Interest Coverage Ratio of SRI for
such fiscal quarter and the Interest Coverage Ratios for the three immediately
preceding fiscal quarters shall fail to be at least 1.1:1 or (v) for any fiscal
quarter of SRI beginning with, and including, the fiscal quarter ending June 30,
2003 and for any fiscal quarter of SRI thereafter, the average of the Interest
Coverage Ratio of SRI for such fiscal quarter and the Interest Coverage Ratios
for each of the three immediately preceding fiscal quarters shall fail to be at
least 1.25:1; or
(40) the failure of the Borrower to accept the Put and to make
the Put Payment to the Agent on the Put Date;
then the Agent may, by notice to the Borrower, declare the Early Amortization
Commencement Date to have occurred; provided, that, in the case of any event
described in 7.01(b) above, the Early Amortization Commencement Date shall be
deemed to have occurred automatically upon the occurrence of such event. Upon
any such declaration or automatic occurrence, (i) the Borrower shall cease
purchasing Receivables from SRI under the Receivables Purchase Agreement, (ii)
the Lender shall cease issuing commercial paper notes to fund or maintain the
Loans hereunder, (iii) the Liquidity/Credit Enhancement Facility shall be drawn
upon by the Lender from time to time thereafter in order to retire the maturing
commercial paper notes issued to fund or maintain the Loans hereunder (and the
Loans hereunder maintained by the amounts so drawn under the Liquidity/Credit
Enhancement Facility shall bear interest at the Default Funding Rate), (iv) at
the option of the Lender in its sole discretion, the Lender may declare the
Loans made to the Borrower hereunder and all Yield and all Fees accrued on such
Loans and any other Obligations to be immediately due and payable (and the
Borrower shall pay such Loans and all such amounts and Obligations immediately);
and (v) at the option of the Lender in its sole discretion, the Agent, on behalf
of the Lender, may direct the Obligors to make all payments
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under the Pledged Receivables directly to the Backup Servicer, the Agent, the
Lender or any lockbox or account established by any of such parties. In
addition, upon any such declaration or upon any such automatic occurrence, the
Agent and the Lender shall have, in addition to all other rights and remedies
under this Agreement or otherwise, all other rights and remedies provided under
the UCC of the applicable jurisdiction and other applicable laws, which rights
shall be cumulative. If any Event of Default shall have occurred, the Non-CP
Rate and the CP Rate shall be increased to the Default Funding Rate, effective
as of the date of the occurrence of such Event of Default and shall remain at
the Default Funding Rate.
SECTION 7.2 Additional Remedies of Agent and Lender. (a) If,
upon the Lender's declaration that the Loans made to the Borrower hereunder are
immediately due and payable pursuant to Section 7.01 or on the Facility Maturity
Date, the aggregate outstanding principal amount of the Loans, all accrued Fees
and Yield and any other Obligations are not immediately paid in full, then the
Agent, in addition to all other rights specified hereunder, shall have the
right, in its own name and as agent for the Lender, to immediately sell in a
commercially reasonable manner and otherwise in accordance with applicable law,
in a recognized market (if one exists) at such price or prices as the Agent may
reasonably deem satisfactory, any or all Pledged Assets and apply the proceeds
thereof to the Obligations.
(41) The parties recognize that it may not be possible to sell
all of the Pledged Assets on a particular Business Day, or in a transaction with
the same purchaser, or in the same manner because the market for such Pledged
Assets may not be liquid. Accordingly, the Agent may elect, in its sole
discretion, the time and manner of liquidating any Pledged Assets and nothing
contained herein shall obligate the Agent to liquidate any Pledged Assets on the
date the Lender declares the Loans made to the Borrower hereunder to be
immediately due and payable pursuant to Section 7.01 or to liquidate all Pledged
Assets in the same manner or on the same Business Day.
(42) Any amounts received from any sale or liquidation of the
Pledged Assets pursuant to this Section 7.02 in excess of the Obligations will
be returned to the Borrower, its successors or assigns, or to whosoever may be
lawfully entitled to receive the same or as a court of competent jurisdiction
may otherwise direct.
(43) The Agent and the Lenders shall have, in addition to all
the rights and remedies provided herein and provided by applicable federal,
state, foreign, and local laws (including, without limitation, the rights and
remedies of a secured party under the Uniform Commercial Code of any applicable
state, to the extent that the Uniform Commercial Code is applicable, and the
right to offset any mutual debt and claim), all rights and remedies available to
the lenders in law, in equity, or under any other agreement between the Lender
and the Borrower.
(44) Except as otherwise expressly provided in this Agreement,
no remedy provided for by this Agreement shall be exclusive of any other remedy,
and each and every remedy shall be cumulative and in addition to any other
remedy, and no delay or omission to exercise any right or remedy shall impair
any such right or remedy or shall be deemed to be a waiver of any Early
Amortization Event or Event of Default.
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(45) If a Development is no longer an Eligible Development, no
additional Receivables related to such Development will be financed under this
Agreement until such time as the circumstance which caused such Development to
cease to be an Eligible Development no longer exists.
ARTICLE VIII. INDEMNIFICATION
SECTION 8.1 Indemnities by the Borrower. Without limiting any
other rights which the Agent, the Lender, the Backup Servicer or any of their
respective Affiliates may have hereunder or under applicable law, the Borrower
hereby agrees to indemnify the Agent, the Lender, the Backup Servicer and each
of their respective Affiliates (each an "Indemnified Party" for purposes of this
Article VIII) from and against any and all damages, losses, claims, liabilities
and related costs and expenses, including reasonable attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising out of
or as a result of this Agreement or in respect of any Pledged Assets, excluding,
however, Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of the Agent, the Lender, the Backup Servicer or
such Affiliate. Without limiting the foregoing, the Borrower shall indemnify
each Indemnified Party for Indemnified Amounts relating to or resulting from:
(46) any Pledged Receivable treated as or represented by the
Borrower to be an Eligible Receivable which is not an Eligible Receivable;
(47) reliance on any representation or warranty made or deemed
made by the Borrower or any of its agents, including without limitation, the
Servicer or any of their respective officers under or in connection with this
Agreement, which shall have been false or incorrect in any material respect when
made or deemed made or delivered;
(48) the failure by the Borrower or any of its agents,
including without limitation, the Servicer to comply with any term, provision or
covenant contained in this Agreement or any agreement executed in connection
with this Agreement, or with any applicable law, rule or regulation with respect
to any Pledged Assets, or the nonconformity of any Pledged Assets with any such
applicable law, rule or regulation;
(49) the failure to vest and maintain vested in the Agent, for
the benefit of the Lender, or to transfer to the Agent, for the benefit of the
Lender, a first priority perfected security interest in the Receivables which
are, or are purported to be, Pledged Receivables, together with all Collections,
Related Security and other Pledged Assets related thereto (including, without
limitation, any and all Intervals with respect to such Receivables), free and
clear of any Adverse Claim whether existing at the time of the related Borrowing
or at any time thereafter;
(50) the failure to maintain, as of the close of business on
each Business Day prior to the Collection Date, a Facility Amount which is less
than or equal to the lesser of (x) the
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Borrowing Limit minus the Discount Amount on such Business Day, or (y) the
Capital Limit on such Business Day (provided, that in determining the Capital
Limit for purposes of this Section 8.01(e), all information used in such
determination must be accurate as of the date of such determination); (1)
(51) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC or real
property laws of any applicable jurisdiction or other applicable laws with
respect to any Receivables which are, or are purported to be, Pledged
Receivables or the other Pledged Assets related thereto, whether at the time of
any Borrowing or at any subsequent time;
(52) any dispute, claim, offset or defense to the payment of
any Receivable which is, or is purported to be, a Pledged Receivable (including,
without limitation, a defense based on such Receivable not being a legal, valid
and binding obligation of such Obligor enforceable against it in accordance with
its terms);
(53) any failure of the Borrower or any of its agents,
including without limitation, the Servicer to perform its duties or obligations
in accordance with the provisions of this Agreement;
(54) the failure to pay prior to delinquency any taxes payable
in connection with the Pledged Receivables or the Pledged Assets related
thereto;
(55) any repayment by the Agent or the Lender of any amount
previously distributed in payment of Loans or payment of Yield or Fees or any
other amount due hereunder, in each case which amount the Agent or the Lender
believes in good faith is required to be repaid;
(56) the commingling of Collections of Pledged Receivables at
any time with other funds;
(57) any investigation, litigation or proceeding related to a
Pledged Receivable, this Agreement or the use of proceeds of Loans or the
Pledged Assets;
(58) any failure by the Borrower to give reasonably equivalent
value to SRI in consideration for the transfer by SRI to the Borrower of any
Receivable or any attempt by any Person to void or otherwise avoid any such
transfer under any statutory provision or common law or equitable action,
including, without limitation, any provision of the Bankruptcy Code;
(59) any failure of the Borrower or any of its respective
agents or representatives, including without limitation, the Servicer
(including, without limitation, agents, representatives and employees of the
Servicer acting pursuant to authority granted under Section 6.01 hereof) to
remit to the Servicer or the Agent, Collections of Pledged Receivables remitted
to the Borrower, the Servicer or any such agent or representative;
(60) any failure on the part of the Borrower or any of its
agents, including
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without limitation, SRI duly to observe or perform in any material respect any
covenant or agreement under the Sinking Fund Agreement; and/or
(61) the failure at any time of the Borrower to maintain funds
in the Sinking Fund Account in the amount required under the Sinking Fund
Account Agreement; provided, that such failure has continued beyond any grace
period provided for in the Sinking Fund Agreement.
Any amounts subject to the indemnification provisions of this Section 8.01 shall
be paid by the Borrower to the Agent within two (2) Business Days following the
Agent's written demand therefor.
SECTION 8.2 Indemnities by the Servicer. Without limiting any
other rights which the Agent, the Lender or any of their respective Affiliates
may have hereunder or under applicable law, the Servicer (if SRI or one of its
Affiliates) hereby agrees to indemnify each Indemnified Party from and against
any and all Indemnified Amounts awarded against or incurred by any of them
arising out of or as a result of the Servicer's performance of or failure to
perform its obligations under this Agreement excluding, however, Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of the Agent, the Lender or such Affiliate. Without limiting the
foregoing, the Servicer (if SRI or one of its Affiliates) shall indemnify each
Indemnified Party for Indemnified Amounts relating to or resulting from:
(62) any Pledged Receivable treated as or represented by the
Servicer (if SRI or one of its Affiliates) to be an Eligible Receivable which is
not an Eligible Receivable; or
(63) reliance on any representation or warranty made or deemed
made by the Servicer (if SRI or one of its Affiliates) or any of their
respective officers under or in connection with this Agreement, which shall have
been false or incorrect in any material respect when made or deemed made or
delivered; or
(64) the failure by the Servicer (if SRI or one of its
Affiliates) to comply with any term, provision or covenant obtained in this
Agreement or any agreement executed in connection with this Agreement, or with
any applicable law, rule or regulation with respect to any Pledged Assets, or
the nonconformity of any Pledged Assets with any such applicable law, rule or
regulation; or
(65) the failure to vest and maintain vested in the Agent, for
the benefit of the Lender, or to transfer to the Agent, for the benefit of the
Lender, a first priority perfected security interest in the Receivables which
are, or are purported to be, Pledged Receivables, together with all Collections,
Related Security and other Pledged Assets related thereto (including, without
limitation, any and all Interval's with respect to such Receivables), free and
clear of any Adverse Claim (other than Permitted Liens and Encumbrances) whether
existing at the time of the related Borrowing or at any time thereafter; or
(66) the commingling by the Servicer (if SRI or one of its
Affiliates) of Collections of Pledged Receivables at any time with other funds;
or
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(67) any failure of the Servicer (if SRI or one of its
Affiliates) or any of its respective agents or representatives (including,
without limitation, agents, representatives and employees of the Servicer (if
SRI or one of its Affiliates) acting pursuant to authority granted under Section
6.01 hereof) to remit to the Servicer (if SRI or one of its Affiliates) or the
Agent, Collections of Pledged Receivables remitted to the Borrower, the Servicer
(if SRI or one of its Affiliates) or any such agent or representative; and/or
(68) any fees or other costs and expenses payable to any
replacement Servicer, to the extent in excess of the servicing fees payable to
the Servicer hereunder.
Any amounts subject to the indemnification provisions of this Section 8.02 shall
be paid by the Servicer (if SRI or one of its Affiliates) to the Agent within
two (2) Business Days following the Agent's written demand therefor.
Each applicable Indemnified Party shall deliver to the
indemnifying party under Section 8.01 and Section 8.02, within a reasonable time
after such Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by such Indemnified Party relating
to the claim giving rise to the Indemnified Amounts. Each such Indemnified Party
will cooperate with the Borrower and the Servicer in connection with any claim
giving rise to the Indemnified Amounts to minimize the liability of such
indemnifying parties, provided that nothing contained herein shall obligate any
such Indemnified Party to take any action which, in the opinion of such
Indemnified Party, is unlawful or otherwise disadvantageous to such Indemnified
Party.
ARTICLE IX. MISCELLANEOUS
SECTION 9.1 Amendments and Waivers. (a) Except as provided in
Section 9.01(b), no amendment or modification of any provision of this Agreement
shall be effective without the written agreement of the Borrower, the Servicer,
the Backup Servicer, the Agent and the Lender, and no termination or, except as
set forth in Section 9.12 hereof, waiver of any provision of this Agreement or
consent to any departure therefrom by the Borrower or the Servicer shall be
effective without the written concurrence of the Agent and the Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
(69) Notwithstanding the provisions of Section 9.01(a), in the
event that there is more than one Lender, the written consent of each Lender
shall be required for any amendment, modification or waiver (i) reducing any
outstanding Loans, or the Yield thereon, (ii) postponing any date for any
payment of any Loan, or the Yield thereon, or (iii) modifying the provisions of
this Section 9.01, or (iv) increasing the Capital Limit or the Borrowing Limit.
SECTION 9.2 Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy) and mailed,
telexed, transmitted or
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delivered, as to each party hereto, at its address set forth under its name on
the signature pages hereof or specified in such party's Assignment and
Acceptance or at such other address as shall be designated by such party in a
written notice to the other parties hereto. All such notices and communications
shall be effective, upon receipt, or in the case of (i) notice by mail, five
days after being deposited in the United States mails, first class postage
prepaid, (ii) notice by telex, when telexed against receipt of answerback, or
(iii) notice by facsimile copy, when verbal communication of receipt is
obtained, except that notices and communications pursuant to Article II shall
not be effective until received.
SECTION 9.3 No Waiver; Remedies. Except as set forth in
Section 9.12 hereof, no failure on the part of the Agent or the Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 9.4 Binding Effect; Assignability; Multiple Lenders.
(i) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Servicer, the Agent, the Lender, the Backup Servicer and their
respective successors and permitted assigns. This Agreement and the Lender's
rights and obligations hereunder and interest herein shall be assignable in
whole or in part (including by way of the sale of participation interests
therein) by the Lender and its successors and assigns. None of the Borrower, the
Servicer or the Backup Servicer may assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the Lender
and the Agent. The parties to each assignment or participation made pursuant to
this Section 9.04 shall execute and deliver to the Agent for its acceptance and
recording in its books and records, an assignment and acceptance agreement (an
"Assignment and Acceptance") or a participation agreement or other transfer
instrument reasonably satisfactory in form and substance to the Agent and the
Borrower. Each such assignment or participation shall be effective as of the
date specified in the applicable Assignment and Acceptance or other agreement or
instrument only after the execution, delivery, acceptance and recording as
described in the preceding sentence. The Agent shall notify the Borrower of any
assignment or participation thereof made pursuant to this Section 9.04. The
Lender may, in connection with any assignment or participation or any proposed
assignment or participation pursuant to this Section 9.04, disclose to the
assignee or participant or proposed assignee or participant any information
relating to the Borrower and the Pledged Assets furnished to the Lender by or on
behalf of the Borrower or the Servicer.
Whenever the term "Lender" is used herein, it shall mean
Autobahn and/or any other Person which shall have executed an Assignment and
Acceptance; provided, however, that each such party shall have a pro rata share
of the rights and obligations of the Lender hereunder in such percentage amount
(the "Commitment Percentage") as shall be obtained by dividing such party's
commitment to fund Loans hereunder by the total commitment of all parties to
fund Loans hereunder. Any right at any time of the Lender to enforce any remedy,
or instruct the Agent to take (or refrain from taking) any action hereunder,
shall be exercised by the Agent only upon direction by such parties that hold a
majority of the Commitment Percentages at such time.
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SECTION 9.5 Term of This Agreement. This Agreement including,
without limitation, the Borrower's obligation to observe its covenants set forth
in Articles V and VI, and the Servicer's obligation to observe its covenants set
forth in Articles V and VI, shall remain in full force and effect until the
Collection Date; provided, however, that the rights and remedies with respect to
any breach of any representation and warranty made or deemed made by the
Borrower or Servicer pursuant to Articles III and IV and the indemnification and
payment provisions of Article VIII and Article IX and the provisions of Section
9.08 and Section 9.09 shall be continuing and shall survive any termination of
this Agreement.
SECTION 9.6 Governing Law; Jury Waiver. THIS AGREEMENT SHALL,
IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
ANY CONFLICTS OF LAW PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF
THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE INTERESTS OF THE LENDER IN THE PLEDGED RECEIVABLES, OR
REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREUNDER.
SECTION 9.7 Costs, Expenses and Taxes. (i) In addition to the
rights of indemnification granted to the Backup Servicer, the Agent, the Lender
and its Affiliates under Article VIII hereof, the Borrower agrees to pay on
demand all reasonable costs and expenses of the Backup Servicer, the Lender and
the Agent incurred in connection with the preparation, execution, delivery,
administration of, or any waiver or consent issued or amendment prepared in
connection with, this Agreement, the other Transaction Documents and the other
documents to be delivered hereunder or in connection herewith or therewith or
incurred in connection with any amendment, waiver or modification of this
Agreement, any other Transaction Document, and any other documents to be
delivered hereunder or thereunder or in connection herewith or therewith that is
necessary or requested by any of the Borrower, the Servicer, the Lender or a
Rating Agency or made necessary or appropriate as a result of the actions of any
regulatory, tax or accounting body affecting the Lender and its Affiliates, or
which is related to an Event of Default including, without limitation, the
reasonable fees and reasonable out-of-pocket expenses of counsel for the Backup
Servicer, the Agent and the Lender with respect thereto and with respect to
advising the Backup Servicer, the Agent and the Lender as to their respective
rights and remedies under this Agreement and the other documents to be delivered
hereunder or in connection herewith, and all costs and expenses, if any
(including reasonable counsel fees and expenses), incurred by the Backup
Servicer, the Agent or the Lender in connection with the enforcement of this
Agreement and the other documents to be delivered hereunder or in connection
herewith.
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(1) The Borrower shall pay on demand any and all stamp, sales,
excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
the other documents to be delivered hereunder or any agreement or other document
providing liquidity support, credit enhancement or other similar support to the
Lender which is specific to this Agreement or the funding or maintenance of
Loans hereunder.
(2) The Borrower shall pay on demand all other costs, expenses
and taxes (excluding franchise and income taxes) incurred by any Issuer or
incurred by any general or limited partner, or member or shareholder of such
Issuer on behalf of such Issuer related to this Agreement ("Other Costs"),
including, without limitation, the portion of the cost of rating such Issuer's
commercial paper by independent financial rating agencies which is allocable to
commercial paper issued to fund Loans hereunder, the cost of obtaining a shadow
rating from the Rating Agencies with respect to the financing facility provided
for under this Agreement and the other Transaction Documents, the taxes
(excluding franchise and income taxes) resulting from such Issuer's operations
which are allocable to the provision of Loans hereunder, and the reasonable fees
and out-of-pocket expenses of counsel for the Issuer with respect to (i)
advising the Issuer as to its rights and remedies under this Agreement and the
other documents to be delivered hereunder or in connection herewith, (ii) the
enforcement of this Agreement and the other documents to be delivered hereunder
or in connection herewith and (iii) advising the Issuer as to the issuance of
the Issuer's commercial paper notes to fund Loans hereunder and action in
connection with such issuance.
SECTION 9.08 No Proceedings. Each of the Borrower, the Agent,
the Servicer and the Lender hereby agrees that it will not institute against, or
join any other Person in instituting against, any Issuer any proceedings of the
type referred to in the definition of Bankruptcy Event so long as any commercial
paper issued by such Issuer shall be outstanding or there shall not have elapsed
one year and one day since the last day on which any such commercial paper shall
have been outstanding. The Servicer hereby agrees that it will not institute
against, or join any other Person in instituting against, the Borrower any
proceedings of the type referred to in the definition of Bankruptcy Event (a)
prior to the Collection Date and (b) so long as any commercial paper issued by a
Lender which is an Issuer shall be outstanding or there shall not have elapsed
one year and one day since the last day on which any such commercial paper shall
have been outstanding. The provisions of this Section 9.08 shall survive the
termination of this Agreement.
SECTION 9.09 Recourse Against Certain Parties. No recourse
under or with respect to any obligation, covenant or agreement (including,
without limitation, the payment of any fees or any other obligations) of the
Lender or the Agent as contained in this Agreement or any other agreement,
instrument or document entered into by the Lender or the Agent pursuant hereto
or in connection herewith shall be had against any administrator of the Lender
or the Agent or any incorporator, affiliate, stockholder, officer, employee or
director of the Lender or the Agent or of any such administrator, as such, by
the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise; it being expressly agreed and understood
that the agreements of each party hereto contained in this Agreement and all of
the
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other agreements, instruments and documents entered into by the Lender or the
Agent pursuant hereto or in connection herewith are, in each case, solely the
corporate obligations of such party (and nothing in this Section 9.09 shall be
construed to diminish in any way such corporate obligations of such party), and
that no personal liability whatsoever shall attach to or be incurred by any
administrator of the Lender or the Agent or any incorporator, stockholder,
affiliate, officer, employee or director of the Lender or the Agent or of any
such administrator, as such, or any of them, under or by reason of any of the
obligations, covenants or agreements of the Lender or the Agent contained in
this Agreement or in any other such instruments, documents or agreements, or
which are implied therefrom, and that any and all personal liability of every
such administrator of the Lender or the Agent and each incorporator,
stockholder, affiliate, officer, employee or director of the Lender or the Agent
or of any such administrator, or any of them, for breaches by the Lender or the
Agent of any such obligations, covenants or agreements, which liability may
arise either at common law or at equity, by statute or constitution, or
otherwise, is hereby expressly waived as a condition of and in consideration for
the execution of this Agreement. The provisions of this Section 9.09 shall
survive the termination of this Agreement.
SECTION 9.10 Execution in Counterparts; Severability;
Integration. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement. In case any
provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
This Agreement contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof, superseding all prior oral or written understandings
other than the Fee Letter.
[SIGNATURE PAGE TO FOLLOW.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE BORROWER: SILVERLEAF FINANCE I, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Title: CFO
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
THE SERVICER: SILVERLEAF RESORTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Chief Executive Officer
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation No.: (▇▇▇) ▇▇▇-▇▇▇▇
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THE AGENT: DZ BANK AG DEUTSCHE ZENTRAL-
GENOSSENSCHAFTSBANK, FRANKFURT AM
MAIN
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: VP
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: VP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: 212/745-1651
Confirmation No.: 212/745-1658
THE LENDER: AUTOBAHN FUNDING COMPANY LLC
By: DZ BANK AG Deutsche Zentral-
Genossenschaftsbank, Frankfurt am
Main, its attorney-in-fact
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: VP
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: VP
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: 212/745-1651
Confirmation No.: 212/745-1658
92
THE AGENT'S BANK: U.S. BANK TRUST NATIONAL ASSOCIATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President
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Attention: ▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: 212/514-6808
Confirmation No.: 212/361-2893
THE BACKUP SERVICER: ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Assistant Vice President
Sixth Street and Marquette Avenue
MAC N9311-161
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Attention: Corporate Trust Services
- Asset Backed Administration
Facsimile No.: 612/667-3464
Telephone No.: 612/▇▇▇-▇▇▇▇
Exh. J-93