EXECUTION COPY
BXG RECEIVABLES NOTE TRUST 2002-A,
as Issuer
BLUEGREEN CORPORATION,
as Servicer
VACATION TRUST, INC.,
as Club Trustee
CONCORD SERVICING CORPORATION,
as Backup Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
---------------------
INDENTURE
Dated as of November 15, 2002
---------------------
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION ........................................................3
SECTION 1.1. General Definitions ...........................................3
SECTION 1.2. Compliance Certificates and Opinions ..........................3
SECTION 1.3. Form of Documents Delivered to Indenture Trustee ..............3
SECTION 1.4. Acts of Noteholders, etc. .....................................4
SECTION 1.5. Notice to Noteholders; Waiver .................................5
SECTION 1.6. Effect of Headings and Table of Contents ......................6
SECTION 1.7. Successors and Assigns ........................................6
SECTION 1.8. GOVERNING LAW .................................................6
SECTION 1.9. Legal Holidays ................................................6
SECTION 1.10. Execution in Counterparts .....................................6
SECTION 1.11. Inspection ....................................................6
SECTION 1.12. Survival of Representations and Warranties ....................7
ARTICLE II. THE NOTES .........................................................7
SECTION 2.1. General Provisions ............................................7
SECTION 2.2. Global Notes ..................................................8
SECTION 2.3. Definitive Notes ..............................................9
SECTION 2.4. Registration, Transfer and Exchange of Notes ..................9
SECTION 2.5. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, Lost and Stolen Notes ..................11
SECTION 2.6. Payment of Interest and Principal; Rights Preserved ..........12
SECTION 2.7. Persons Deemed Owners ........................................12
i
SECTION 2.8. Cancellation .................................................12
SECTION 2.9. Noteholder Lists .............................................12
SECTION 2.10. Treasury Notes ...............................................13
SECTION 2.11. Notice to Depository .........................................13
SECTION 2.12. Confidentiality ..............................................13
ARTICLE III. ACCOUNTS; COLLECTION AND APPLICATION OF MONEYS;
REPORTS .........................................................14
SECTION 3.1. Trust Accounts; Investments by Indenture Trustee .............14
SECTION 3.2. Establishment and Administration of the Trust Accounts .......15
SECTION 3.3. Reserved .....................................................18
SECTION 3.4. Distributions ................................................18
SECTION 3.5. Reports to Noteholders .......................................20
SECTION 3.6. Note Balance Write-Down Amounts ..............................21
SECTION 3.7. Withholding Taxes ............................................21
ARTICLE IV. THE TRUST ESTATE .................................................22
SECTION 4.1. Acceptance by Indenture Trustee ..............................22
SECTION 4.2. Grant of Security Interest; Tax Treatment ....................22
SECTION 4.3. Further Action Evidencing Assignments ........................23
SECTION 4.4. Substitution and Repurchase of Timeshare Loans ...............24
SECTION 4.5. Release of Lien ..............................................25
SECTION 4.6. Appointment of Custodian and Paying Agent ....................26
SECTION 4.7. Sale of Timeshare Loans ......................................26
ARTICLE V. SERVICING OF TIMESHARE LOANS ......................................27
SECTION 5.1. Appointment of Servicer and Backup Servicer; Servicing
Standard .....................................................27
ii
SECTION 5.2. Payments on the Timeshare Loans ..............................27
SECTION 5.3. Duties and Responsibilities of the Servicer ..................28
SECTION 5.4. Servicer Events of Default ...................................31
SECTION 5.5. Accountings; Statements and Reports ..........................35
SECTION 5.6. Records ......................................................36
SECTION 5.7. ▇▇▇▇▇▇▇▇ ▇▇▇▇ and Errors and Omissions Insurance .............36
SECTION 5.8. Merger or Consolidation of the Servicer ......................37
SECTION 5.9. Sub-Servicing ................................................37
SECTION 5.10. Servicer Resignation .........................................38
SECTION 5.11. Fees and Expenses ............................................38
SECTION 5.12. Access to Certain Documentation ..............................38
SECTION 5.13. No Offset ....................................................39
SECTION 5.14. Account Statements ...........................................39
SECTION 5.15. Indemnification; Third Party Claim ...........................39
SECTION 5.16. Backup Servicer ..............................................39
SECTION 5.17. Aruba Notices ................................................40
SECTION 5.18. Recordation ..................................................41
ARTICLE VI. EVENTS OF DEFAULT; REMEDIES ......................................41
SECTION 6.1. Events of Default ............................................41
SECTION 6.2. Acceleration of Maturity; Rescission and Annulment ...........42
SECTION 6.3. Remedies .....................................................44
SECTION 6.4. Indenture Trustee May File Proofs of Claim ...................45
SECTION 6.5. Indenture Trustee May Enforce Claims Without Possession
of Notes .....................................................46
SECTION 6.6. Application of Money Collected ...............................46
iii
SECTION 6.7. Limitation on Suits ..........................................49
SECTION 6.8. Unconditional Right of Noteholders to Receive Principal
and Interest .................................................49
SECTION 6.9. Restoration of Rights and Remedies ...........................49
SECTION 6.10. Rights and Remedies Cumulative ...............................50
SECTION 6.11. Delay or Omission Not Waiver .................................50
SECTION 6.12. Control by Noteholders .......................................50
SECTION 6.13. Waiver of Events of Default ..................................51
SECTION 6.14. Undertaking for Costs ........................................51
SECTION 6.15. Waiver of Stay or Extension Laws .............................51
SECTION 6.16. Sale of Trust Estate .........................................52
SECTION 6.17. Action on Notes ..............................................52
SECTION 6.18. Performance and Enforcement of Certain Obligations ...........53
ARTICLE VII. THE INDENTURE TRUSTEE ...........................................53
SECTION 7.1. Certain Duties ...............................................53
SECTION 7.2. Notice of Events of Default ..................................55
SECTION 7.3. Certain Matters Affecting the Indenture Trustee ..............55
SECTION 7.4. Indenture Trustee Not Liable for Notes or Timeshare Loans ....56
SECTION 7.5. Indenture Trustee May Own Notes ..............................56
SECTION 7.6. Indenture Trustee's Fees and Expenses ........................56
SECTION 7.7. Eligibility Requirements for Indenture Trustee ...............57
SECTION 7.8. Resignation or Removal of Indenture Trustee ..................57
SECTION 7.9. Successor Indenture Trustee ..................................58
SECTION 7.10. Merger or Consolidation of Indenture Trustee .................59
SECTION 7.11. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee ............................................59
iv
SECTION 7.12. Paying Agent and Note Registrar Rights .......................61
SECTION 7.13. Authorization ................................................61
SECTION 7.14. Maintenance of Office or Agency ..............................61
ARTICLE VIII. COVENANTS OF THE ISSUER ........................................62
SECTION 8.1. Payment of Principal and Interest ............................62
SECTION 8.2. Reserved .....................................................62
SECTION 8.3. Money for Payments to Noteholders to Be Held in Trust ........62
SECTION 8.4. Existence; Merger; Consolidation, etc. .......................63
SECTION 8.5. Protection of Trust Estate; Further Assurances ...............64
SECTION 8.6. Additional Covenants .........................................66
SECTION 8.7. Taxes ........................................................67
SECTION 8.8. Restricted Payments ..........................................67
SECTION 8.9. Treatment of Notes as Debt for Tax Purposes ..................68
SECTION 8.10. Further Instruments and Acts .................................68
SECTION 8.11. [Reserved] ...................................................68
ARTICLE IX. SUPPLEMENTAL INDENTURES ..........................................68
SECTION 9.1. Supplemental Indentures ......................................68
SECTION 9.2. Supplemental Indentures with Consent of Noteholders ..........69
SECTION 9.3. Execution of Supplemental Indentures .........................70
SECTION 9.4. Effect of Supplemental Indentures ............................70
SECTION 9.5. Reference in Notes to Supplemental Indentures ................70
ARTICLE X. REDEMPTION OF NOTES ...............................................70
SECTION 10.1. Optional Redemption; Election to Redeem ......................70
v
SECTION 10.2. Notice to Indenture Trustee ..................................71
SECTION 10.3. Notice of Redemption by the Servicer .........................71
SECTION 10.4. Deposit of Redemption Price ..................................71
SECTION 10.5. Notes Payable on Redemption Date .............................71
ARTICLE XI. SATISFACTION AND DISCHARGE .......................................71
SECTION 11.1. Satisfaction and Discharge of Indenture ......................71
SECTION 11.2. Application of Trust Money; Repayment of Money Held by
Paying Agent .................................................72
SECTION 11.3. Trust Termination Date .......................................73
ARTICLE XII. REPRESENTATIONS AND WARRANTIES AND COVENANTS ....................73
SECTION 12.1. Representations and Warranties of the Issuer .................73
SECTION 12.2. Representations and Warranties of the Servicer ...............74
SECTION 12.3. Representations and Warranties of the Indenture Trustee ......77
SECTION 12.4. Multiple Roles ...............................................78
SECTION 12.5. [Reserved] ...................................................78
SECTION 12.6. Covenants of the Club Trustee ................................78
SECTION 12.7. Representations and Warranties of the Backup Servicer ........81
ARTICLE XIII. MISCELLANEOUS ..................................................84
SECTION 13.1. Officer's Certificate and Opinion of Counsel as to
Conditions Precedent .........................................84
SECTION 13.2. Statements Required in Certificate or Opinion ................84
SECTION 13.3. Notices ......................................................84
SECTION 13.4. No Proceedings ...............................................86
SECTION 13.5. Limitation of Liability of Owner Trustee .....................87
vi
Exhibit A Form of Notes
Exhibit B Form of Investor Representation Letter
Exhibit C Reserved
Exhibit D Form of Monthly Servicer Report
Exhibit E Servicing Officer's Certificate
Exhibit F Form of Investor Certification
Exhibit G Form of ROAP Waiver Letter
Exhibit H Form of Aruba Notice
Exhibit I Resort Ratings
Annex A Standard Definitions
Schedule I Schedule of Timeshare Loans
vii
INDENTURE
This INDENTURE, dated as of November 15, 2002 (the "Indenture"), is
among BXG RECEIVABLES NOTE TRUST 2002-A, a statutory trust formed under the laws
of the State of Delaware, as issuer (the "Issuer"), BLUEGREEN CORPORATION
("Bluegreen"), a Massachusetts corporation, in its capacity as servicer (the
"Servicer"), VACATION TRUST, INC., a Florida corporation, as trustee under the
Club Trust Agreement (the "Club Trustee"). CONCORD SERVICING CORPORATION, an
Arizona corporation, as backup servicer (the "Backup Servicer") and U.S. BANK
NATIONAL ASSOCIATION, a national banking association, as indenture trustee (the
"Indenture Trustee"), paying agent (the "Paying Agent") and as custodian (the
"Custodian").
RECITALS OF THE ISSUER
WHEREAS, the Issuer has duly authorized the execution and delivery
of this Indenture to provide for the issuance of its $86,899,000 4.580%
Timeshare Loan-Backed Notes, Series 2002-A, Class A (the "Class A Notes"),
$21,724,000 4.740% Timeshare Loan-Backed Notes, Series 2002-A, Class B (the
"Class B Notes"), $23,535,000 5.735% Timeshare Loan- Backed Notes, Series 2002-A
Class C (the "Class C Notes"), and $38,018,000 7.750% Timeshare Loan-Backed
Notes, Series 2002-A, Class D, (the "Class D Notes" and together with the Class
A Notes, Class B Notes and Class C2 Notes, the "Notes");
WHEREAS, all things necessary to make the Notes, when executed by
the Issuer and authenticated and delivered by the Indenture Trustee hereunder,
the valid recourse obligations of the Issuer, and to make this Indenture a valid
agreement of the Issuer, in accordance with its terms, have been done.
WHEREAS, the Servicer has agreed to service and administer the
Timeshare Loans securing the Notes and the Backup Servicer has agreed to, among
other things, service and administer the Timeshare Loans if the Servicer shall
no longer be the Servicer hereunder;
WHEREAS, the Club Trustee is a limited purpose entity which, on
behalf of Beneficiaries of the Club, holds title to the Timeshare Properties
related to the Club Loans.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the holders thereof, it is mutually covenanted and agreed, for the
benefit of the Noteholders, as follows:
GRANTING CLAUSE
To secure the payment of the principal of and interest on the Notes in
accordance with their terms, the payment of all of the sums payable under this
Indenture and the performance of the covenants contained in this Indenture, the
Issuer hereby Grants to the Indenture Trustee, for the benefit of the
Noteholders, all of the Issuer's right, title and interest in and to the
following whether now owned or hereafter acquired and any and all benefits
accruing
1
to the Issuer from, (i) the Timeshare Loans specified on Schedule I hereto, (ii)
any Qualified Substitute Timeshare Loans, (iii) the Receivables in respect of
each Timeshare Loan due on and after the related Cut-Off Date, (iv) the related
Timeshare Loan Documents (excluding any rights as developer or declarant under
the Timeshare Declaration, the Timeshare Program Consumer Documents or the
Timeshare Program Governing Documents), (v) all Related Security in respect of
each Timeshare Loan, (vi) all rights and remedies under the Transfer Agreements,
the Purchase Agreement, the Sale Agreement, the Lockbox Agreement, the Backup
Servicing Agreement, the Administration Agreement and the Custodial Agreement,
(vii) all amounts in or to be deposited to the Lockbox Account, the Collection
Account, the General Reserve Account, the Closing Date Delinquency Reserve
Account and, in the case of the Class D Notes only, the Class D Reserve Account,
and (viii) proceeds of the foregoing (including, without limitation, all cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part or are included in the
proceeds of any of the foregoing) (collectively, the "Trust Estate").
Notwithstanding the foregoing, the Trust Estate shall not include (i) any
Timeshare Loan released from the lien of this Indenture in accordance with the
terms hereof and any Related Security, Timeshare Loan Documents, income or
proceeds related to such released Timeshare Loan, (ii) any amount distributed
pursuant to Section 3.4 or Section 6.6 hereof or (iii) any Misdirected Deposits.
Such Grant is made in trust to secure (i) the payment of all amounts
due on the Notes in accordance with their terms, equally and ratably except as
otherwise may be provided in this Indenture, without prejudice, priority, or
distinction between any Note of the same Class and any other Note of the same
Class by reason of differences in time of issuance or otherwise, and (ii) the
payment of all other sums payable under the Notes and this Indenture.
The Indenture Trustee acknowledges such ▇▇▇▇▇, accepts the trusts
hereunder in accordance with the provisions hereof, and agrees to perform the
duties herein required to the best of its ability and to the end that the
interests of the Noteholders may be adequately and effectively protected as
hereinafter provided.
The Custodian shall hold the Timeshare Loan Documents in trust, for
the use and benefit of the Issuer and all present and future Noteholders, and
shall retain possession thereof. The Custodian further agrees and acknowledges
that each other item making up the Trust Estate that is physically delivered to
the Custodian will be held by the Custodian in the State of Minnesota or in any
other location acceptable to the Indenture Trustee and the Servicer.
The Indenture Trustee further acknowledges that in the event the
conveyance of the Timeshare Loans by the Depositor to the Issuer pursuant to the
Sale Agreement is determined to constitute a loan and not a sale as it is
intended by all the parties hereto, the Custodian will be holding each of the
Timeshare Loans as bailee of the Issuer; provided, however, that with respect to
the Timeshare Loans, the Custodian should not act at the direction of the Issuer
without the written consent of the Indenture Trustee.
2
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. General Definitions.
In addition to the terms defined elsewhere in this Indenture,
capitalized terms shall have the meanings given them in the "Standard
Definitions" attached hereto as Annex A.
SECTION 1.2. Compliance Certificates and Opinions.
Upon any written application or request (or oral application with
prompt written or telecopied confirmation) by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, other than any
request that (a) the Indenture Trustee authenticate the Notes specified in such
request, (b) the Indenture Trustee invest moneys in any of the Trust Accounts
pursuant to the written directions specified in such request or (c) the
Indenture Trustee pay moneys due and payable to the Issuer hereunder to the
Issuer's assignee specified in such request, the Indenture Trustee shall require
the Issuer to furnish to the Indenture Trustee an Officer's Certificate stating
that all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with and that the request otherwise is
in accordance with the terms of this Indenture, and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that, in the case of any such requested
action as to which other evidence of satisfaction of the conditions precedent
thereto is specifically required by any provision of this Indenture, no
additional certificate or opinion need be furnished.
SECTION 1.3. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Issuer delivered to
the Indenture Trustee may be based, insofar as it relates to legal matters, upon
an Opinion of Counsel, unless such officer knows that the opinion with respect
to the matters upon which his/her certificate or opinion is based are erroneous.
Any such officer's certificate or opinion and any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an officer or officers of the Issuer as to such
factual matters unless such officer or counsel knows that the certificate or
opinion or representations with respect to such matters is erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion and shall include a statement to the effect that such other
counsel believes that
3
such counsel and the Indenture Trustee may reasonably rely upon the opinion of
such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of compliance with any term hereof, it is intended that the truth
and accuracy, at the time of the granting of such application or at the
effective date of such certificate or report (as the case may be), of the facts
and opinions stated in such document shall in such case be conditions precedent
to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 7.1(b) hereof.
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default, Event of Default or Servicer Event of
Default is a condition precedent to the taking of any action by the Indenture
Trustee at the request or direction of the Issuer, then, notwithstanding that
the satisfaction of such condition is a condition precedent to the Issuer's
right to make such request or direction, the Indenture Trustee shall be
protected in acting in accordance with such request or direction if it does not
have knowledge, of the occurrence and continuation of such event. For all
purposes of this Indenture, the Indenture Trustee shall not be deemed to have
knowledge of any Default, Event of Default or Servicer Event of Default nor
shall the Indenture Trustee have any duty to monitor or investigate to determine
whether a default has occurred (other than an Event of Default of the kind
described in Section 6.1(a) hereof) or Servicer Event of Default has occurred
unless a Responsible Officer of the Indenture Trustee shall have actual
knowledge thereof or shall have been notified in writing thereof by the Issuer,
the Servicer or any secured party.
SECTION 1.4. Acts of Noteholders, etc.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 7.1 hereof) conclusive
in favor of the Indenture Trustee and the Issuer, if made in the manner
provided in this Section 1.4.
4
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Indenture Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the holder of any Note shall bind every future holder of
the same Note and the holder of every Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Indenture Trustee or the
Issuer in reliance thereon, whether or not notation of such action is made upon
such Note.
(d) By accepting the Notes issued pursuant to this Indenture, each
Noteholder irrevocably appoints the Indenture Trustee hereunder as the special
attorney-in-fact for such Noteholder vested with full power on behalf of such
Noteholder to effect and enforce the rights of such Noteholder for the benefit
of such Noteholder; provided that nothing contained in this Section 1.4(d) shall
be deemed to confer upon the Indenture Trustee any duty or power to vote on
behalf of the Noteholders with respect to any matter on which the Noteholders
have a right to vote pursuant to the terms of this Indenture.
SECTION 1.5. Notice to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of any
event, or the mailing of any report to Noteholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, via first class mail, or sent by private courier or confirmed
telecopy to each Noteholder affected by such event or to whom such report is
required to be mailed, at its address as it appears in the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice or the mailing of such report. In any case where a
notice or report to Noteholders is mailed, neither the failure to mail such
notice or report, nor any defect in any notice or report so mailed, to any
particular Noteholder shall affect the sufficiency of such notice or report with
respect to other Noteholders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Noteholders shall be filed with
the Indenture Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
(b) In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to mail or send notice to
Noteholders, in accordance with Section 1.5(a) hereof, of any event or any
report to Noteholders when such notice or report is required to be delivered
pursuant to any provision of this Indenture, then such notification or
5
delivery as shall be made with the approval of the Indenture Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.6. Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 1.7. Successors and Assigns.
All covenants and agreements in this Indenture by each of the
parties hereto shall bind its respective successors and permitted assigns,
whether so expressed or not.
SECTION 1.8. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. UNLESS MADE
APPLICABLE IN A SUPPLEMENT HERETO, THIS INDENTURE IS NOT SUBJECT TO THE TRUST
INDENTURE ACT OF 1939 AND SHALL NOT BE GOVERNED THEREBY AND CONSTRUED IN
ACCORDANCE THEREWITH.
SECTION 1.9. Legal Holidays.
In any case where any Payment Date or the Stated Maturity or any
other date on which principal of or interest on any Note is proposed to be paid
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) such payment need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on such Payment Date, Stated Maturity or other date on which principal of
or interest on any Note is proposed to be paid; provided that, no penalty
interest shall accrue for the period from and after such Payment Date, Stated
Maturity, or any other date on which principal of or interest on any Note is
proposed to be paid, as the case may be, until such next succeeding Business
Day.
SECTION 1.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 1.11. Inspection.
The Issuer agrees that, on ten Business Days' prior notice (or, one
Business Day's prior notice after the occurrence and during the occurrence of an
Event of Default or a Servicer Event of Default), it will permit the
representatives of the Indenture Trustee or any Noteholder, during the Issuer's
normal business hours, to examine all of the books of account, records, reports
and other papers of the Issuer, to make copies thereof and extracts therefrom,
and to
6
discuss its affairs, finances and accounts with its designated officers,
employees and independent accountants in the presence of such designated
officers and employees (and by this provision the Issuer hereby authorizes its
independent accountants to discuss with such representatives such affairs,
finances and accounts), all at such reasonable times and as often as may be
reasonably requested for the purpose of reviewing or evaluating the financial
condition or affairs of the Issuer or the performance of and compliance with the
covenants and undertakings of the Issuer and the Servicer in this Indenture or
any of the other documents referred to herein or therein. Any reasonable expense
incident to the exercise by the Indenture Trustee at any time or any Noteholder
during the continuance of any Default or Event of Default, of any right under
this Section 1.11 shall be borne by the Issuer. Nothing contained herein shall
be construed as a duty of the Indenture Trustee to perform such inspection.
SECTION 1.12. Survival of Representations and Warranties.
The representations, warranties and certifications of the Issuer
made in this Indenture or in any certificate or other writing delivered by the
Issuer pursuant hereto shall survive the authentication and delivery of the
Notes hereunder.
ARTICLE II.
THE NOTES
SECTION 2.1. General Provisions.
(a) Form of Notes. The Notes shall be designated as the "BXG
Receivables Note Trust 2002-A, Timeshare Loan-Backed Notes, Series 2002-A". The
Notes, together with their certificates of authentication, shall be in
substantially the form set forth in Exhibit A attached hereto, with such
appropriate insertions, omissions, substitutions and other variations as are
required or are permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed
thereon, as may consistently herewith, be determined by the officer executing
such Notes, as evidenced by such officer's execution of such Notes.
(b) Denominations. The Outstanding Note Balance of the Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes which may be
authenticated and delivered under this Indenture is limited to $86,899,000,
$21,724,000, $23,535,000 and $38,018,000, respectively. The Notes shall be
issuable only as registered Notes, without interest coupons, in the
denominations of at least $50,000 and in integral multiples of $1,000; provided,
however, that the foregoing shall not restrict or prevent the transfer in
accordance with Section 2.4 hereof of any Note with a remaining Outstanding Note
Balance of less than $50,000.
(c) Execution, Authentication, Delivery and Dating. The Notes shall
be manually executed by an Authorized Officer of the Owner Trustee on behalf of
the Issuer. Any Note bearing the signature of an individual who was at the time
of execution thereof an Authorized Officer of the Owner Trustee on behalf of the
issuer shall bind the Issuer, notwithstanding that such individual ceases to
hold such office prior to the authentication and delivery of such Note or did
not hold such office at the date of such Note. No Note shall be
7
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose unless there appears on such Note a certificate of authentication
substantially in the form set forth in Exhibit A hereto, executed by the
Indenture Trustee by manual signature, and such certificate upon any Note shall
be conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. Each Note shall be dated the date of its
authentication. The Notes may from time to time be executed by the Issuer and
delivered to the Indenture Trustee for authentication together with an Issuer
Order to the Indenture Trustee directing the authentication and delivery of such
Notes and thereupon the same shall be authenticated and delivered by the
Indenture Trustee in accordance with such Issuer Order.
SECTION 2.2. Global Notes.
Each of the Notes, upon original issuance, shall be issued in the
form of one or more book-entry global certificates (the "Global Notes" and each,
a "Global Note") to be deposited with the Indenture Trustee as custodian for The
Depository Trust Company, the initial Depository, by or on behalf of the Issuer.
All Global Notes shall be initially registered on the Note Register in the name
of Cede & Co., the nominee of DTC and no Note Owner will receive a definitive
note (a "Definitive Note") representing such Note Owner's interest in the
related Class of Notes, except as provided in Section 2.3 hereof. Unless and
until Definitive Notes have been issued in respect of a Class of Notes pursuant
to Section 2.3:
(a) the provisions of this Section 2.2 shall be in full force and
effect with respect to such Class of Notes;
(b) the Issuer, the Servicer and the Indenture Trustee may deal with
the Depository and the Depository Participants for all purposes with respect to
such Notes (including the making of distributions on such Notes) as the
authorized representatives of the respective Note Owners;
(c) to the extent that the provisions of this Section 2.2 conflict
with any other provisions of this Indenture, the provisions of this Section 2.2
shall control; and
(d) the rights of the respective Note Owners of a Class of Notes
shall be exercised only through the Depository and the Depository Participants
and shall be limited to those established by law and agreements between the
respective Note Owners and the Depository and/or the Depository Participants.
Pursuant to the Depository Agreement, unless and until Definitive Notes are
issued in respect of the Notes pursuant to Section 2.3 hereof, the Depository
will make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal of, and interest on, the Notes to the
Depository Participants.
8
SECTION 2.3. Definitive Notes.
If (a) the Depository advises the Indenture Trustee in writing that
the Depository is no longer willing, qualified or able to properly discharge its
responsibilities as Depository with respect to the Global Notes and the Issuer
is unable to locate a qualified successor, (b) the Issuer, at its sole option,
advises the Indenture Trustee in writing that it elects to terminate the book-
entry system with respect to any or all Classes of Notes though the Depository,
or (c) after the occurrence of an Event of Default, Note Owners evidencing not
less than 66-2/3% of the Adjusted Note Balance of such Class of Notes, advise
the Indenture Trustee and the Depository through the Depository Participants in
writing that the continuation of a book-entry system with respect to such Class
of Notes, respectively, through the Depository is no longer in the best interest
of such Note Owners, the Indenture Trustee shall use its best efforts to notify
all affected Note Owners through the Depository of the occurrence of any such
event and of the availability of Definitive Notes to such Note Owners. None of
the Issuer, the Indenture Trustee or the Servicer shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Issuer, the Indenture Trustee, the Note Registrar and the Servicer
shall recognize holders of Definitive Notes as Noteholders hereunder. Upon the
issuance of Definitive Notes, all references herein to obligations imposed upon
or to be performed by the Depository shall be deemed to be imposed upon and
performed by the Indenture Trustee, to the extent applicable with respect to
such Definitive Notes.
SECTION 2.4. Registration, Transfer and Exchange of Notes.
(a) The Issuer shall cause to be kept at the Corporate Trust Office
a register (the "Note Register") for the registration, transfer and exchange of
Notes. The Indenture Trustee is hereby appointed "Note Registrar" for purposes
of registering Notes and transfers of Notes as herein provided. The names and
addresses of all Noteholders and the names and addresses of the transferees of
any Notes shall be registered in the Note Register; provided, however, in no
event shall the Note Registrar be required to maintain in the Note Register the
names of the individual participants holding Notes through the Depository. The
Person in whose name any Note is so registered shall be deemed and treated as
the sole owner and Noteholder thereof for all purposes of this Indenture and the
Note Registrar, the Issuer, the Indenture Trustee, the Servicer and any agent of
any of them shall not be affected by any notice or knowledge to the contrary. A
Definitive Note is transferable or exchangeable only upon the surrender of such
Note to the Note Registrar at the Corporate Trust Office together with an
assignment and transfer (executed by the Holder or his duly authorized
attorney), subject to the applicable requirements of this Section 2.4. Upon
request of the Indenture Trustee, the Note Registrar shall provide the Indenture
Trustee with the names and addresses Noteholders.
(b) Upon surrender for registration of transfer of any Definitive
Note, subject to the applicable requirements of this Section 2.4, the Issuer
shall execute and the Indenture Trustee shall duly authenticate in the name of
the designated transferee or transferees, one or more new Notes in denominations
of a like aggregate denomination as the Definitive Note being surrendered. Each
Note surrendered for registration of transfer shall be canceled and subsequently
destroyed by the Note Registrar. Each new Note issued pursuant to this Section
2.4
9
shall be registered in the name of any Person as the transferring Holder may
request, subject to the applicable provisions of this Section 2.4. All Notes
issued upon any registration of transfer or exchange of Notes shall be entitled
to the same benefits under this Indenture as the Notes surrendered upon such
registration of transfer or exchange.
(c) The issuance of the Notes will not be registered or qualified
under the Securities Act or the securities laws of any state. No resale or
transfer of any Note may be made unless such resale or transfer is made in
accordance with this Indenture and only if (i) in the United States to a person
whom the transferor reasonably believes is a "qualified institutional buyer" (as
defined in Rule 144A) that is purchasing for its own account or for the account
of a qualified institutional buyer in a transaction meeting the requirements of
Rule 144A as certified by the transferee (other than the Initial Purchaser and
their respective initial transferees) in a letter in the form of Exhibit B
hereto, (ii) pursuant to an exemption from registration under the Securities Act
provided by Rule 144 (if available) or (iii) pursuant to an effective
registration statement under the Securities Act, in each of cases (i) through
(iii) in accordance with any applicable securities laws of any state of the
United States. Each transferee and each subsequent transferee will be required
to notify any subsequent purchaser of such Notes from it of the resale
restrictions described herein. None of the Issuer, the Servicer or the Indenture
Trustee is obligated to register or qualify the Notes under the Securities Act
or any other securities law or to take any action not otherwise required under
this Indenture to permit the transfer of any Note without registration.
(d) No resale or other transfer of any Note may be made to any
transferee unless (i) such transferee is not, and will not acquire such Note on
behalf or with the assets of, any Benefit Plan or (ii) no "prohibited
transaction" under ERISA or section 4975 of the Code or Similar Law that is not
subject to a statutory, regulatory or administrative exemption will occur in
connection with purchaser's or such transferee's acquisition or holding of such
Note. In addition, the Notes may not be purchased by or transferred to any
Benefit Plan or person acting on behalf of or with assets of any Benefit Plan,
unless it represents that it is not sponsored (within the meaning of Section
3(l6)(B) of ERISA) by the Issuer, the Depositor, the Originators, the Servicer,
the Indenture Trustee, the Owner Trustee, the Administrator, The Paying Agent,
the Custodian, the Backup Servicer, the Lockbox Bank or the Initial Purchaser,
or by any affiliate of any such person. In addition to the applicable provisions
of this Section 2.4 and the rules of the Depository, the exchange, transfer and
registration of transfer of Global Notes shall only be made in accordance with
Section 2.4(c) and this Section 2.4(d).
(e) No fee or service charge shall be imposed by the Note Registrar
for its services in respect of any registration of transfer or exchange referred
to in this Section 2.4. The Note Registrar may require payment by each
transferor of a sum sufficient to cover any tax, expense or other governmental
charge payable in connection with any such transfer.
(f) None of the Issuer, the Indenture Trustee, the Servicer or the
Note Registrar is obligated to register or qualify the Notes under the
Securities Act or any other securities law or to take any action not otherwise
required under this Indenture to permit the transfer of such Notes without
registration or qualification. Any such Noteholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Issuer, the Indenture
Trustee,
10
the Servicer and the Note Registrar against any loss, liability or expense that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.
(g) The Servicer agrees to cause the Issuer, and the Issuer agrees
to provide, such information as required under Rule 144A under the Securities
Act so as to allow resales of Notes to "qualified institutional buyers" (as
defined therein) in accordance herewith.
(h) The Notes represent the sole obligation of the Issuer payable
from the Trust Estate and do not represent the obligations of the Originators,
the Servicer, the Depositor, the Backup Servicer, the Owner Trustee, the
Indenture Trustee, Administrator or the Custodian.
SECTION 2.5. Mutilated, Destroyed, Lost and Stolen Notes.
(a) If any mutilated Note is surrendered to the Indenture Trustee,
the Issuer shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefore a replacement Note of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
(b) If there shall be delivered to the Issuer and the Indenture
Trustee (i) evidence to their satisfaction of the destruction, loss or theft of
any Note and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless then, in the absence of
actual notice to the Issuer or the Indenture Trustee that such Note has been
acquired by a bona fide purchaser, the Issuer shall execute and upon its request
the Indenture Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Note, a replacement Note of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
(c) In case the final installment of principal on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable, the Issuer, in its discretion, may, instead of
issuing a replacement Note, pay such Note.
(d) Upon the issuance of any replacement Note under this Section
2.5, the Issuer or the Indenture Trustee may require the payment by the
Noteholder of a sum sufficient to cover any Tax or other governmental charge
that may be imposed as a result of the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section 2.5 in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
(f) The provisions of this Section 2.5 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
11
SECTION 2.6. Payment of Interest and Principal; Rights Preserved.
(a) Any installment of interest or principal, payable on any Note
that is punctually paid or duly provided for by or on behalf of the Issuer on
the applicable Payment Date shall be paid to the Person in whose name such Note
was registered at the close of business on the Record Date for such Payment Date
by check mailed to the address specified in the Note Register, or if a Holder
has provided wire transfer instructions to the Indenture Trustee at least 5
Business Days prior to the applicable Payment Date, upon the request of a
Holder, by wire transfer of federal funds to the account and number specified in
the Note Register, in each case on such Record Date for such Person (which shall
be, as to each original purchaser of the Notes, the account and number specified
by such purchaser to the Indenture Trustee in writing, or, if no such account
or number is so specified, then by check mailed to such Person's address as it
appears in the Note Register on such Record Date).
(b) All reductions in the principal amount of a Note effected by
payments of principal made on any Payment Date shall be binding upon all Holders
of such Note and of any Note issued upon the registration of transfer thereof or
in exchange therefore or in lieu thereof, whether or not such payment is noted
on such Note. All payments on the Notes shall be paid without any requirement of
presentment, but each Holder of any Note shall be deemed to agree, by its
acceptance of the same, to surrender such Note at the Corporate Trust Office
within thirty (30) days after receipt of the final principal payment of such
Note.
SECTION 2.7. Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the
issuer, the Indenture Trustee, and any agent of the Issuer or the Indenture
Trustee may treat the registered Noteholder as the owner of such Note for the
purpose of receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note be overdue, and neither
the Issuer, the Indenture Trustee, nor any agent of the Issuer or the Indenture
Trustee shall be affected by notice to the contrary.
SECTION 2.8. Cancellation.
All Notes surrendered for registration of transfer or exchange or
following final payment shall, if surrendered to any Person other than the
Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly
canceled by it. The Issuer may at any time deliver to the Indenture Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Indenture Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 2.8, except as expressly permitted by this Indenture. All canceled
Notes held by the Indenture Trustee may be disposed of in the normal course of
its business or as directed by an Issuer Order.
SECTION 2.9. Noteholder Lists.
The Indenture Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Noteholders. In
12
the event the Indenture Trustee no longer serves as the Note Registrar, the
Issuer (or any other obligor upon the Notes) shall furnish to the Indenture
Trustee at least 5 Business Days before each Payment Date (and in all events in
intervals of not more than 6 months) and at such other times as the Indenture
Trustee may request in writing a list in such form and as of such date as the
Indenture Trustee may reasonably require of the names and addresses of the
Noteholders.
SECTION 2.10. Treasury Notes.
In determining whether the Noteholders of the required Outstanding
Note Balance of the Notes have concurred in any direction, waiver or consent,
Notes held or redeemed by the Issuer or any other obligor in respect of the
Notes or held by an Affiliate of the Issuer or such other obligor shall be
considered as though not Outstanding, except that for the purposes of
determining whether the Indenture Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes which a Responsible Officer of the
Indenture Trustee knows are so owned shall be so disregarded.
SECTION 2.11. Notice to Depository.
Whenever notice or other communication to the Holders of Global
Notes is required under this Indenture, unless and until Definitive Notes have
been issued to the related Note Owners pursuant to Section 2.3 hereof, the
Indenture Trustee shall give all such notices and communications specified
herein to be given to such Note Owners to the Depository.
SECTION 2.12. Confidentiality.
Each Noteholder, by acceptance of a Note, agrees and covenants that
it shall hold in confidence all Confidential Information; provided, however,
that any Noteholder may deliver or disclose Confidential Information to (i) its
directors, officers, trustees, managers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the investment
represented by the Notes), (ii) its financial advisors and other professional
advisors who agree to hold confidential such information substantially in
accordance with the terms of this Section 2.12, (iii) any other Noteholder, (iv)
any institutional investor to which such Noteholder sells or offers to sell such
Note or any part thereof or any participation therein (if such Person has agreed
in writing prior to its receipt of such confidential information to be bound by
the provisions of this Section 2.12), (v) any federal or state regulatory
authority having jurisdiction over such Noteholder, (vi) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agencies that requires access to information about
such Noteholder's investment portfolio, (vii) the Rating Agencies or (viii) any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Noteholder, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Noteholder is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such Noteholder may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under the Notes and the Transaction Documents.
13
ARTICLE III.
ACCOUNTS; COLLECTION AND
APPLICATION OF MONEYS; REPORTS
SECTION 3.1. Trust Accounts: Investments by Indenture Trustee.
(a) On or before the Closing Date, the Indenture Trustee shall
establish in the name of the Indenture Trustee for the benefit of the
Noteholders as provided in this Indenture, the Trust Accounts, which accounts
(other than the Lockbox Account) shall be Eligible Bank Accounts maintained at
the Corporate Trust Office.
Subject to the further provisions of this Section 3.1(a), the
Indenture Trustee shall, upon receipt or upon transfer from another account, as
the case may be, deposit into such Trust Accounts all amounts received by it
which are required to be deposited therein in accordance with the provisions of
this Indenture. All such amounts and all investments made with such amounts,
including all income and other gain from such investments, shall be held by the
Indenture Trustee in such accounts as part of the Trust Estate as herein
provided, subject to withdrawal by the Indenture Trustee in accordance with, and
for the purposes specified in the provisions of, this Indenture.
(b) The Indenture Trustee shall assume that any amount remitted to
it in respect of the Trust Estate is to be deposited into the Collection Account
pursuant to Section 3.2(a) hereof unless a Responsible Officer of the Indenture
Trustee receives written instructions from the Servicer to the contrary.
(c) None of the parties hereto shall have any right of set-off with
respect to any Trust Account or any investment therein.
(d) So long as no Event of Default shall have occurred and be
continuing, all or a portion of the amounts in any Trust Account (other than the
Lockbox Account) shall be invested and reinvested by the Indenture Trustee
pursuant to an Issuer Order in one or more Eligible Investments. Subject to the
restrictions on the maturity of investments set forth in Section 3.1(f) below,
each such Issuer Order may authorize the Indenture Trustee to make the specific
Eligible Investments set forth therein, to make Eligible Investments from time
to time consistent with the general instructions set forth therein, in each
ease, in such amounts as such Issuer Order shall specify.
(e) In the event that either (i) the Issuer shall have failed to
give investment directions to the Indenture Trustee by 9:30 A.M., New York City
time on any Business Day on which there may be uninvested cash or (ii) an Event
of Default shall be continuing, the Indenture Trustee shall promptly invest and
reinvest the funds then in the designated Trust Account to the fullest extent
practicable in those obligations or securities described in clause (e) of the
definition of "Eligible Investments". All investments made by the Indenture
Trustee shall mature no later than the maturity date therefor permitted by
Section 3.1(f) below.
14
(f) No investment of any amount held in any Trust Account shall
mature later than the Business Day immediately preceding the Payment Date which
is scheduled to occur immediately following the date of investment. All income
or other gains (net of losses) from the investment of moneys deposited in any
Trust Account shall be deposited by the Indenture Trustee in such account
immediately upon receipt.
(g) Subject to Section 3.1(d) above, any investment of any finds in
any Trust Account shall be made under the following terms and conditions:
(i) each such investment shall be made in the name of the Indenture
Trustee, in each case in such manner as shall be necessary to maintain the
identity of such investments as assets of the Trust Estate; and
(ii) any certificate or other instrument evidencing such investment
shall be delivered directly to the Indenture Trustee, and the Indenture
Trustee shall have sole possession of such instrument, and all income on
such investment.
(h) The Indenture Trustee shall not in any way be held liable by
reason of any insufficiency in any Trust Account resulting from losses on
investments made in accordance with the provisions of this Section 3.1
including, but not limited to, losses resulting from the sale or depreciation in
the market value of such investments (but the institution serving as Indenture
Trustee shall at all times remain liable for its own obligations, if any,
constituting part of such investments). The Indenture Trustee shall not be
liable for any investment or liquidation of an investment made by it in
accordance with this Section 3.1 on the grounds that it could have made a more
favorable investment or a more favorable selection for sale of an investment.
SECTION 3.2. Establishment and Administration of the Trust Accounts.
(a) Collection Account. The Issuer hereby directs and the Indenture
Trustee hereby agrees to cause to be established and maintained an account (the
"Collection Account") for the benefit of the Noteholders. The Collection Account
shall be an Eligible Bank Account initially established at the corporate trust
department of the Indenture Trustee, bearing the following designation "BXG
Receivables Note Trust 2002-A, Timeshare Loan-Backed Notes, Series 2002-A --
Collection Account, U.S. Bank National Association, as Indenture Trustee for the
benefit of the Noteholders". The Indenture Trustee on behalf of the Noteholders
shall possess all right, title and interest in all funds on deposit from time to
time in the Collection Account and in all proceeds thereof. The Collection
Account shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders as their interests appear in the Trust
Estate. If, at any time, the Collection Account ceases to be an Eligible Bank
Account, the Indenture Trustee shall within two (2) Business Days establish a
new Collection Account which shall be an Eligible Bank Account, transfer any
cash and/or any investments to such new Collection Account, and from the date
such new Collection Account is established, it shall be the "Collection
Account". The Indenture Trustee agrees to immediately deposit any amounts
received by it into the Collection Account. Amounts on deposit in the Collection
Account shall be invested in accordance with Section 3.1 hereof. Withdrawals and
payments from the Collection Account will be made on each Payment Date as
provided in Section 3.4 or Section 6.6
15
hereof, as applicable. The Indenture Trustee, at the written direction of the
Servicer, shall withdraw (no more than once per calendar week) from the
Collection Account and return to the Servicer or as directed by the Servicer,
any amounts which (i) were mistakenly deposited by the Lockbox Bank in the
Collection Account, including, without limitation, amounts representing
Misdirected Payments and (ii) represent Additional Servicing Compensation. The
Indenture Trustee may conclusively rely on such written direction.
(b) General Reserve Account. The Issuer hereby directs and the
Indenture Trustee hereby agrees to cause to be established and maintained an
account (the "General Reserve Account") for the benefit of the Noteholders. On
the Closing Date, the Indenture Trustee shall deposit, from the proceeds from
the sale of the Notes, an amount equal to the General Reserve Account Initial
Deposit. The General Reserve Account shall be an Eligible Bank Account initially
established at the corporate trust department of the Indenture Trustee, bearing
the following designation "BXG Receivables Note Trust 2002-A -- General Reserve
Account, U.S. Bank National Association, as Indenture Trustee for the benefit of
the Noteholders". The Indenture Trustee on behalf of the Noteholders shall
possess all right, title and interest in all funds on deposit from time to time
in the General Reserve Account and in all proceeds thereof. The General Reserve
Account shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders as their interests appear in the Trust
Estate. If, at any time, the General Reserve Account ceases to be an Eligible
Bank Account, the Indenture Trustee shall within two (2) Business Days establish
a new General Reserve Account which shall be an Eligible Bank Account transfer
any cash and/or any investments to such new General Reserve Account, and from
the date such new General Reserve Account is established, it shall be the
"General Reserve Account". Amounts on deposit in the General Reserve Account
shall be invested in accordance with Section 3.1 hereof. Deposits to the General
Reserve Account shall be made in accordance with Section 3.4 hereof. Withdrawals
and payments from the General Reserve Account shall be made in the following
manner:
(i) Withdrawals. Subject to Sections 3.2(b)(ii) and (iii) below, if
on any Payment Date, Available Funds (without giving effect to any deposit
from the General Reserve Account) would be insufficient to pay any portion
of the Required Payments on such Payment Date, the Indenture Trustee
shall, based on the Monthly Servicer Report, withdraw from the General
Reserve Account an amount equal to the lesser of such insufficiency and
the amount on deposit in the General Reserve Account and deposit such
amount in the Collection Account.
(ii) Sequential Pay Event. Upon the occurrence of a Sequential Pay
Event, the Indenture Trustee shall withdraw all amounts on deposit in the
General Reserve Account and shall deposit such amounts to the Collection
Account for distribution in accordance with Section 6.6 hereof.
(iii) Stated Maturity or Payment in Full. On the earlier to occur of
the Stated Maturity and the Payment Date on which the Outstanding Note
Balance of all Classes of Notes will be reduced to zero, the Indenture
Trustee shall withdraw all amounts on deposit in the General Reserve
Account and shall deposit such amounts to the Collection Account.
16
(iv) Amounts in Excess of General Reserve Account Required Balance.
Except if a Cash Accumulation Event shall have occurred and is continuing,
on any Payment Date, if amounts on deposit in the General Reserve Account
are greater than the General Reserve Account Required Balance (after
giving effect to all other distributions and disbursements on such Payment
Date), the Indenture Trustee shall, based on the Monthly Servicer Report,
withdraw funds in excess of the General Reserve Account Required Balance
from the General Reserve Account and disburse such amounts to Owner
Trustee to be distributed in accordance with the Trust Agreement.
(c) Class D Reserve Account. The Issuer hereby directs and the
Indenture Trustee hereby agrees to cause to be established and maintained an
account (the "Class D Reserve Account") for the benefit of the Class D
Noteholders. The Class D Reserve Account shall be an Eligible Bank Account
initially established at the corporate trust department of the Indenture
Trustee, bearing the following designation "BXG Receivables Note Trust 2002-A --
Class D Reserve Account, U.S. Bank National Association, as Indenture Trustee
for the benefit of the Class D Noteholders". The Indenture Trustee on behalf of
the Class D Noteholders shall possess all right, title and interest in all funds
on deposit from time to time in the Class D Reserve Account and in all proceeds
thereof. The Class D Reserve Account shall be under the sole dominion and
control of the Indenture Trustee for the benefit of the Class D Noteholders as
their interests appear in the Trust Estate. If, at any time, the Class D Reserve
Account ceases to be an Eligible Bank Account, the Indenture Trustee shall
within two (2) Business Days establish a new Class D Reserve Account which shall
be an Eligible Bank Account, transfer any cash and/or any investments to such
new Class D Reserve Account and from the date such new Class D Reserve Account
is established, it shall be the "Class D Reserve Account". Amounts on deposit in
the Class D Reserve Account shall be invested in accordance with Section 3.1
hereof. Deposits to the Class D Reserve Account shall be made in accordance with
Section 3.4 hereof. Withdrawals and payments from the Class D Reserve Account
shall be made in the following manner:
(i) Withdrawals. Subject to Sections 3.2(c)(ii) and (iii) below, if
on any Payment Date, Available Funds (after giving effect to deposits from
the General Reserve Account) would be insufficient to pay any portion of
the Class D Interest Distribution Amount and/or the Class D Principal
Distribution Amount on such Payment Date, the Indenture Trustee shall,
based on the Monthly Servicer Report, withdraw from the Class D Reserve
Account an amount equal to the lesser of such insufficiency and the amount
on deposit in the Class D Reserve Account and deposit such amount in the
Collection Account for distribution in accordance with Section 3.4 hereof.
(ii) Sequential Pay Event. Upon the occurrence of a Sequential Pay
Event, the Indenture Trustee shall withdraw all amounts on deposit in the
Class D Reserve Account and shall deposit such amounts to the Collection
Account for distribution to the Class D Noteholders in accordance with
Section 6.6 hereof.
(iii) Stated Maturity or Payment in Full. On the earlier to occur of
the Stated Maturity and when the Payment Date on which the Outstanding
Note Balance of all Classes of Notes will be reduced to zero, the
Indenture Trustee shall withdraw all
17
amounts on deposit in the Class D Reserve Account and shall deposit such
amounts to the Collection Account.
(iv) Amounts in Excess of Class D Reserve Account Required Balance.
On any Payment Date, if amounts on deposit in the Class D Reserve Account
are greater than the Class D Reserve Account Required Balance (after
giving effect to all other distributions and disbursements on such Payment
Date), the Indenture Trustee shall, based on the Monthly Servicer Report,
withdraw funds in excess of the Class D Reserve Account Required Balance
from the Class D Reserve Account and disburse such amounts to Owner
Trustee to be distributed in accordance with the Trust Agreement.
(d) Closing Date Delinquency Reserve Account. The Issuer hereby
directs and the Indenture Trustee hereby agrees to cause to be established and
maintained an account (the "Closing Date Delinquency Reserve Account") for the
benefit of the Noteholders. On the Closing Date, the Indenture Trustee shall
deposit from the proceeds from the sale of the Notes, an amount equal to the
Closing Date Delinquency Reserve Account Initial Deposit. The Closing Date
Delinquency Reserve Account shall be an Eligible Bank Account initially
established at the corporate trust department of the Indenture Trustee, bearing
the following designation "BXG Receivables Note Trust 2002-A -- Closing Date
Delinquency Reserve Account, U.S. Bank National Association, as Indenture
Trustee for the benefit of the Noteholders". The Indenture Trustee on behalf of
the Noteholders shall possess all right, title and interest in all funds on
deposit from time to time in the Closing Date Delinquency Reserve Account and in
all proceeds thereof. The Closing Date Delinquency Reserve Account shall be
under the sole dominion and control of the Indenture Trustee for the benefit of
the Noteholders as their interests appear in the Trust Estate. If, at any time,
the Closing Date Delinquency Reserve Account ceases to be an Eligible Bank
Account, the Indenture Trustee shall within two (2) Business Days establish a
new Closing Date Delinquency Reserve Account which shall be an Eligible Bank
Account, transfer any cash and/or any investments to such new Closing Date
Delinquency Reserve Account and from the date such new Closing Date Delinquency
Reserve Account is established, it shall be the "Closing Date Delinquency
Reserve Account". Amounts on deposit in the Closing Date Delinquency Reserve
Account shall be invested in accordance with Section 3.1 hereof. Upon the
earlier of the Payment Date in September 2003 or a Sequential Pay Event, the
Indenture Trustee shall withdraw the amount on deposit in the Closing Date
Delinquency Reserve Account and deposit such amount to the Collection Account
for distribution to the parties and in the manner as required by Section 3.4 or
Section 6.6 hereof, as applicable.
SECTION 3.3. Reserved.
SECTION 3.4. Distributions.
(a) So long as no Sequential Pay Event has occurred, on each Payment
Date, to the extent of Available Funds and based on the Monthly Servicer Report,
the Indenture Trustee shall withdraw funds from the Collection Account to make
the following disbursements and distributions to the following parties, in the
following order of priority:
18
(i) to the Indenture Trustee, the Indenture Trustee Fee, plus any
accrued and unpaid Indenture Trustee Fees with respect to prior Payment
Dates, and any extraordinary out-of-pocket expenses of the Indenture
Trustee (up to $10,000 per Payment Date and no more than a cumulative
total of $100,000 for Servicer Termination Costs) incurred and not
reimbursed in connection with its obligations and duties under the
Indenture;
(ii) to the Owner Trustee, the Owner Trustee Fee, plus any accrued
and unpaid Owner Trustee Fees with respect to prior Payment Dates;
(iii) to the Administrator, the Administrator Fee, plus any accrued
and unpaid Administrator Fees with respect to prior Payment Dates;
(iv) to the Custodian, the Custodian Fee, plus any accrued and
unpaid Custodian Fees with respect to prior Payment Dates;
(v) to the Lockbox Bank, the Lockbox Fee, plus any accrued and
unpaid Lockbox Fees with respect to prior Payment Dates;
(vi) to the Servicer, the Servicing Fee, plus any accrued and unpaid
Servicing Fees with respect to prior Payment Dates;
(vii) to the Backup Servicer, the Backup Servicing Fee, plus any
accrued and unpaid Backup Servicing Fees with respect to prior Payment
Dates (less any amounts received from the Indenture Trustee, as successor
Servicer);
(viii) to the Class A Noteholders, the Class A Interest Distribution
Amount;
(ix) to the Class B Noteholders, the Class B Interest Distribution
Amount;
(x) to the Class C Noteholders, the Class C Interest Distribution
Amount;
(xi) to the Class D Noteholders, the Class D Interest Distribution
Amount;
(xii) to the Class A Noteholders, the Class A Principal Distribution
Amount;
(xiii) to the Class B Noteholders, the Class B Principal
Distribution Amount;
(xiv) to the Class C Noteholders, the Class C Principal Distribution
Amount;
(xv) to the Class D Noteholders, the Class D Principal Distribution
Amount;
(xvi) to (a) the Class A Noteholders, (b) the Class B Noteholders,
(c) the Class C Noteholders and (d) the Class D Noteholders, in that
order, the Deferred Interest Amount for such Class, if any;
19
(xvii) to the General Reserve Account, any remaining Available Funds
until the amounts on deposit in the General Reserve Account shall equal
the General Reserve Account Required Balance;
(xviii) if a Cash Accumulation Event shall have occurred and is
continuing, to the General Reserve Account, all remaining Available Funds
(notwithstanding that the amount on deposit in the General Reserve Account
is equal to or greater than General Reserve Account Required Balance);
(xix) to the Class D Reserve Account, any remaining Available Funds
until the amounts on deposit in the Class D Reserve Account shall equal
the Class D Reserve Account Required Balance;
(xx) to the Indenture Trustee, any extraordinary out-of-pocket
expenses of the Indenture Trustee not paid in accordance with (i) above;
and
(xxi) to the Owner Trustee, any remaining Available Funds, to be
distributed in accordance with the Trust Agreement.
(b) On and after the Assumption Date, the Indenture Trustee, as
successor Servicer, shall pay the Backup Servicing Fee from amounts received in
respect of the Servicing Fee.
(c) So long as no Sequential Pay Event has occurred, on any Payment
Date, if Available Funds are insufficient to pay any portion of the Class D
Interest Distribution Amount and the Class D Principal Distribution Amount, the
Indenture Trustee shall withdraw from the Collection Account and pay to the
Class D Noteholders, all amounts deposited therein from the Class D Reserve
Account.
(d) Upon the occurrence of a Sequential Pay Event, distributions
shall be made in accordance with Section 6.6. hereof.
SECTION 3.5. Reports to Noteholders.
On each Payment Date, the Indenture Trustee shall account to the
Initial Purchaser, each Noteholder, each Note Owner and to each Rating Agency
the portion of payments then being made which represents principal and the
amount which represents interest, and shall contemporaneously advise the Issuer
of all such payments. The Indenture Trustee may satisfy its obligations under
this Section 3.5 by making available electronically the Monthly Servicer Report
to the Initial Purchaser, the Noteholders, each Rating Agency and the Issuer;
provided, however, the Indenture Trustee shall have no obligation to provide
such information described in this Section 3.5 until it has received the
requisite information from the Issuer or the Servicer. On or before the fifth
day prior to the final Payment Date with respect to any Class, the Indenture
Trustee shall send notice of such Payment Date to each Rating Agency, the
Initial Purchaser and the Noteholders of such Class. Such notice shall include a
statement that if such Notes are paid in flu on the final Payment Date, interest
shall cease to accrue as of the day immediately preceding such final Payment
Date. In addition, the Indenture Trustee shall deliver
20
to the Note Owners, all notices, compliance reports and other certificates
delivered by the Servicer or the Issuer pursuant to this Indenture. At a Note
Owner's request, the Indenture Trustee agrees to provide such Note Owner an
accounting of balances in the General Reserve Account, the Closing Date
Delinquency Reserve Account and the Class D Reserve Account.
The Indenture Trustee may make available to the Noteholders, Note
Owner and each Rating Agency, via the Indenture Trustee's internet website, the
Monthly Servicer Report available each month and, with the consent or at the
direction of the Issuer, such other information regarding the Notes and/or the
Timeshare Loans as the Indenture Trustee may have in its possession, but only
with the use of a password provided by the Indenture Trustee or its agent to
such Person upon receipt by the Indenture Trustee from such Person of a
certification in the form of Exhibit F; provided, however, that the Indenture
Trustee or its agent shall provide such password to the parties to this
Agreement and the Rating Agencies without requiring such certification. The
Indenture Trustee will make no representation or warranties as to the accuracy
or completeness of such documents and will assume no responsibility therefor.
The Indenture Trustee's internet website shall be specified by the
Indenture Trustee from time to time in writing to the Issuer, the Servicer, the
Noteholders and the Rating Agencies. For assistance with this service,
Noteholders may call the customer service desk at (800) 934-68O2. In connection
with providing access to the Indenture Trustee's internet website, the Indenture
Trustee may require registration and the acceptance of a disclaimer. The
Indenture Trustee shall not be liable for the dissemination of information in
accordance with this Agreement.
The Indenture Trustee shall have the right to change the way Monthly
Servicer Reports are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the indenture Trustee
shall provide timely and adequate notification to all above parties regarding
any such changes.
Annually (and more often, if required by applicable law), the
Indenture Trustee shall distribute to Noteholders any Form 1099 or similar
information returns required by applicable tax law to be distributed to the
Noteholders. The Servicer shall prepare or cause to be prepared all such
information for distribution, by the Indenture Trustee to the Noteholders.
SECTION 3.6. Note Balance Write-Down Amounts.
The Note Balance Write-Down Amount, if any, on each Payment Date
shall be applied to the Adjusted Note Balance of a Class of Notes immediately
following the distribution of Available Funds and any amounts from the Class D
Reserve Account in the following order of priority: first, to the Class D Notes
until the Adjusted Note Balance thereof is reduced to zero; second, to the Class
C Notes until the Adjusted Note Balance thereof is reduced to zero; third, to
the Class B Notes until the Adjusted Note Balance thereof is reduced to zero;
and fourth, to the Class A Notes until the Adjusted Note Balance thereof is
reduced to zero. The application of the Note Balance Write-Down Amount to a
Class of Notes shall not reduce such Class' entitlement to unpaid Principal
Distribution Amounts.
SECTION 3.7. Withholding Taxes.
21
The Indenture Trustee, on behalf of the Issuer, shall comply with
all requirements of the Code and applicable Treasury Regulations and applicable
state and local law with respect to the withholding from any distributions made
by it to any Noteholder of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in connection therewith.
ARTICLE IV.
THE TRUST ESTATE
SECTION 4.1. Acceptance by Indenture Trustee.
(a) Concurrently with the execution and delivery of this Indenture,
the Indenture Trustee does hereby acknowledge and accept the conveyance by the
Issuer of the assets constituting the Trust Estate. The Indenture Trustee shall
hold the Trust Estate in trust for the benefit of the Noteholders, subject to
the terms and provisions hereof. In connection with the conveyance of the Trust
Estate to the Indenture Trustee, the Issuer has delivered or has caused the
Depositor to deliver (i) to the Custodian, the Timeshare Loan Files, and (ii) to
the Servicer, the Timeshare Loan Servicing Files for each Timeshare Loan
conveyed on the Closing Date. On or prior to each Transfer Date, the Issuer will
deliver or cause to be delivered (i) to the Custodian, the Timeshare Loan Files,
and (ii) to the Servicer, the Timeshare Loan Servicing Files, for each Qualified
Substitute Timeshare Loan to be conveyed on such Transfer Date.
(b) The Indenture Trustee shall perform its duties under this
Section 4.1 and hereunder on of the Trust Estate and for the benefit of the
Noteholders in accordance with the terms of this Indenture and applicable law
and, in each case, taking into account its other obligations hereunder, but
without regard to:
(i) any relationship that the Indenture Trustee or any Affiliate of
the Indenture Trustee may have with an Obligor;
(ii) the ownership of any Note by the Indenture Trustee or any
Affiliate of the Indenture Trustee;
(iii) the Indenture Trustee's right to receive compensation for its
services hereunder or with respect to any particular transaction; or
(iv) the ownership, or holding in trust for others, by the Indenture
Trustee of any other assets or property.
SECTION 4.2. Grant of Security Interest; Tax Treatment.
(a) The conveyance by the Issuer of the Timeshare Loans to the
Indenture Trustee shall not constitute and is not intended to result in an
assumption by the Indenture Trustee or any Noteholder of any obligation of the
Issuer or the Servicer to the Obligors, the insurers under any insurance
policies, or any other Person in connection with the Timeshare Loans.
22
(b) It is the intention of the parties hereto that, with respect to
all taxes, the Notes will be treated as indebtedness of the Issuer to the
Noteholders secured by the Timeshare Loans (the "Intended Tax
Characterization"). The provisions of this Indenture shall be construed in
furtherance of the Intended Tax Characterization. Each of the Issuer, the
Servicer, the Indenture Trustee, the Club Trustee and the Backup Servicer by
entering into this Indenture, and each Noteholder by the purchase of a Note,
agree to report such transactions for purposes of all taxes in a manner
consistent with the Intended Tax Characterization, unless otherwise required by
applicable law.
(c) None of the Issuer, the Servicer, the Club Trustee or the Backup
Servicer shall take any action inconsistent with the Indenture Trustee's
interest in the Timeshare Loans and shall indicate or shall cause to be
indicated in its books and records held on its behalf that each Timeshare Loan
and the other Timeshare Loans constituting the Trust Estate has been assigned to
the Indenture Trustee on behalf of the Noteholders.
SECTION 4.3. Further Action Evidencing Assignments.
(a) The Issuer and the Indenture Trustee each agrees that, from time
to time, it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Holders representing at least 66-2/3% of the Adjusted Note Balance of
each Class of Notes may reasonably request, in order to perfect, protect or more
fully evidence the security interest in the Timeshare Loans or to enable the
Indenture Trustee to exercise or enforce any of its rights hereunder. Without
limiting the generality of the foregoing, the Issuer will, without the necessity
of a request and upon the request of the Indenture Trustee, execute and file or
record (or cause to be executed and filed or recorded) such Assignments of
Mortgage, financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be necessary
or appropriate to create and maintain in the Indenture Trustee a first priority
perfected security interest, at all times, in the Trust Estate, including,
without limitation, recording and filing UCC-1 financing statements,
amendments or continuation statements prior to the effective date of any change
of the name, identity or structure or relocation of its chief executive office
or any change that would or could affect the perfection pursuant to any
financing statement or continuation statement or assignment previously filed or
make any UCC-1 or continuation statement previously filed pursuant to this
Indenture seriously misleading within the meaning of applicable provisions of
the UCC (and the Issuer shall give the Indenture Trustee at least thirty (30)
Business Days prior notice of the expected occurrence of any such circumstance).
The Issuer shall deliver promptly to the Indenture Trustee file-stamped copies
of any such filings.
(b) (i) The Issuer hereby grants to each of the Servicer and the
Indenture Trustee a power of attorney to execute all documents including, but
not limited to, Assignments of Mortgage, UCC-l financing statements, amendments
or continuation statements, on behalf of the Issuer as may be necessary or
desirable to effectuate the foregoing and (ii) the Servicer hereby grants to the
Indenture Trustee a power of attorney to execute all documents on behalf of the
Servicer as may be necessary or desirable to effectuate the foregoing; provided,
however, that such grant shall not create a duty on the part of the Indenture
Trustee or the Servicer to file,
23
prepare, record or monitor, or any responsibility for the contents or adequacy
of, any such documents.
SECTION 4.4. Substitution and Repurchase of Timeshare Loans.
(a) Mandatory Substitution and Repurchase of Timeshare Loans for
Breach of Representation or Warranty. If at any time, any party hereto obtains
knowledge, discovers, or is notified by any other party hereto, that any of the
representations and warranties of the Depositor in the Sale Agreement were
incorrect at the time such representations and warranties were made, then the
party discovering such defect, omission, or circumstance shall promptly notify
the other parties to this Indenture, the Rating Agencies, the Depositor and the
Club Originator. In the event any such representation or warranty of the
Depositor is incorrect and materially and adversely affects the value of a
Timeshare Loan or the interests of the Noteholders therein, then the Issuer and
the Indenture Trustee shall require the Depositor, within 60 days after the date
it is first notified of, or otherwise obtains Knowledge of such breach, to
eliminate or otherwise cure in all material respects the circumstance or
condition which has caused such representation or warranty to be incorrect or
(1) if the breach relates to a particular Timeshare Loan and is not cured in all
material respects (such Timeshare Loan, a "Defective Timeshare Loan"), either
(a) repurchase the Issuer's interest in such Defective Timeshare Loan at the
Repurchase Price or (b) provide one or more Qualified Substitute Timeshare Loans
and pay the Substitution Shortfall Amounts, if any. The Indenture Trustee is
hereby appointed attorney-in-fact, which appointment is coupled with an interest
and is therefore irrevocable, to act on behalf and in the name of the Issuer to
enforce the Depositor's repurchase or substitution obligations if the Depositor
has not complied with its repurchase or substitution obligations under the Sale
Agreement within 30 days after the end of the aforementioned 60-day period.
(b) Optional Purchase or Substitution of Upgraded Club Loans.
Pursuant to the Transfer Agreements and the Purchase Agreement, with respect to
any Upgraded Club Loan, on any date, the Club Originator, as designee of the
Depositor, shall have the option, but not the obligation, to (i) pay to the
Collection Account the Repurchase Price for an Upgraded Club Loan or (ii)
substitute one or more Qualified Substitute Timeshare Loans for an Upgraded Club
Loan and pay the related Substitution Shortfall Amounts, if any; provided,
however, that the option to substitute one or more Qualified Substitute
Timeshare Loans for an Upgraded Club Loan is limited on any date to (A) 20% of
the Cut-Off Date Aggregate Loan Balance of the Timeshare Loans less (B) the Loan
Balances of the Upgraded Club Loans previously substituted by the Club
Originator pursuant to this Section 4.4(b) on the related substitution dates.
The Club Originator, as designee of the Depositor, shall deposit the related
Repurchase Price and Substitution Shortfall Amounts, if any, in the Collection
Account as set forth in Section 4.4(d) below.
(c) Optional Purchase or Substitution of Defaulted Timeshare Loans.
Pursuant to the Transfer Agreements and the Purchase Agreement, with respect to
any Defaulted Timeshare Loans, on any date, the Club Originator, as designee of
the Depositor shall have the option, but not the obligation, to either (i)
purchase the Defaulted Timeshare Loan at the Repurchase Price for such Defaulted
Timeshare Loan or (ii) substitute one or more Qualified Substitute Timeshare
Loans for such Defaulted Timeshare Loan and pay the related Substitution
24
Shortfall Amounts, if any; provided, however, that the option to repurchase a
Defaulted Timeshare Loan or to substitute one or more Qualified Substitute
Timeshare Loans for a Defaulted Timeshare Loan is limited on any date to the
Optional Purchase Limit and the Optional Substitution Limit, respectively. The
Club Originator, as designee of the Depositor, shall purchase or substitute
Defaulted Timeshare Loans as provided herein and the Club Originator shall
deposit the related Repurchase Price and Substitution Shortfall Amounts, if any,
in the Collection Account as set forth in Section 4.4(d) below. The Club
Originator, may irrevocably waive the Club Originator's option to purchase or
substitute a Defaulted Timeshare Loan by delivering or causing to be delivered
to the Indenture Trustee a Waiver Letter in the form of Exhibit G attached
hereto.
(d) Payment of Repurchase Prices and Substitution Shortfall Amounts.
The Issuer and the Indenture Trustee shall direct that the Depositor remit or
cause to be remitted all amounts in respect of Repurchase Prices and
Substitution Shortfall Amounts payable during the related Due Period in
immediately available funds to the Indenture Trustee on the Transfer Date for
deposit in the Collection Account.
(e) Schedule of Timeshare Loans. The Issuer and Indenture Trustee
shall direct the Depositor to provide or cause to be provided to the Indenture
Trustee on any date on which a Timeshare Loan is purchased, repurchased or
substituted with an electronic supplement to the Schedule of Timeshare Loans
reflecting the removal and/or substitution of Timeshare Loans and subjecting any
Qualified Substitute Timeshare Loans to the provisions thereof.
(f) Officer's Certificate. No substitution of a Timeshare Loan shall
be effective unless the Issuer and the Indenture Trustee shall have received
an Officer's Certificate from the Club Originator indicating that (1) the new
Timeshare Loan meets all the criteria of the definition of "Qualified Substitute
Timeshare Loan", (2) the Timeshare Loan Files for such Qualified Substitute
Timeshare Loan have been delivered to the Custodian, and (3) the Timeshare Loan
Servicing Files for such Qualified Substitute Timeshare Loan have been
delivered to the Servicer.
(g) Qualified Substitute Timeshare Loans. On the related Transfer
Date, the Issuer and the Indenture Trustee shall direct the Depositor to deliver
or cause the delivery of the Timeshare Loan Files of the related Qualified
Substitute Timeshare Loans to the Custodian on the related Transfer Date in
accordance with the provisions of this Indenture and the Custodial Agreement.
SECTION 4.5. Release of Lien.
(a) The Issuer shall be entitled to obtain a release from the Lien
of the Indenture for any Timeshare Loan purchased, repurchased or substituted
under Section 4.4 hereof, (i) upon satisfaction of each of the applicable
provisions of Section 4.4 hereof, (ii) in the case of any purchase or
repurchase, after a payment by the Depositor of the Repurchase Price of the
Timeshare Loan, and (iii) in the case of any substitution, after payment by the
Depositor of the applicable Substitution Shortfall Amounts, if any, pursuant to
Section 4.4 hereof.
25
(b) The Issuer shall be entitled to obtain a release from the Lien
of the Indenture for any Timeshare Loan which has been paid in full.
(c) In addition, on any Payment Date if (i) Available Funds are
sufficient to pay the Required Payments, (ii) the amount on deposit in the
General Reserve Account is at least equal to the General Reserve Account
Required Balance, (iii) the amount on deposit in the Class D Reserve Account is
at least equal to the Class D Reserve Account Required Balance, (iv) no Event of
Default has occurred and is continuing, (v) the Optional Purchase Limit is
greater than zero and (vi) the Aggregate Outstanding Note Balance is not greater
than 94% of the Aggregate Loan Balance, the Indenture Trustee shall release
Defaulted Timeshare Loans that have not been purchased, repurchased or
substituted under Section 4.4 hereof from the Lien of the Indenture, without
additional payment.
(d) In connection with (a), (b) and (c) above, the Issuer and
Indenture Trustee will execute and deliver such releases, endorsements and
assignments as are provided to it by the Depositor, in each case, without
recourse, representation or warranty, as shall be necessary to vest in the
Depositor or its designee, the legal and beneficial ownership of each Timeshare
Loan being released pursuant to this Section 4.5. The Servicer shall deliver a
Request for Release to the Custodian with respect to the related Timeshare Loan
Files and Timeshare Loan Servicing Files being released pursuant to this Section
4.5, and such files shall be transferred to the Depositor or its designee.
SECTION 4.6. Appointment of Custodian and Paying Agent.
(a) The Indenture Trustee may appoint a Custodian to hold all or a
portion of the Timeshare Loan Files as agent for the Indenture Trustee. Each
Custodian shall be a depository institution supervised and regulated by a
federal or state banking authority, shall have combined capital and surplus of
at least $10,000,000, shall be qualified to do business in the jurisdiction in
which it holds any Timeshare Loan File and shall not be the Issuer or an
Affiliate of the Issuer. The initial Custodian shall be U.S. Bank National
Association. The Indenture Trustee shall not be responsible for paying the
Custodian Fee or any other amounts owed to the Custodian.
(b) The Issuer hereby appoints the Indenture Trustee as a Paying
Agent. The Issuer may appoint other Paying Agents from time to time. Any such
other Paying Agent shall be appointed by Issuer Order with written notice
thereof to the Indenture Trustee. Any Paying Agent appointed by the Issuer shall
be a Person who would be eligible to be Indenture Trustee hereunder as provided
in Section 7.7 hereof.
SECTION 4.7. Sale of Timeshare Loans.
The parties hereto agree that none of the Timeshare Loans in the
Trust Estate may be sold or disposed of in any manner except as expressly
provided for herein.
26
ARTICLE V.
SERVICING OF TIMESHARE LOANS
SECTION 5.1. Appointment of Servicer and Backup Servicer; Servicing
Standard.
(a) Subject to the terms and conditions herein, the Issuer and the
Indenture Trustee hereby appoint Bluegreen as the initial Servicer hereunder.
The Servicer shall service and administer the Timeshare Loans and perform all of
its duties hereunder in accordance the Servicing Standard.
(b) Subject to the terms and conditions herein and in the Backup
Servicing Agreement, the Issuer hereby appoints Concord Servicing Corporation to
act as the initial Backup Servicer hereunder. The Backup Servicer shall service
and administer the Timeshare Loans and perform all of its duties hereunder and
under the Backup Servicing Agreement in accordance the Servicing Standard.
SECTION 5.2. Payments on the Timeshare Loans.
(a) The Servicer shall, in a manner consistent with the Servicing
Standard, collect all payments made under each Timeshare Loan and direct each
Obligor to timely make all payments in respect of his or her Timeshare Loan to
the Lockbox Account maintained at the Lockbox Bank.
(b) On the Closing Date, the Servicer shall cause to be deposited to
the Collection Account all amounts collected and received in respect of the
Timeshare Loans after the Initial Cut-Off Date (without deduction for any
Liquidation Expenses).
(c) Subject to subsection (d) below, on each Monday, Wednesday,
Friday (or, if such day is not a Business Day, then on the next Business Day)
and the last Business Day of the related calendar month, the Indenture Trustee
shall direct the Lockbox Bank to remit all collections in respect of the
Timeshare Loans on deposit in the Lockbox Account to the Collection Account.
(d) Liquidation Expenses shall be reimbursed to the Servicer in
accordance with Section 3.2(a) hereof. To the extent that the Servicer has
received any Liquidation Expenses as Additional Servicing Compensation and shall
subsequently recover any portion of such Liquidation Expenses from the related
Obligor, the Servicer shall deposit such amounts into the Collection Account in
accordance with Section 5.3(b) hereof.
(e) The Servicer agrees that to the extent it receives any amounts
in respect of any insurance policies which are not payable to the Obligor or any
other collections relating to the Trust Estate, it shall deposit such amounts to
the Collection Account within two (2) Business Days of receipt thereof (unless
otherwise expressly provided herein).
27
SECTION 5.3. Duties and Responsibilities of the Servicer.
(a) In addition to any other customary services which the Servicer
may perform or may be required to perform hereunder, the Servicer shall perform
or cause to be performed through sub-servicers, the following servicing and
collection activities in accordance with the Servicing Standard:
(i) perform standard accounting services and general record keeping
services with respect to the Timeshare Loans;
(ii) respond to telephone or written inquiries of Obligors
concerning the Timeshare Loans;
(iii) keep Obligors informed of the proper place and method for
making payment with respect to the Timeshare Loans;
(iv) contact Obligors to effect collections and to discourage
delinquencies in the payment of amounts owed under the Timeshare Loans and
doing so by any lawful means;
(v) report tax information to Obligors and taxing authorities to the
extent required by law;
(vi) take such other action as may be necessary or appropriate in
the discretion of the Servicer for the purpose of collecting and
transferring to the Indenture Trustee for deposit into the Collection
Account all payments received by the Servicer or remitted to the Lockbox
Account in respect of the Timeshare Loans (except as otherwise expressly
provided herein), and to carry out the duties and obligations imposed upon
the Servicer pursuant to the terms of this Indenture;
(vii) arranging for Liquidations of Timeshare Properties related to
Defaulted Timeshare Loans and the remarketing of such Timeshare Properties
as provided in Section 5.3(b) below;
(viii) use reasonable best efforts to enforce the purchase and
substitution obligations of the Club Originator under the Transfer
Agreements or the Purchase Agreement;
(ix) refrain from modifying, waiving or amending the terms of any
Timeshare Loan; provided, however, the Servicer may modify, waive or amend
a Timeshare Loan for which a default on such Timeshare Loan has occurred
or is imminent or and such modification, amendment or waiver will not (i)
materially alter the interest rate on or the principal balance of such
Timeshare Loan, (ii) shorten the final maturity of, lengthen the timing of
payments of either principal or interest, or any other terms of, such
Timeshare Loan in any manner which would have a material adverse affect on
the Noteholders, (iii) adversely affect the Timeshare Property underlying
such Timeshare Loan or (iv) reduce materially the likelihood that payments
of interest and principal on such Timeshare Loan
28
shall be made when due; provided, further, the Servicer may grant a single
extension of the final maturity of a Timeshare Loan if the Servicer, in
its reasonable discretion, determines that (A) such Timeshare Loan is in
default or a default on such Timeshare Loan is likely to occur in the
foreseeable future and (B) the value of such Timeshare Loan will be
enhanced by such extension; provided, further, the Servicer shall not be
permitted to modify, waive or amend the terms of any Timeshare Loan if the
sum of the Cut-Off Date Loan Balance of such Timeshare Loan and the
Cut-Off Date Loan Balances of all other Timeshare Loans for which the
Servicer has modified, waived or amended the terms thereof exceeds 1% of
the Cut-Off Date Aggregate Loan Balance.
(x) work with Obligors in connection with any transfer of ownership
of a Timeshare Property by an Obligor to another Person (to the extent
permitted), whereby the Servicer may consent to the assumption by such
Person of the Timeshare Loan related to such Timeshare Property (to the
extent permitted); provided, however, in connection with any such
assumption, the rate of interest borne by, the maturity date of, the
principal amount of, the timing of payments of principal and interest in
respect of, and all other material terms of, the related Timeshare Loan
shall not be changed other than as permitted in (ix) above; and
(xi) to the extent that the Custodian Fees or the Lockbox Fees are,
in the Servicer's reasonable business judgment, no longer commercially
reasonable, use commercially reasonable efforts to exercise its rights
under the Custodial Agreement or the Lockbox Agreement to replace the
Custodian or Lockbox Bank, as applicable. Any such successor shall be
reasonably acceptable to the Indenture Trustee
(xii) delivery of such information and data to the Backup Servicer
as is required under the Backup Servicing Agreement
(xiii) delivery of any new or amended ACH Forms executed by an
Obligor to the Custodian to be held as part of the related Timeshare Loan
File.
(b) In the event that a Defaulted Timeshare Loan is not or cannot be
released from the Lien of the Indenture pursuant to Section 4.5 hereof, the
Servicer shall, in accordance with the Servicing Standard, promptly institute
collection procedures, which may include, but is not limited to, cancellation,
forfeiture, termination or foreclosure proceedings or obtaining a deed-in-lieu
of foreclosure (each, a "Foreclosure Property"). Upon the Timeshare Property
becoming a Foreclosure Property, the Servicer shall promptly attempt to remarket
such Foreclosure Property. The Issuer acknowledges that the Club Originator or
the Aruba Originator may be in the best position to remarket the Foreclosure
Property in connection with such Originator's overall marketing program for the
applicable Timeshare Project. The Servicer shall select the remarketing option
reasonably anticipated to produce the highest Net Liquidation Proceeds, giving
effect to the gross price obtainable, broker's commissions, foreclosure costs,
sales and marketing expenses and other factors. The Servicer shall be entitled
to reimbursement of Liquidation Expenses out of Liquidation Proceeds. Any
Liquidation Expenses later recovered by the Servicer shall be deposited by the
Servicer in the Collection Account in accordance with Section 5.2(c) and (d)
hereof.
29
(i) To the extent that one of the Originators or an Affiliate
thereof is selected to remarket a Foreclosure Property, the Servicer shall
cause such Originator or Affiliate thereof to agree that it will remarket
such Foreclosure Property in the ordinary course in a manner similar and
consistent with (or better than) the manner in which it remarkets or sells
other timeshare properties it or its Affiliates owns.
(ii) The Servicer (if Bluegreen Corporation or its Affiliate is
acting as Servicer) on behalf of the Issuer and the Indenture Trustee
shall take all necessary steps to have the record title of the applicable
Timeshare Properties subject to such Defaulted Timeshare Loans continue to
be held by the Club Trustee. In such event, the Servicer shall direct the
Club Trustee, directly or through its agents to exercise the remedies
provided for in the Club Trust Agreement, in the Mortgage Note themselves
or in the other Club documents with respect to such Defaulted Timeshare
Loans and the Obligors thereunder, and the Owner Beneficiary Rights will
be remarketed with the purpose of obtaining the maximum Net Liquidation
Proceeds in respect of such Defaulted Timeshare Loans.
(iii) The Servicer shall reserve its rights under the Club Trust
Agreement and/or the applicable Mortgages to obtain, at any time, record
title and all beneficial interests in respect of the Timeshare Properties
related to Defaulted Timeshare Loans. All actions taken by the Servicer in
respect of any Defaulted Timeshare Loans shall, at all times, be carried
out in a manner such that none of the Trust, the Owner Trustee, the
Indenture Trustee or the Noteholders shall, under applicable law, be
deemed to be the developer or declarant of any Resort or the Club.
(iv) The Servicer agrees that it shall require that any liquidation
Proceeds be in the form of cash only.
(c) In connection with the Servicer's performance of its duties
under Section 5.3(b), (i) the Servicer will undertake such duties in the
ordinary course in a manner similar and consistent with (or better than) the
manner in which the Servicer sells or markets other timeshare properties it or
its Affiliates owns and (ii) the Servicer may not sell any of the Defaulted
Timeshare Loans that are an asset of the Trust Estate except for or as
specifically permitted by this Indenture.
(d) For so long as Bluegreen or any of its Affiliates controls the
Resorts, the Servicer shall use commercially reasonable best efforts to maintain
or cause to maintain the Resorts in good repair, working order and condition
(ordinary wear and tear excepted).
(e) For so long as Bluegreen or any of its Affiliates controls the
Resorts, the manager, related management contract and master marketing and sale
contract (if applicable) for each Resort at all times shall be reasonably
satisfactory to the Holders representing at least 66-2/3% of the Adjusted Note
Balance of each Class of Notes. For so long as Bluegreen or any of its
Affiliates controls the Timeshare Association for a Resort, and Bluegreen or an
Affiliate thereof is the manager, the related management contract and master
marketing and sale contract may be amended or modified only with the prior
written consent of the Holders representing at
30
least 66-2/3% of the Adjusted Note Balance of each Class of Notes, which consent
shall not be unreasonably withheld or delayed.
(f) In the event any Lien (other than a Permitted Lien) attaches to
any Timeshare Loan or related collateral from any Person claiming from and
through Bluegreen or one of its Affiliates which materially adversely affects
the Issuer's interest in such Timeshare Loan, Bluegreen shall, within the
earlier to occur of ten (10) Business Days after such attachment or the
respective lienholders' action to foreclose on such lien, either (a) cause such
Lien to be released of record, (b) provide the Indenture Trustee with a bond in
accordance with the applicable laws of the state in which the Timeshare Property
is located, issued by a corporate surety acceptable to the Indenture Trustee, in
an amount and in form reasonably acceptable to the Indenture Trustee or (c)
provide the Indenture Trustee with such other security as the Indenture Trustee
may reasonably require.
(g) The Servicer shall: (a) promptly notify the Indenture Trustee of
(i) any claim, action or proceeding which may be reasonably expected to have a
material adverse effect on the Trust Estate, or any material part thereof, and
(ii) any action, suit, proceeding, order or injunction of which Servicer becomes
aware after the date hereof pending or threatened against or affecting Servicer
or any Affiliate which may be reasonably expected to have a material adverse
effect on the Trust Estate or the Servicer's ability to service the same; (b) at
the request of Indenture Trustee with respect to a claim or action or proceeding
which arises from or through the Servicer or one of its Affiliates, appear in
and defend, at Servicer's expense, any such claim, action or proceeding which
would have a material adverse effect on the Timeshare Loans or the Servicer's
ability to service the same; and (c) comply in all respects, and shall cause all
Affiliates to comply in all respects, with the terms of any orders imposed on
such Person by any governmental authority the failure to comply with which would
have a material adverse effect on the Timeshare Loans or the Servicer's ability
to service the same.
(h) Except as contemplated by the Transaction Documents, the
Servicer shall not, and shall not permit the Club Managing Entity to, encumber,
pledge or otherwise ▇▇▇▇▇ ▇ ▇▇▇▇ or security interest in and to the Reservation
System (including, without limitation, all hardware, software and data in
respect thereof) and furthermore agrees, and shall cause the Club Managing
Entity, to use commercially reasonable efforts to keep the Reservation System
operational, not to dispose of the same and to allow the Club the use of, and
access to, the Reservation System in accordance with the terms of the Club
Management Agreement.
(i) The Servicer shall comply in all material respects with the
Collection Policy in effect on the Closing Date (or, as amended from time to
time with the consent of the Holders representing at least 66-2/3% of the
Adjusted Note Balance of each Class of Notes) and with the terms of the
Timeshare Loans.
SECTION 5.4. Servicer Events of Default.
(a) A "Servicer Event of Default" means, the occurrence and
continuance of any of the following events:
31
(i) any failure by the Servicer to make any required payment,
transfer or deposit when due hereunder and the continuance of such default
for a period of two (2) Business Days;
(ii) any failure by the Servicer to provide any required report
within five (5) Business Days of when such report is required to be
delivered hereunder;
(iii) any failure by the Servicer to observe or perform in any
material respect any other covenant or agreement which has a material
adverse effect on the Noteholders and such failure is not remedied within
30 days (or, if the Servicer shall have provided evidence satisfactory to
the Indenture Trustee that such covenant cannot be cured in the 30-day
period and that it is diligently pursuing a cure, 60 days), after the
earlier of (x) the Servicer first acquiring Knowledge thereof and (y) the
Indenture Trustee's giving written notice thereof to the Servicer;
(iv) any representation or warranty made by the Servicer in this
Indenture shall prove to be incorrect in any material respect as of the
time when the same shall have been made, and such breach is not remedied
within 30 days (or, if the Servicer shall have provided evidence
satisfactory to the Indenture Trustee that such breach cannot be cured in
the 30-day period and that it is diligently pursuing a cure, 60 days)
after the earlier of (x) the Servicer first acquiring Knowledge thereof
and (y) the Indenture Trustee's giving written notice thereof to the
Servicer;
(v) the entry by a court having competent jurisdiction in respect of
the Servicer of (i) a decree or order for relief in respect of the
Servicer in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other similar
law or (ii) a decree or order adjudging the Servicer a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of or in respect
of the Servicer under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of the Servicer, or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days;
(vi) the commencement by the Servicer of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by either to the
entry of a decree or order for relief in respect of the Servicer in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or similar official of the Servicer or of any substantial
part of its property, or the making by it of an
32
assignment for the benefit of creditors, or the Servicer's failure to pay
its debts generally as they become due, or the taking of corporate action
by the Servicer in furtherance of any such action;
(vii) the occurrence of the Cash Accumulation Event whereby the
Servicer (if Bluegreen) fails to have at least $75,000,000 in financing
facilities in place, or
(viii) a Cash Accumulation Event (other than as described in (vii)
above) that remains uncured for two consecutive Due Periods.
If any Servicer Event of Default shall have occurred and not been
waived hereunder, the Indenture Trustee may, and upon notice from Holders
representing at least 66-2/3% of the Adjusted Note Balance of each Class of
Notes shall, terminate, on behalf of the Noteholders, by notice in writing to
the Servicer, all of the rights and obligations of the Servicer, as Servicer
under this Indenture. The Indenture Trustee shall immediately give written
notice of such termination to the Backup Servicer.
Unless consented to by the Holders representing at least 66-2/3% of
the Adjusted Note Balance of each Class of Notes, the Issuer may not waive any
Servicer Event of Default.
(b) Replacement of Servicer. From and after the receipt by the
Servicer of such written termination notice or the resignation of the Servicer
pursuant to Section 5.10 hereof, all authority and power of the Servicer under
this Indenture, whether with respect to the Timeshare Loans or otherwise, shall,
pass to and be vested in the Indenture Trustee, and the Indenture Trustee shall
be the successor Servicer hereunder and the duties and obligations of the
Servicer shall terminate. The Servicer shall perform such actions as are
reasonably necessary to assist the Indenture Trustee and the Backup Servicer in
such transfer. If the Servicer fails to undertake such action as is reasonably
necessary to effectuate such a transfer, the Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of and at the expense
of the Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things reasonably
necessary to effect the purposes of such notice of termination. The Servicer
agrees that if it is terminated pursuant to this Section 5.4, it shall promptly
(and, in any event, no later than five (5) Business Days subsequent to its
receipt of the notice of termination from the Indenture Trustee) provide the
Indenture Trustee, the Backup Servicer or their respective designees (with
reasonable costs being borne by the Servicer) with all documents and records
(including, without limitation, those in electronic form) reasonably requested
by it to enable the Indenture Trustee to assume the Servicer's functions
hereunder and for the Backup Servicer to assume the functions required by the
Backup Servicing Agreement, and the Servicer shall cooperate with the Indenture
Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder and the assumption by a successor of the Servicer's obligations
hereunder, including, without limitation, the transfer within one (1) Business
Day to the Indenture Trustee or its designee for administration by it of all
cash amounts which shall at the time or thereafter received by it with respect
to the Timeshare Loans (provided, however, that the Servicer shall continue to
be entitled to receive all amounts accrued or owing to it under this Indenture
on or prior to the date of such termination). The Indenture Trustee shall be
entitled to renegotiate the Servicing Fee; provided,
33
however, no change to the Servicing Fee may be made unless the Indenture Trustee
shall have (i) submitted a servicing fee proposal (a "New Servicing Fee
Proposal") to S&P seeking written confirmation as to whether or not the New
Servicing Fee Proposal would result in a qualification, downgrade or withdrawal
of any rating assigned to a Class of Notes, (ii) notified the Noteholders of
S&P's response, and (iii) received the written consent of Holders representing
at least 66-2/3% of the Adjusted Note Balance of each Class of Notes.
Notwithstanding anything herein to the contrary, in no event shall the Indenture
Trustee or Bluegreen be liable for any Servicing Fee or for any differential in
the amount of the Servicing Fee paid hereunder and the amount necessary to
induce any successor Servicer to assume the obligations of Servicer under this
Indenture.
The Indenture Trustee shall be entitled to be reimbursed by the
Servicer, (or by the Trust Estate to the extent set forth in Section 3.4(a)(i)
or Section 6.6(a)(i) hereof) if the Servicer is unable to fulfill its
obligations hereunder for all Servicer Termination Costs.
The successor 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 successor Servicer becomes 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 obligations, if any, of
the Servicer, (iii) no obligation to pay any taxes required to be paid by the
Servicer, (iv) no obligation to pay any of the fees and expenses of any other
party involved in this transaction that were incurred by the prior Servicer and
(v) no liability or obligation with respect to any Servicer indemnification
obligations of any prior Servicer including the original Servicer.
Notwithstanding anything contained in the Indenture to the contrary,
any successor Servicer is authorized to accept and rely on all of the
accounting, records (including computer records) and work of the prior Servicer
relating to the Timeshare Loans (collectively, the "Predecessor Servicer Work
Product"), without any audit or other examination thereof, and such successor
Servicer shall have no duty, responsibility, obligation or liability for the
acts and omissions of the prior Servicer. If any error, inaccuracy, omission or
incorrect or nonstandard practice or procedure (collectively, "Errors") exist in
any Predecessor Servicer Work Product and such Errors make it materially more
difficult to service or should cause or materially contribute to the successor
Servicer making or continuing any Errors (collectively, "Continued Errors"), the
successor Servicer shall have no duty, responsibility, obligation or liability
for such Continued Errors; provided, however, that each successor Servicer shall
agree to use its best efforts to prevent further Continued Errors. In the event
that the successor Servicer becomes aware of Errors or Continued Errors, the
successor Servicer shall, with the prior consent of the Indenture Trustee, use
its best efforts to reconstruct and reconcile such data as is commercially
reasonable to correct such Errors and Continued Errors and to prevent future
Continued Errors and to recover its costs thereby.
The Indenture Trustee may appoint an Affiliate as the successor
Servicer and the provisions of this Section 5.4(b) related to the Indenture
Trustee shall apply to such Affiliate.
(c) Any successor Servicer, including the Indenture Trustee, shall
not be deemed to be in default or to have breached its duties as successor
Servicer hereunder if the predecessor Servicer shall fail to deliver any
required deposit to the Collection Account or
34
otherwise fail to cooperate with, or take any actions required by such successor
Servicer related to the transfer of servicing hereunder.
SECTION 5.5. Accountings; Statements and Reports.
(a) Monthly Servicer Report. Not later than two (2) Business Days
prior to the Payment Date, the Servicer shall deliver to the Issuer, the
Indenture Trustee, the Rating Agencies and the Initial Purchaser, a report (the
"Monthly Servicer Report") substantially in the form of Exhibit D hereto,
detailing certain activity relating to the Timeshare Loans. The Monthly Servicer
Report shall be completed with the information specified therein for the related
Due Period and shall contain such other information as may be reasonably
requested by the Issuer, the Indenture Trustee or the Initial Purchaser in
writing at least five (5) Business Days prior to such Determination Date. Each
such Monthly Servicer Report shall be accompanied by an Officer's Certificate of
the Servicer in the form of Exhibit E hereto, certifying the accuracy of the
computations reflected in such Monthly Servicer Report.
(b) Certification as to Compliance. The Servicer shall deliver to
the Issuer, the Indenture Trustee, the Rating Agencies and the Initial
Purchaser, an Officer's Certificate on or before April 30 of each year
commencing in 2003: (x) to the effect that a review of the activities of the
Servicer during the preceding calendar year, and of its performance under this
Indenture during such period has been made under the supervision of the Officers
executing such Officer's Certificate with a view to determining whether during
such period, to the best of such officer's knowledge, the Servicer had
performed and observed all of its obligations under this Indenture, and either
(A) stating that based on such review, no Servicer Event of Default is known to
have occurred and is continuing, or (B) if such a Servicer Event of Default is
known to have occurred and is continuing, specifying such Servicer Event of
Default and the nature and status thereof.
(c) Annual Accountants' Reports. On or before each April 30 of each
year commencing in 2003, the Servicer shall (i) cause a firm of independent
public accountants to furnish a certificate or statement (and the Servicer
shall provide a copy of such certificate or statement to the Issuer, the
Indenture Trustee, the Rating Agencies and the Initial Purchaser), to the effect
that (1) such firm has examined and audited the Servicer's servicing controls
and procedures for the previous calendar year and that such independent public
accountants have examined certain documents and records (including computer
records) and servicing procedures of the Servicer relating to the Timeshare
Loans, (2) they have examined the most recent Monthly Servicer Report prepared
by the Servicer and three other Monthly Servicer Reports chosen at random by
such firm and compared such Monthly Servicer Reports with the information
contained in such documents and records, (3) their examination included such
tests and procedures as they considered necessary in the circumstances, (4)
their examinations and comparisons described under clauses (1) and (2) above
disclosed no exceptions which, in their opinion, were material, relating to such
Timeshare Loans or such Monthly Servicer Reports, or, if any such exceptions
were disclosed thereby, setting forth such exceptions which, in their opinion,
were material, (5) on the basis of such examinations and comparison, such firm
is of the opinion that the Servicer has, during the relevant period, serviced
the Timeshare Loans in compliance with this Indenture and the other Transaction
Documents in all material respects and that such documents and records have been
maintained in accordance with this Indenture and the
35
other Transaction Documents in all material respects, except in each case for
(A) such exceptions as such firm shall believe to be immaterial and (B) such
other exceptions as shall be set forth in such written report. The report will
also indicate that such firm is independent of the Servicer within the meaning
of the Code of Professional Ethics of the American Institute of Certified Public
Accountants. In the event such independent public accountants require the
Indenture Trustee to agree to the procedures to be performed by such firm in any
of the reports required to be prepared pursuant to this Section 5.5(c), the
Servicer shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee has not made any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
(d) Report on Proceedings and Servicer Event of Default. (i)
Promptly upon a Responsible Officer of the Servicer's obtaining Knowledge of any
proposed or pending investigation of it by any Governmental Authority or any
court or administrative proceeding which involves or is reasonably likely to
involve the possibility of materially and adversely affecting the properties,
business, prospects, profits or conditions (financial or otherwise) of the
Servicer and its subsidiaries, as a whole, the Servicer shall send written
notice specifying the nature of such investigation or proceeding and what action
the Servicer is taking or proposes to take with respect thereto and evaluating
its merits, or (ii) immediately upon obtaining Knowledge of the existence of any
condition or event which constitutes a Servicer Event of Default, the Servicer
shall send written notice to the Issuer, the Indenture Trustee and the Initial
Purchaser describing its nature and period of existence and what action the
Servicer is taking or proposes to take with. respect thereto.
SECTION 5.6. Records.
The Servicer shall maintain all data for which it is responsible
(including, without limitation, computerized tapes or disks) relating directly
to or maintained in connection with the servicing of the Timeshare Loans (which
data and records shall be clearly marked to reflect that the Timeshare Loans
have been Granted to the Indenture Trustee on behalf of the Noteholders and
constitute property of the Trust Estate) at the address specified in Section
13.3 hereof or, upon fifteen (15) days' notice to the Issuer and the Indenture
Trustee, at such other place where any Servicing Officer of the Servicer is
located (or upon 24 hours' written notice if an Event of Default or Servicer
Event of Default shall have occurred).
SECTION 5.7. Fidelity Bond and Errors and Omissions Insurance.
The Servicer shall maintain or cause to be maintained fidelity bond
and errors and omissions insurance with respect to the Servicer in such form and
in amounts as is customary for institutions acting as custodian of funds in
respect of timeshare loans or receivables on behalf of institutional investors;
provided that such insurance shall be in a minimum amount of $1,000,000 per
policy and shall name the Indenture Trustee as an additional insured. No
provision of this Section 5.7 requiring such fidelity bond or errors and
omissions insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Indenture. The Servicer shall be deemed to have
complied with this provision if one of its respective Affiliates has such
36
fidelity bond or errors and omissions insurance coverage and, by the terms of
such fidelity bond or errors and omissions insurance policy, the coverage
afforded thereunder extends to the Servicer. Upon a request of the Indenture
Trustee, the Servicer shall deliver to the Indenture Trustee, a certification
evidencing coverage under such fidelity bond and the errors and omissions
insurance. Any such fidelity bond or errors and omissions insurance policy shall
not be canceled or modified in a materially adverse manner without ten (10)
Business Days' prior written notice to the Indenture Trustee.
SECTION 5.8. Merger or Consolidation of the Servicer.
(a) The Servicer shall promptly provide written notice to the
Indenture Trustee and the Rating Agencies of any merger or consolidation of the
Servicer. The Servicer shall keep in full effect its existence, rights and
franchise as a corporation under the laws of the state of its incorporation
except as permitted herein, and shall obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture or any of the Timeshare Loans and to perform
its duties under this Indenture.
(b) Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to the business of the Servicer, shall be the successor of the Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person (i)
is a company whose business includes the servicing of assets similar to the
Timeshare Loans and shall be authorized to lawfully transact business in the
state or states in which the related Timeshare Properties it is to service are
situated; (ii) is a U.S. Person, and (iii) delivers to the Indenture Trustee (1)
an agreement, in form and substance reasonably satisfactory to the Indenture
Trustee, which contains an assumption by such successor entity of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by the Servicer under this Indenture and the other
Transaction Documents to which the Servicer is a party and (2) an opinion of
counsel as to the enforceability of such agreement; provided, further, that the
Rating Agencies shall have confirmed that such action will not result in a
downgrade or withdrawal of any rating assigned to a Class of Notes.
SECTION 5.9. Sub-Servicing.
(a) The Servicer may enter into one or more sub-servicing agreements
with a sub-servicer upon delivery to the Indenture Trustee of a written
confirmation from the Rating Agencies that the execution of such sub-servicing
agreement and the retention of such sub-servicer would not result in the
qualification, downgrade or withdrawal of any rating assigned to a Class of
Notes. References herein to actions taken or to be taken by the Servicer in
servicing the Timeshare Loans include actions taken or to be taken by a
sub-servicer on behalf of the Servicer. Any sub-servicing agreement will be upon
such terms and conditions as the Servicer may reasonably agree and as are not
inconsistent with this Indenture. The Servicer shall be solely responsible for
any sub-servicing fees due and payable to such sub-servicer.
37
(b) Notwithstanding any sub-servicing agreement, the Servicer shall
remain obligated and liable for the servicing and administering of the Timeshare
Loans in accordance with this Indenture, without diminution of such obligation
or liability by virtue of such sub- servicing agreement, and to the same extent
and under the same terms and conditions as if the Servicer alone were servicing
and administering the Timeshare Loans.
SECTION 5.10. Servicer Resignation.
The Servicer shall not resign from the duties and obligations hereby
imposed on it under this Indenture unless and until (i) a successor servicer,
acceptable to the Issuer, the Indenture Trustee and the Holders representing at
least 66-2/3% of the Adjusted Note Balance of each Class of Notes, enters into
an agreement in form and substance satisfactory to the Indenture Trustee and the
Holders representing at least 66-2/3% of the Adjusted Note Balance of each Class
of Notes, which contains an assumption by such successor servicer of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by the Servicer under this Indenture from and after the
date of assumption, (ii) the Issuer, the Indenture Trustee and Holders
representing at least 66-2/3% of the Adjusted Note Balance of each Class of
Notes consent to the assumption of the duties, obligations and liabilities of
this Indenture by such successor Servicer, and (iii) the ratings of the Notes
will not be qualified, downgraded or withdrawn (as evidenced by a letter from
each Rating Agency to the Indenture Trustee to such effect, which letter shall
be obtained at the expense of the Servicer, without right of reimbursement).
Upon such resignation, the Servicer shall comply with Section 5.4(b) hereunder.
Except as provided in the immediately preceding paragraph or
elsewhere in this Indenture, or as provided with respect to the survival of
indemnifications herein, the duties and obligations of a Servicer under this
Indenture shall continue until this Agreement shall have been terminated as
provided herein. The duties and obligations of a Servicer hereunder shall
survive the exercise by the Indenture Trustee of any right or remedy under this
Indenture or the enforcement by the Indenture Trustee of any provision of this
Indenture.
SECTION 5.11. Fees and Expenses.
As compensation for the performance of its obligations under this
Indenture, the Servicer shall be entitled to receive on each Payment Date, from
amounts on deposit in the Collection Account and in the priorities described in
Sections 3.2(a) and 3.4 hereof, the Servicing Fee and any Additional Servicing
Compensation. Other than Liquidation Expenses, the Servicer shall pay all
expenses incurred by it in connection with its servicing activities hereunder.
SECTION 5.12. Access to Certain Documentation.
Upon ten (10) Business Days' prior written notice (or, one Business
Day's prior written notice after the occurrence and during the continuance of an
Event of Default or a Servicer Event of Default), the Servicer will, from time
to time during regular business hours, as requested by the Issuer, the Indenture
Trustee or any Noteholder and, prior to the occurrence of a Servicer Event of
Default, at the expense of the Issuer or such Noteholder and upon the
38
occurrence and continuance of a Servicer Event of Default, at the expense of the
Servicer, permit the Issuer, the Indenture Trustee or any Noteholder or its
agents or representatives (i) to examine and make copies of and abstracts from
all books, records and documents (including, without limitation, computer tapes
and disks) in the possession or under the control of the Servicer relating to
the servicing of the Timeshare Loans serviced by it and (ii) to visit the
offices and properties of the Servicer for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating to the
Timeshare Loans with any of the officers, employees or accountants of the
Servicer having knowledge of such matters. Nothing in this Section shall affect
the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer to provide access to information as a result of such obligation shall
not constitute a breach of this Section.
SECTION 5.13. No Offset.
Prior to the termination of this Indenture, the obligations of
Servicer under this Indenture shall not be subject to any defense, counterclaim
or right of offset which the Servicer has or may have against the Issuer, the
Indenture Trustee or any Noteholder, whether in respect of this Indenture, any
Timeshare Loan or otherwise.
SECTION 5.14. Account Statements.
In connection with the Servicer's preparation of the Monthly
Servicer Reports, the Indenture Trustee agrees to deliver to the Servicer a
monthly statement providing account balances of each of the Trust Accounts.
SECTION 5.15. Indemnification; Third Party Claim.
The Servicer agrees to indemnify the Issuer, the Indenture Trustee
and the Noteholders from and against any and all actual damages (excluding
economic losses related to the collectibility of any Timeshare Loan), claims,
reasonable attorneys' fees and related costs, judgments, and any other costs,
fees and expenses that each may sustain because of the failure of the Servicer
to service the Timeshare Loans in accordance with the Servicing Standard or
otherwise perform its obligations and duties hereunder in compliance with the
terms of this Indenture, or because of any act or omission by the Servicer due
to its negligence or willful misconduct in connection with its maintenance and
custody of any funds, documents and records under this Indenture, or its release
thereof except as contemplated by this Indenture. The Servicer shall immediately
notify the Issuer and the Indenture Trustee if it has Knowledge of a claim made
by a third party with respect to the Timeshare Loans, and, if such claim relates
to the servicing of the Timeshare Loans by the Servicer, the Servicer shall
assume, with the consent of the Indenture Trustee, the defense of any such claim
and pay all expenses in connection therewith, including reasonable counsel fees,
and promptly pay, discharge and satisfy any judgment or decree which may be
entered against it. This Section 5.15 shall survive the termination of this
indenture or the resignation or removal of the Servicer hereunder.
SECTION 5.16. Backup Servicer.
39
(a) Backup Servicing Agreement. The Issuer, the Indenture Trustee,
the Servicer, the Depositor and the Backup Servicer hereby agree to execute the
Backup Servicing Agreement. The Backup Servicer shall be responsible for each of
the duties and obligations imposed upon it by the provisions of the Backup
Servicing Agreement and shall have no duties or obligations under any
Transaction Document to which it is not a party.
(b) Termination of Servicer; Cooperation. In the event that the
Servicer is terminated or resigns in accordance with the terms of this
Indenture, the Backup Servicer agrees to continue to perform it duties and
obligations hereunder and in the Backup Servicing Agreement without
interruption. The Backup Servicer agrees to cooperate in good faith with any
successor Servicer to effect a transition of the servicing obligations by the
Servicer to any successor Servicer. The Indenture Trustee agrees to provide such
information regarding the Trust Accounts as the Backup Servicer shall require to
produce the Monthly Servicer Report on and after the Assumption Date.
(c) Backup Servicer Duties After Assumption Date. In the event that
the Servicer is terminated or resigns in accordance with this Indenture, the
Backup Servicer agrees that it shall undertake those servicing duties and
obligations as set forth in Section 2 and Schedule V of the Backup Servicing
Agreement. Notwithstanding Section 5.9 hereof, so long as Concord Servicing
Corporation is the Backup Servicer, the Indenture Trustee, as successor
Servicer, will not be obligated or liable for the servicing and administration
activities to the extent that the Backup Servicer is responsible for such
activities under the Backup Servicing Agreement.
(d) Backup Servicing Fee. Prior to the Assumption Date, the Backup
Servicer should receive its Backup Servicing Fee in accordance with Sections 3.4
or 6.6, as applicable. On and after the Assumption Date, the Indenture Trustee,
as successor Servicer, will be obligated to distribute the Backup Servicing Fee
to the Backup Servicer from amounts received by the Indenture Trustee in respect
of the Servicing Fee.
(e) Termination of Backup Servicer. Notwithstanding anything to the
contrary herein, the Indenture Trustee shall have the right to remove the Backup
Servicer with or without cause at any time and replace the Backup Servicer
pursuant to the provisions of the Backup Servicing Agreement. In the event that
the Indenture Trustee shall exercise its rights to remove and replace Concord
Servicing Corporation as Backup Servicer, Concord Servicing Corporation shall
have no further obligation to perform the duties of the Backup Servicer under
this Indenture. In the event of a termination of the Backup Servicing Agreement,
the Indenture Trustee shall appoint a successor Backup Servicer reasonably
acceptable to the Indenture Trustee. Upon the termination or resignation of the
Backup Servicer, the Indenture Trustee shall be deemed to represent, warrant and
covenant that it will service or engage a subservicer to perform each of the
servicing duties and responsibilities described in this Indenture.
SECTION 5.17. Aruba Notices. By December 31, 2002 (with respect to
Timeshare Loans in the Trust Estate on the Closing Date or within 30 days of the
related Transfer Date (with respect to a Subsequent Timeshare Loan or Qualified
Substitute Timeshare Loan), as the case maybe, the Servicer shall confirm that
notices have been mailed out to each Obligor under
40
a Timeshare Loan with respect to any Resort in the country of Aruba that such
Timeshare Loan has been transferred and assigned to the Issuer and that the
Issuer has in turn, pledged such Timeshare Loan to the Indenture Trustee, in
trust, for the benefit of the Noteholders. Such notice may include any notice or
notices that the Aruba Originator's predecessors in title to the Timeshare Loan
may give to the same Obligor with respect to any transfers and assignments of
the Timeshare Loan by such predecessors. Such notice shall be in the form
attached hereto as Exhibit H, as the same may be amended, revised or substituted
by the Indenture Trustee and the Servicer from time to time.
SECTION 5.18. Recordation. As soon as practicable after the Closing Date
or Transfer Date, as applicable (but in no event later than 10 Business Days (or
60 days with respect to Timeshare Loans for which the original Mortgages are
still at the related recording office) after such date), the Servicer shall
cause all Assignments of Mortgage in respect of the Timeshare Loans to be
recorded in the appropriate offices. The Servicer agrees to cause all evidences
of recordation to be delivered to the Custodian to be held as part of the
Timeshare Loan Files.
ARTICLE VI.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.1. Events of Default.
"Event of Default' wherever used herein with respect to Notes, means
any one of the following events:
(a) a default in the making of Interest Distribution Amounts,
Principal Distribution Amounts, Deferred Interest Amounts or any other payments
in respect of any Note when such become due and payable, and continuance of such
default for three (3) Business Days;
(b) a non-monetary default in the performance, or breach, of any
covenant of the Issuer in this Indenture (other than a covenant dealing with a
default in the performance of which, or the breach of which, is specifically
dealt with elsewhere in this Section 6.1), the continuance of such default or
breach for a period of 30 days (or, if the Issuer shall have provided evidence
satisfactory to the Indenture Trustee that such covenant cannot be cured in the
30-day period and that it is diligently pursuing a cure, 60 days) after the
earlier of (x) the Issuer first acquiring Knowledge thereof, and (y) the
Indenture Trustee's giving written notice thereof to the Issuer; provided,
however, that if such default or breach is in respect of the negative covenants
contained in Section 8.6(a)(i) or (ii) hereof, there shall be no grace period
whatsoever; or
(c) if any representation or warranty of the Issuer made in this
Indenture shall prove to be incorrect in any material respect as of the time
when the same shall have been made, and such breach is not remedied within 30
days (or, if the Issuer shall have provided evidence satisfactory to the
Indenture Trustee that such representation or warranty cannot be cured in the
30-day period and that it is diligently pursuing a cure, 60 days) after the
earlier of (x) the Issuer
41
first acquiring Knowledge thereof, and (y) the Indenture Trustee's giving
written notice thereof to the Issuer; or
(d) the entry by a court having jurisdiction over the Issuer of (i)
a decree or order for relief in respect of the Issuer in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (ii) a decree or order adjudging the
Issuer a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in respect
of the Issuer under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of the Issuer, or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(e) the commencement by the Issuer of a voluntary case or proceeding
under any applicable federal or state bankruptcy, insolvency, reorganization, or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by either to the entry of a decree or
order for relief in respect of the Issuer in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency, reorganization, or
other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal or state law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or similar official of the Issuer or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the Issuer's failure to pay its debts generally as they become due, or the
taking of corporate action by the Issuer in furtherance of any such action; or
(f) the Issuer becoming subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended; or
(g) the impairment of the validity of any security interest of the
Indenture Trustee in the Trust Estate in any material respect, except as
expressly permitted hereunder, or the creation of any material encumbrance on or
with respect to the Trust Estate or any portion thereof not otherwise permitted,
which is not stayed or released within ten (10) days of the Issuer having
Knowledge of its creation.
(h) the occurrence and continuance of a Servicer Event of Default
that is uncured for two consecutive Due Periods.
SECTION 6.2. Acceleration of Maturity; Rescission and Annulment.
(a) Upon the occurrence and continuance of an Event of Default, if
(i) such Event of Default of the kind specified in Section 6.1(d) or Section
6.1(e) above occurs, (ii) an Event of Default of the kind specified in Section
6.1(a) above occurs and (x) the Indenture Trustee has, in its good faith
judgment, determined that the value of the assets comprising the Trust Estate is
less than the Aggregate Outstanding Note Balance or (y) such Event of Default
42
continues for two consecutive Payment Dates, then each Class of Notes shall
automatically become due and payable at its Outstanding Note Balance together
with all accrued and unpaid interest thereon.
(b) Upon the occurrence and continuance of an Event of Default, if
such Event of Default is of the kind specified in Section 6.1(a) above (other
than as described in Section 6.2(a) above), the Indenture Trustee shall, upon
notice from Holders representing at least 66-2/3% of the Adjusted Note Balance
of the most senior Class of Notes then Outstanding (and, if payment of interest
and principal on the most senior Class of Notes then Outstanding is current, the
consent of the Holders representing at least 66-2/3% of the Adjusted Note
Balance of the most senior Class of Notes which has failed to receive one or
more payments of interest or principal), declare each Class of Notes to be
immediately due and payable at its Outstanding Note Balance plus all accrued and
unpaid interest thereon.
(c) Upon the occurrence and continuance of an Event of Default, if
such Event of Default (other than an Event of Default of the kind described in
Sections 6.2(a) of (b) above) shall occur and is continuing, the Indenture
Trustee shall, upon notice from Holders representing at least 66-2/3% of the
Adjusted Note Balance of the most senior Class of Notes then Outstanding,
declare each Class of Notes to be immediately due and payable at its Outstanding
Note Balance plus all accrued and unpaid interest thereon.
(d) Upon any such declaration or automatic acceleration, the
Outstanding Note Balance of each Class of Notes together with all accrued and
unpaid interest thereon shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Issuer. The Indenture Trustee shall promptly send a notice
of any declaration or automatic acceleration to each Rating Agency.
(e) At any time after such a declaration of acceleration has been
made but before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article provided, the
Holders representing at least 66-2/3% of the Outstanding Note Balance of the
most senior Class Outstanding (and, if the consent of another Class shall have
been required for such declaration, Holders representing at least 66-2/3% of the
Outstanding Note Balance of such Class) by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration and its consequences
if:
(i) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(1) all principal due on any Class of Notes which has become
due otherwise than by such declaration of acceleration
and interest thereon from the date when the same first
became due until the date of payment or deposit,
(2) all interest due with respect to any Class of Notes and,
to the extent that payment of such interest is lawful,
interest upon overdue interest from the date when the
same first became due until the
43
date of payment or deposit at a rate per annum equal to
the applicable Note Rate, and
(3) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements, and advances of each of the Indenture
Trustee and the Servicer, its agents and counsel;
and
(ii) all Events of Default with respect to the Notes, other than the
non-payment of the Outstanding Note Balance of each Class of Notes which
became due solely by such declaration of acceleration, have been cured or
waived as provided in Section 6.13 hereof.
(f) An automatic acceleration under Section 6.2(a) may only be
rescinded and annulled by Holders representing at least 66-2/3% of the Adjusted
Note Balance of each Class of Notes then Outstanding.
(g) Notwithstanding Section 6.2(d) and (e) above, (i) if the
Indenture Trustee shall have commenced making payments as described in Section
6.6, no acceleration may be rescinded or annulled and (ii) no rescission shall
affect any subsequent Events of Default or impair any rights consequent thereon.
SECTION 6.3. Remedies.
(a) If an Event of Default with respect to the Notes occurs and is
continuing of which a Responsible Officer of the Indenture Trustee has
Knowledge, the Indenture Trustee shall immediately give notice to each
Noteholder as set forth in Section 7.2 and shall solicit such Noteholders for
advice. The Indenture Trustee shall then take such action as so directed by the
Holders representing at least 66-2/3% of the Adjusted Note Balance of each Class
of Notes then Outstanding subject to the provisions of this Indenture.
(b) Following any acceleration of the Notes, the Indenture Trustee
shall have all of the rights, powers and remedies with respect to the Trust
Estate as are available to secured parties under the UCC or other applicable
law, subject to the limitations set forth in subsection (d) below and provided
such action is not inconsistent with any other provision of this Agreement. Such
rights, powers and remedies may be exercised by the Indenture Trustee in its own
name as trustee of an express trust.
(c) (i) If an Event of Default specified in Section 6.1(a) above
occurs and is continuing, the Indenture Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against the Issuer
for the Aggregate Outstanding Note Balance and interest remaining unpaid with
respect to the Notes.
(ii) Subject to the provisions set forth herein, if an Event of
Default occurs and is continuing, the Indenture Trustee may, in its
discretion, and at the instruction of the
44
Holders representing at least 66-2/3% of the Adjusted Note Balance of each
Class of Notes shall, proceed to protect and enforce its rights and the
rights of the Noteholders by such appropriate judicial or other
proceedings as the Indenture Trustee shall deem most effectual to protect
and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy. The Indenture
Trustee shall notify the Issuer, the Rating Agencies, the Servicer and the
Noteholders of any such action.
(d) If the Indenture Trustee shall have received instructions,
within 45 days from the date notice pursuant to Section 6.3(a) is first given,
from Holders representing at least 66-2/3% of the Adjusted Note Balance of each
Class of Notes that such Persons approve of or request the liquidation of all of
the Timeshare Loans, the Indenture Trustee shall to the extent lawful, promptly
sell, dispose of or otherwise liquidate all of the Timeshare Loans in a
commercially reasonable manner and on commercially reasonable terms, which shall
include the solicitation of competitive bids from third parties including any
Noteholder (other than Bluegreen or any Affiliates thereof), such bids to be
approved by the Holders representing at least 66-2/3% of the Adjusted Note
Balance of each Class of Notes. The Indenture Trustee may obtain a prior
determination from any conservator, receiver or liquidator of the Issuer that
the terms and manner of any proposed sale, disposition or liquidation are
commercially reasonable.
SECTION 6.4. Indenture Trustee May File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding related to the Issuer, or any other obligor in respect
of the Notes, or the property of the Issuer, or such other obligor or their
creditors, the Indenture Trustee (irrespective of whether the principal of the
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall have made any
demand on the Issuer for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Indenture Trustee and any predecessor Indenture Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and any predecessor
Indenture Trustee, their agents and counsel) and of the Noteholders
allowed in such judicial proceeding;
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and
(iii) to participate as a member, voting or otherwise, of any
official committee of creditors appointed in such matter;
and any custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to
45
the Indenture Trustee and to pay to the Indenture Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and any predecessor Indenture Trustee, their agents and
counsel, and any other amounts due the Indenture Trustee and any predecessor
Indenture Trustee under Section 7.6 hereof.
(b) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize, consent to, accept or adopt on behalf of any
Noteholder any plan of reorganization, agreement, adjustment or composition
affecting the Notes or the rights of any Noteholder thereof or affecting the
Timeshare Loans or the other assets constituting the Trust Estate or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding.
SECTION 6.5. Indenture Trustee May Enforce Claims Without Possession of
Notes
All rights of action and claims under this Indenture, the Notes, the
Timeshare Loans or the other assets constituting the Trust Estate may be
prosecuted and enforced by the Indenture Trustee without the possession of any
of the Notes or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Indenture Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall,
after provisions for the payment of reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and any predecessor
Indenture Trustee, their agents and counsel, be for the benefit, of the
Noteholders in respect of which such judgment has been recovered, and
distributed pursuant to the priorities contemplated by Section 3.4 and Section
6.6 hereof, as applicable.
SECTION 6.6. Application of Money Collected.
(a) If a Payment Default Event shall have occurred and the Indenture
Trustee has not yet effected the remedies under Section 6.3(d) and Section 6.16
hereof, any money collected by the Indenture Trustee in respect of the Trust
Estate and any other money that may be held thereafter by the Indenture Trustee
as security for the Notes, including, without limitation, the amounts on deposit
in the General Reserve Account and the Class D Reserve Account (which shall only
be available to pay shortfalls on the Class D Interest Distribution Amount and
principal on the Class D Notes), shall be applied in the following order on each
Payment Date:
(i) to the Indenture Trustee, any unpaid Indenture Trustee Fees and
any extraordinary out-of-pocket expenses of the Indenture Trustee related
to a servicing transfer (up to $10,000 per Payment Date, and no more than
a cumulative total of $100,000) incurred and not reimbursed as of such
date;
(ii) to the Owner Trustee, any accrued and unpaid Owner Trustee
Fees;
(iii) to the Administrator, any accrued and unpaid Administrator
Fees;
(iv) to the Custodian, any accrued and unpaid Custodian Fees;
(v) to the Lockbox Bank, any accrued and unpaid Lockbox Fees;
46
(vi) to the Servicer, any accrued and unpaid Servicing Fees;
(vii) to the Backup Servicer, any accrued and unpaid Backup
Servicing Fees;
(viii) to the Class A Noteholders, the Class A Interest Distribution
Amount;
(ix) to the Class B Noteholders, the Class B Interest Distribution
Amount;
(x) to the Class C Noteholders, the Class C Interest Distribution
Amount;
(xi) to the Class D Noteholders, the Class D Interest Distribution
Amount;
(xii) to the Class A Noteholders, all remaining amounts until the
Outstanding Note Balance of the Class A Notes is reduced to zero;
(xiii) to the Class B Noteholders, all remaining amounts until the
Outstanding Note Balance of the Class B Notes is reduced to zero;
(xiv) to the Class C Noteholders, all remaining amounts until the
Outstanding Note Balance of the Class C Notes is reduced to zero;
(xv) to the Class D Noteholders, all remaining amounts until the
Outstanding Note Balance of the Class D Notes is reduced to zero;
(xvi) to (a) the Class A Noteholders, (b) the Class B Noteholders,
(c) the Class C Noteholders and (d) the Class D Noteholders, in that
order, the Deferred Interest Amount for such Class, if any;
(xvii) to the Indenture Trustee, any extraordinary out-of-pocket
expenses of the Indenture Trustee not paid in accordance with (i) above;
and
(xviii) to the Owner Trustee, any remaining amounts, in accordance
with the Trust Agreement.
(b) If (i) (A) a Payment Default Event shall have occurred or (B)
each Class of Notes shall otherwise have been declared due and payable following
an Event of Default and (ii) the Indenture Trustee shall have effected a sale of
the Trust Estate under Section 6.3(d) and Section 6.16 hereof ((i) and (ii), a
"Trust Estate Liquidation Event"), any money collected by the Indenture Trustee
in respect of the Trust Estate and any other money that may be held thereafter
by the Indenture Trustee as security for the Notes, including without limitation
the amounts on deposit in the General Reserve Account and the Class D Reserve
Account (which shall only be available to pay shortfalls on the Class D Interest
Distribution Amount and principal on the Class D Notes), shall be applied in the
following order on each Payment Date:
(i) to the Indenture Trustee, any unpaid Indenture Trustee Fees and
other expenses incurred and charged and unpaid as of such date;
(ii) to the Owner Trustee, any accrued and unpaid Owner Trustee
Fees;
47
(iii) to the Administrator, any accrued and unpaid Administrator
Fees;
(iv) to the Custodian, any accrued and unpaid Custodian Fees;
(v) to the Lockbox Bait, any accrued and unpaid Lockbox Fees;
(vi) to the Servicer, any accrued and unpaid Servicing Fees;
(vii) to the Backup Servicer, any accrued and unpaid Backup
Servicing Fees;
(viii) to the Class A Noteholders, the Class A Interest Distribution
Amount;
(ix) to the Class A Noteholders, the Class A Deferred Interest
Amount, if any;
(x) to the Class A Noteholders, all remaining amounts until the
Outstanding Note Balance of the Class A Notes is reduced to zero;
(xi) to the Class B Noteholders, the Class B Interest Distribution
Amount;
(xii) to the Class B Noteholders, the Class B Deferred Interest
Amount, if any;
(xiii) to the Class B Noteholders, all remaining amounts until the
Outstanding Note Balance of the Class B Notes is reduced to zero;
(xiv) to the Class C Noteholders, the Class C Interest Distribution
Amount;
(xv) to the Class C Noteholders, the Class C Deferred Interest
Amount, if any;
(xvi) to the Class C Noteholders, all remaining amounts until the
Outstanding Note Balance of the Class C Notes is reduced to zero;
(xvii) to the Class D Noteholders, the Class D Interest Distribution
Amount;
(xviii) to the Class D Noteholders, the Class D Deferred Interest
Amount if any;
(xix) to the Class D Noteholders, all remaining amounts until the
outstanding Note Balance of the Class D Notes is reduced to zero; and
(xx) to the Owner Trustee, any remaining amounts, in accordance with
the Trust Agreement.
(c) Notwithstanding the occurrence and continuation of an Event of
Default, prior to the occurrence of a Sequential Pay Event, Noteholders shall
continue to be paid in the manner and priorities described in Section 3.4
hereof.
48
SECTION 6.7. Limitation on Suits.
No Noteholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture or for any other remedy
hereunder, unless:
(a) there is a continuing Event of Default and such Noteholder has
previously given written notice to the Indenture Trustee of a continuing Event
of Default;
(b) such Noteholder or Noteholders have offered to the Indenture
Trustee reasonable indemnity (which may be in the form of written assurances)
against the costs, expenses and liabilities to be incurred in compliance with
such request;
(c) the Indenture Trustee, for 30 days after its receipt of such
notice, request and offer of indemnity, has failed to institute any such
proceeding; and
(d) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 30-day period by the Holders
representing at least 66-2/3% of the Adjusted Note Balance of each Class of
Notes Outstanding;
it being understood and intended that no one or more of such Noteholders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Noteholders, or to obtain or to seek to obtain priority or preference over
any other Noteholders or to enforce any right under this Indenture, except in
the manner herein provided and for the ratable benefit of all such Noteholders
it is further understood and intended that so long as any portion of the Notes
remains Outstanding, the Servicer shall not have any fight to institute any
proceeding, judicial or otherwise, with respect to this Indenture (other than
for the enforcement of Section 3.4 hereof or for the appointment of a receiver
or trustee (including without limitation a proceeding under the Bankruptcy
Code), or for any other remedy hereunder. Nothing in this Section 6.7 shall be
construed as limiting the rights of otherwise qualified Noteholders to petition
a court for the removal of a Indenture Trustee pursuant to Section 7.8 hereof
SECTION 6.8. Unconditional Right of Noteholders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture, other than
the provisions hereof limiting the right to recover amounts due on the Notes to
recoveries from the property comprising the Trust Estate, the Holder of any Note
shall have the absolute and unconditional right to receive payment of the
principal of, and interest on, such Note as such payments of principal and
interest become due, including on the Stated Maturity, and such right shall not
be impaired without the consent of such Noteholder.
SECTION 6.9. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Indenture Trustee or to such Noteholder, then and,
in every such case, subject to any determination in such proceeding, the
49
Issuer, the Indenture Trustee and the Noteholders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Indenture Trustee and the Noteholders continue as though no
such proceeding had been instituted.
SECTION 6.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost, or stolen Notes in the last paragraph of
Section 2.5 hereof, no right or remedy herein conferred upon or reserved to the
Indenture Trustee or to the Noteholders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.11. Delay or Omission Not Waiver.
No delay or omission of the Indenture Trustee or of any Holder of
any Note to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a Waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Indenture Trustee or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Noteholders, as the case may be.
SECTION 6.12. Control by Noteholders.
Except as may otherwise be provided in this Indenture, until such
time as the conditions specified in Sections 11.1(a)(i) and (ii) hereof have
been satisfied in full, the Holders representing at least 66-2/3% of the
Adjusted Note Balance of each Class of Notes shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee, or exercising any trust or power conferred on the
Indenture Trustee, with respect to the Notes. Notwithstanding the foregoing:
(i) no such direction shall be in conflict with any rule of law or
with this Indenture;
(ii) the Indenture Trustee shall not be required to follow any such
direction which the Indenture Trustee reasonably believes might result in
any personal liability on the part of the Indenture Trustee for which the
Indenture Trustee is not adequately indemnified; and
(iii) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee which is not inconsistent with any such
direction; provided that the Indenture Trustee shall give notice of any
such action to each Noteholder.
50
SECTION 6.13. Waiver of Events of Default.
(a) Unless a Sequential Pay Event shall have occurred, the Holders
representing at least 66-2/3% of the Adjusted Note Balance of each Class of
Notes may, by one or more instruments in writing, waive any Event of Default
hereunder and its consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or interest on any
Note (which may only be waived by the Holder of such Note), or
(ii) in respect of a covenant or provision hereof which under
Article IX hereof cannot be modified or amended without the consent of
the Holder of each Outstanding Note affected (which only may be waived by
the Holders of all Outstanding Notes affected).
(b) A copy of each waiver pursuant to Section 6.13(a) above shall be
furnished by the Issuer to the Indenture Trustee and each Noteholder. Upon any
such waiver, such Event of Default shall cease to exist and shall be deemed to
have been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Event of Default or impair any right
consequent thereon.
SECTION 6.14. Undertaking for Costs.
All parties to this Indenture agree (and each Holder of any Note by
its acceptance thereof shall be deemed to have agreed) that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Indenture Trustee for any action
taken, suffered or omitted by it as Indenture Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to (i) any suit instituted by
the Indenture Trustee, (ii) to any suit instituted by any Noteholder, or group
of Noteholders representing at least 66-2/3% of the Adjusted Note Balance of
each Class of Notes Outstanding, or (iii) to any suit instituted by any
Noteholder for the enforcement of the payment of the principal of or interest on
any Note on or after the maturities for such payments, including the Stated
Maturity, as applicable.
SECTION 6.15. Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
51
SECTION 6.16. Sale of Trust Estate.
(a) The power to effect the sale of the Trust Estate pursuant to
Section 6.3 hereof shall continue unimpaired until the entire Trust Estate shall
have been sold or all amounts payable on the Notes shall have been paid or
losses allocated thereto and borne thereby. The Indenture Trustee may from time
to time, upon directions in accordance with Section 6.12 hereof, postpone any
public sale by public announcement made at the time and place of such sale.
(b) Unless required by applicable law, the Indenture Trustee shall
not sell to a third party the Trust Estate, or any portion thereof except as
permitted under Section 6.3(d) hereof
(c) In connection with a sale of the Trust Estate:
(i) any one or more Noteholders (other than Bluegreen or any
Affiliates thereof) may bid for and purchase the property offered for
sale, and upon compliance with the terms of sale may hold, retain, and
possess and dispose of such property, without further accountability, and
any Noteholder (other than Bluegreen or any Affiliates thereof) may, in
paying the purchase money therefor, deliver in lieu of cash any
Outstanding Notes or claims for interest thereon for credit in the amount
that shall, upon distribution of the net proceeds of such sale, be payable
thereon, and the Notes, in ease the amounts so payable thereon shall be
less than the amount due thereon, shall be returned to the Noteholders
after being appropriately stamped to show such partial payment;
(ii) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance prepared by the Servicer transferring the
Indenture Trustee's interest in the Trust Estate without recourse,
representation or warranty in any portion of the Trust Estate in
connection with a sale thereof;
(iii) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer and convey the
Issuer's interest in any portion of the Trust Estate in connection with a
sale thereof, and to take all action necessary to effect such sale;
(iv) no purchaser or transferee at such a sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any moneys; and
(v) The method, manner, time, place and terms of any sale of the
Trust Estate shall be commercially reasonable.
(vi) None of Bluegreen or its Affiliates may bid for and purchase
the Timeshare Loans offered for sale by the Indenture Trustee in Section
6.16(c)(i) above.
SECTION 6.17. Action on Notes.
52
The Indenture Trustee's right to seek and recover judgment on the
Notes or under this Indenture or any other Transaction Document shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture or any other Transaction Document. Neither the
Lien of this Indenture nor any rights or remedies of the Indenture Trustee or
the Noteholders shall be impaired by the recovery of any judgment by the
Indenture Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer. Any money or property collected by the Indenture Trustee shall be
applied in accordance with the provisions of this Indenture.
SECTION 6.18. Performance and Enforcement of Certain Obligations.
Promptly following a request from the Indenture Trustee, the Issuer
shall take all such lawful action as the Indenture Trustee may request to compel
or secure the performance and observance by the Depositor, the Club Originator
and the Servicer, as applicable, of each of their respective obligations to the
Issuer under or in connection with the Sale Agreement and any other Transaction
Document and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Sale Agreement
or any other Transaction Document to the extent and in the manner directed by
the Indenture Trustee, including the transmission of notices of default on the
part of the Depositor, the Club Originator or the Servicer thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by the Depositor, the Club Originator or the Servicer of
each of their obligations under the Sale Agreement and the other Transaction
Documents.
ARTICLE VII.
THE INDENTURE TRUSTEE
SECTION 7.1. Certain Duties.
(a) The Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Indenture
Trustee; except as expressly set forth herein, the Indenture Trustee shall have
no obligation to monitor the performance of the Servicer under the Transaction
Documents.
(b) In the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the Indenture
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture; provided, however, the
Indenture Trustee shall not be required to verify or recalculate the contents
thereof
(c) In case an Event of Default or a Servicer Event of Default
(resulting in the appointment of the Indenture Trustee as successor Servicer)
has occurred and is continuing, the Indenture Trustee shall exercise such of the
tights and powers vested in it by this Indenture, and
53
use the same degree of care and skill in their exercise, as a prudent Person
would exercise or use under the circumstances in the conduct of such Person's
own affairs; provided, however, that no provision in this Indenture shall be
construed to limit the obligations of the Indenture Trustee to provide notices
under Section 7.2 hereof.
(d) The Indenture Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Indenture Trustee reasonable security or
indemnity acceptable to the Indenture Trustee (which may be in the form of
written assurances) against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
(e) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) this Section shall not be construed to limit the effect of
Section 7.1(a) and (b) above;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it shall be
proved that the Indenture Trustee shall have been negligent in
ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the written direction of the holders of the requisite principal amount of
the outstanding Notes, or in accordance with any written direction
delivered to it under Sections 6.2(a), (b) or (c) hereof relating to the
time, method and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power
conferred upon the Indenture Trustee, under this Indenture.
(f) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Indenture Trustee shall be subject to the provisions
of this Section 7.1.
(g) The Indenture Trustee makes no representations or warranties
with respect to the Timeshare Loans or the Notes or the validity or sufficiency
of any assignment of the Timeshare Loans to the Issuer or to the Trust Estate.
(h) Notwithstanding anything to the contrary herein, the Indenture
Trustee is not required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable grounds to
believe that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
54
SECTION 7.2. Notice of Events of Default.
The Indenture Trustee shall promptly (but, in any event, within
three (3) Business Days) notify the Issuer, the Servicer, the Rating Agencies
and the Noteholders upon a Responsible Officer obtaining actual knowledge of any
event which constitutes an Event of Default or a Servicer Event of Default or
would constitute an Event of Default or a Servicer Event of Default but for the
requirement that notice be given or time elapse or both.
SECTION 7.3. Certain Matters Affecting the Indenture Trustee.
Subject to the provisions of Section 7.1 hereof:
(a) The Indenture Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) Any request or direction of any Noteholders, the Issuer, or the
Servicer mentioned herein shall be in writing;
(c) Whenever in the performance of its duties hereunder the
Indenture Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Indenture
Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officer's Certificate or an
opinion of counsel;
(d) The Indenture Trustee may consult with counsel, and the advice
of such counsel or any Opinion of Counsel shall be deemed authorization in
respect of any action taken, suffered, or omitted by it hereunder in good faith
and in reliance thereon;
(e) Prior to the occurrence of an Event of Default or after the
curing of all Events of Default which may have occurred, the Indenture Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper document, unless
requested in writing so to do by Noteholders representing at least 66-2/3% of
the Adjusted Note Balance of each Class of Notes; provided, however, that if the
payment within a reasonable time to the Indenture Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such investigation
is, in the reasonable opinion of the Indenture Trustee, not reasonably assured
to the Indenture Trustee by the security afforded to it by the terms of this
Indenture, the Indenture Trustee may require reasonable indemnity against such
cost, expense or liability as a condition to so proceeding. The reasonable
expense of every such examination shall be paid by the Servicer or, if paid by
the Indenture Trustee, shall be reimbursed by the Servicer upon demand;
(f) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a
55
custodian (which may be an Affiliate of the Indenture Trustee), and the
Indenture Trustee shall not be liable for any acts or omissions of such agents,
attorneys or custodians appointed with due care by it hereunder; and
(g) Delivery of any reports, information and documents to the
Indenture Trustee provided for herein or any other Transaction Document is for
informational purposes only (unless otherwise expressly stated), and the
Indenture Trustee's receipt of such shall not constitute constructive knowledge
of any information contained therein or determinable from information contained
therein, including the Servicer's or Issuer's compliance with any of its
representations, warranties or covenants hereunder (as to which the Indenture
Trustee is entitled to rely exclusively on Officer's Certificates).
SECTION 7.4. Indenture Trustee Not Liable for Notes or Timeshare Loans.
(a) The Indenture Trustee makes no representations as to the
validity or sufficiency of this Indenture or any Transaction Document, the Notes
(other than the authentication thereof) or of any Timeshare Loan. The Indenture
Trustee shall not be accountable for the use or application by the Issuer of
funds paid to the Issuer in consideration of conveyance of the Timeshare Loans
and related assets to the Trust Estate.
(b) The Indenture Trustee (in its capacity as Indenture Trustee)
shall have no responsibility or liability for or with respect to the validity of
any security interest in any property securing a Timeshare Loan; the existence
or validity of any Timeshare Loan, the validity of the assignment of any
Timeshare Loan to the Trust Estate or of any intervening assignment; the review
of any Timeshare Loan, any Timeshare Loan File, the completeness of any
Timeshare Loan File, the receipt by the Custodian of any Timeshare Loan or
Timeshare Loan File (it being understood that the Indenture Trustee has not
reviewed and does not intend to review such matters); the performance or
enforcement of any Timeshare Loan; the compliance by the Servicer or the Issuer
with any covenant or the breach by the Servicer or the Issuer of any warranty or
representation made hereunder or in any Transaction Document or the accuracy of
any such warranty or representation; the acts or omissions of the Servicer, the
Issuer or any Obligor; or any action of the Servicer or the Issuer taken in the
name of the Indenture Trustee.
SECTION 7.5. Indenture Trustee May Own Notes.
The Indenture Trustee in its individual or any other capacity may
become the owner or pledgee of Notes with the same rights as it would have if it
were not the Indenture Trustee. Any Paying Agent, Note Registrar, co-registrar
or co-paying agent may become the owner or pledgee of Notes with the same rights
as it would have if it were not the Paying Agent, Note Registrar, co-registrar
or co-paying agent.
SECTION 7.6. Indenture Trustee's Fees and Expenses.
On each Payment Date, the Indenture Trustee shall be entitled to the
Indenture Trustee Fee and reimbursement of out-of-pocket expenses incurred by it
in connection with its responsibilities hereunder in the priorities provided in
Sections 3.4 or 6.6 hereof, as applicable.
56
SECTION 7.7. Eligibility Requirements for Indenture Trustee.
Other than the initial Indenture Trustee, the Indenture Trustee
hereunder shall at all times (a) be a corporation, depository institution, or
trust company organized and doing business under the laws of the United States
of America or any state thereof authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $100,000,000,
(b) be subject to supervision or examination by federal or state authority, (c)
be capable of maintaining an Eligible Bank Account, (d) have a long-term
unsecured debt rating of not less than "Baa2" from ▇▇▇▇▇'▇ and "BBB" from S&P,
and (e) shall be acceptable to Noteholders representing at least 66-2/3% of the
Adjusted Note Balance of the each Class of Notes. If such institution publishes
reports of condition at least annually, pursuant to or to the requirements of
the aforesaid supervising or examining authority, then for the purpose of this
Section 7.7, the combined capital and surplus of such institution shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Indenture Trustee
shall cease to be eligible in accordance with the provisions of this Section
7.7, the Indenture Trustee shall resign in the manner and with the effect
specified in Section 7.8 below.
SECTION 7.8. Resignation or Removal of Indenture Trustee.
(a) The Indenture Trustee may at any time resign and be discharged
with respect to the Notes by giving 60 days' written notice thereof to the
Servicer, the Issuer, the Rating Agencies, the Noteholder and the Noteholders.
Upon receiving such notice of resignation, the Issuer shall promptly appoint a
successor Indenture Trustee not objected to by Noteholders representing at least
66-2/3% of the Adjusted Note Balance of each Class of Notes within 30 days after
prior written notice, by written instrument, in sextuplicate, one counterpart of
which installment shall be delivered to each of the Issuer, the Servicer, the
Rating Agencies, the Noteholders, the successor indenture Trustee and the
predecessor Indenture Trustee. If no successor Indenture Trustee shall have been
so appointed and have accepted appointment within 60 days after the giving of
such notice of resignation, the resigning Indenture Trustee may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee.
(b) If at any time the Indenture Trustee shall cease to be eligible
in accordance with the provisions of Section 7.7 hereof and shall fail to resign
after written request therefor by the Issuer, or if at any time the Indenture
Trustee shall be legally unable to act, fails to perform in any material respect
its obligations under this Indenture, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Indenture Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Indenture
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Issuer or Holders representing at least
66-2/3% of the Adjusted Note Balance of each Class of Notes may direct the
Issuer to remove the Indenture Trustee. If it removes the Indenture Trustee
under the authority of the immediately preceding sentence, the Issuer shall
promptly appoint a successor Indenture Trustee not objected to by Holders
representing at least 66-2/3% of the Adjusted Note Balance of each Class of
Notes, within 30 days after prior written notice, by written instrument, in
sextuplicate, one counterpart of which instrument shall be delivered to each of
the Issuer, the Servicer, the
57
Noteholders, the Rating Agencies, the successor Indenture Trustee and the
predecessor Indenture Trustee.
(c) Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee pursuant to any of the provisions
of this Section 7.8 shall not become effective until acceptance of appointment
by the successor Indenture Trustee as provided in Section 7.9 hereof.
SECTION 7.9. Successor Indenture Trustee.
(a) Any successor Indenture Trustee appointed as provided in Section
7.8 hereof shall execute, acknowledge and deliver to each of the Servicer, the
Issuer, the Rating Agencies, the Noteholders and to its predecessor Indenture
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Indenture Trustee shall become
effective and such successor Indenture Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor Indenture Trustee hereunder with like effect as
if originally named a Indenture Trustee. The predecessor Indenture Trustee shall
deliver or cause to be delivered to the successor Indenture Trustee or its
custodian any Transaction Documents and statements held by it or its custodian
hereunder; and the Servicer and the Issuer and the predecessor Indenture Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for the full and certain vesting and confirmation in the
successor Indenture Trustee of all such rights; powers, duties and obligations.
(b) In case of the appointment hereunder of a successor Indenture
Trustee with respect to the Notes, the Issuer, the retiring Indenture Trustee
and each successor Indenture Trustee with respect to the Notes shall execute and
deliver an indenture supplemental hereto wherein each successor Indenture
Trustee shall accept such appointment and which (i) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Indenture Trustee all the rights, powers, trusts and
duties of the retiring Indenture Trustee with respect to the Notes to which the
appointment of such successor Indenture Trustee relates, (ii) if the retiring
Indenture Trustee is not retiring with respect to all Notes, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Indenture Trustee with respect
to the Notes as to which the retiring Indenture Trustee is not retiring shall
continue to be vested in the retiring Indenture Trustee, and (iii) shall add to
or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the Trust Estate hereunder by
more than one Indenture Trustee, it being understood that nothing herein or in
such supplemental indenture shall constitute such Indenture Trustees co-trustees
of the same allocated trust and that each such Indenture Trustee shall be
trustee of a trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such Indenture Trustee; and upon the
execution and delivery of such supplemental indenture the resignation or removal
of the retiring Indenture Trustee shall become effective to the extent provided
therein and each such successor Indenture Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Indenture Trustee with respect to the Notes to which the
appointment of such successor Indenture Trustee relates; but, on request of the
Issuer
58
or any successor Indenture Trustee, such retiring Indenture Trustee shall duly
assign, transfer and deliver to such successor Indenture Trustee all property
and money held by such retiring Indenture Trustee hereunder with respect to the
Notes of that or those to which the appointment of such successor Indenture
Trustee relates.
Upon request of any such successor Indenture Trustee, the Issuer
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor trustee all such rights, powers and trusts
referred to in the preceding paragraph.
(c) No successor Indenture Trustee shall accept appointment as
provided in this Section 7.9 unless at the time of such acceptance such
successor Indenture Trustee shall be eligible under the provisions of Section
7.7 hereof.
(d) Upon acceptance of appointment by a successor Indenture Trustee
as provided in this Section 7.9, the Servicer shall mail notice of the
succession of such Indenture Trustee hereunder to each Noteholder at its address
as shown in the Note Register. If the Servicer fails to mail such notice within
ten (10) days after acceptance of appointment by the successor Indenture
Trustee, the successor Indenture Trustee shall cause such notice to be mailed at
the expense of the Issuer and the Servicer.
SECTION 7.10. Merger or Consolidation of Indenture Trustee.
Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation succeeding to the corporate trust business
of the Indenture Trustee, shall be the successor of the Indenture Trustee
hereunder; provided such corporation shall be eligible under the provisions of
Section 7.7 hereof, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
SECTION 7.11. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) At any time or times for the purpose of meeting any legal
requirement of any jurisdiction in which any part of the Trust Estate may at the
time be located or in which any action of the Indenture Trustee may be required
to be performed or taken, the Indenture Trustee, the Servicer or the Holders
representing at least 66-2/3% of the Adjusted Note Balance of each Class of
Notes, by an instrument in writing signed by it or them, may appoint, at the
reasonable expense of the Issuer and the Servicer, one or more individuals or
corporations to act as separate trustee or separate trustees or co-trustee,
acting jointly with the Indenture Trustee, of all or any part of the Trust
Estate, to the full extent that local law makes it necessary for such separate
trustee or separate trustees or co-trustee acting jointly with the Indenture
Trustee to act. Notwithstanding the appointment of any separate or co-trustee,
the Indenture Trustee shall remain obligated and liable for the obligations of
the Indenture Trustee under this Indenture.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Issuer shall execute, acknowledge and deliver all such instruments
as may be required by the legal requirements of any jurisdiction or by any such
separate trustee or separate trustees or co-
59
trustee for the purpose of more fully confirming such title, rights, or duties
to such separate trustee or separate trustees or co-trustee. Upon the acceptance
in writing of such appointment by any such separate trustee or separate trustees
or co-trustee, it, he, she or they shall be vested with such title to the Trust
Estate or any part thereof, and with such rights, powers, duties and obligations
as shall be specified in the instrument of appointment, and such rights, powers,
duties and obligations shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee, or the Indenture Trustee and such separate
trustee or separate trustees or co-trustees jointly with the Indenture Trustee
subject to all the terms of this Indenture, except to the extent that under any
law of any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall be
exercised and performed by such separate trustee or separate trustees or
co-trustee, as the case may be. Any separate trustee or separate trustees or
co-trustee may, at any time by an instrument in writing, constitute the
Indenture Trustee its attorney-in-fact and agent with full power and authority
to do all acts and things and to exercise all discretion on its behalf and in
its name. In any case any such separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, the title to the Trust Estate and all
assets, property, rights, power duties and obligations and duties of such
separate trustee or co-trustee shall, so far as permitted by law, vest in and be
exercised by the Indenture Trustee, without the appointment of a successor to
such separate trustee or co-trustee unless and until a successor is appointed.
(c) All provisions of this indenture which are for the benefit of
the Indenture Trustee shall extend to and apply to each separate trustee or
co-trustee appointed pursuant to the foregoing provisions of this Section 7.11.
(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act and the Indenture Trustee
shall act, subject to the following provisions and conditions (i) all powers,
duties and obligations and rights conferred upon the Indenture Trustee in
respect of the receipt, custody, investment and payment of monies shall be
exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties
and obligations conferred or imposed upon the Indenture Trustee shall be
conferred or imposed and exercised or performed by the Indenture Trustee and
such additional trustee or trustees and separate trustee or trustees jointly
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Timeshare Properties in any such jurisdiction) shall be exercised and performed
by such additional trustee or trustees or separate trustee or trustees; (iii) no
power hereby given to, or exercisable by, any such additional trustee or
separate trustee shall be exercised hereunder by such trustee except jointly
with, or with the consent of, the Indenture Trustee; and (iv) no trustee
hereunder shall be personally liable by reason of any act or omission of any
other trustee hereunder.
If at any time, the Indenture Trustee shall deem it no longer
necessary or prudent in order to conform to such law, the Indenture Trustee
shall execute and deliver all instruments and agreements necessary or proper to
remove any additional trustee or separate trustee.
60
(e) Any request, approval or consent in writing by the Indenture
Trustee to any additional trustee or separate trustee shall be sufficient
warrant to such additional trustee or separate trustee, as the case may be, to
take such action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 7.11, the
powers of any additional trustee or separate trustee shall not exceed those of
the Indenture Trustee hereunder.
SECTION 7.12. Paying Agent and Note Registrar Rights.
So long as the Indenture Trustee is the Paying Agent and Note
Registrar, the Paying Agent and Note Registrar shall be entitled to the rights,
benefits and immunities of the Indenture Trustee as set forth in Article VII to
the same extent and as fully as though named in place of the Indenture Trustee
herein. The Paying Agent shall be compensated out of the Indenture Trustee Fee.
SECTION 7.13. Authorization.
The Issuer hereby authorities and directs the Indenture Trustee to
enter into the Lockbox Agreement. Pursuant to the Lockbox Agreement, the
Indenture Trustee agrees to cause to be established and maintained an account
(the "Lockbox Account") for the benefit of the Noteholders. The Lockbox Account
will be titled as follows "U.S. Bank National Association, as Indenture Trustee
of BXG Receivables Note Trust 2002-A-Blocked Account", Timeshare Loan-Backed
Notes, Series 2002-A". The Indenture Trustee is authorized and directed to act
as titleholder of the Lockbox Account in accordance with the terms of the
Lockbox Agreement for the benefit of the Noteholders with interests in the funds
on deposit in such accounts. In addition, the Indenture Trustee is hereby
authorized to enter into, execute, deliver and perform under, each of the
applicable Transaction Documents and the Depository Agreement. The Lockbox Bank
will be required to transfer and will be permitted to withdraw funds from the
Lockbox Account in accordance with the Lockbox Agreement.
SECTION 7.14. Maintenance of Office or Agency.
The Indenture Trustee will maintain in the Borough of Manhattan, the
City of New York, an office or agency where Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Indenture Trustee in respect of the Notes and this Indenture may be served.
The Indenture Trustee will give prompt written notice to the Issuer, the
Servicer and the Noteholders of the location, and of any Change in the location,
of any such office or agency or shall fail to furnish the Issuer or the Servicer
with the address thereof, such surrenders, notices and demands may be made or
served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
61
ARTICLE VIII.
COVENANTS OF THE ISSUER
SECTION 8.1. Payment of Principal and Interest.
The Issuer will cause the due and punctual payment of the principal
of, and interest on, the Notes in accordance with the terms of the Notes and
this Indenture.
SECTION 8.2. Reserved.
SECTION 8.3. Money for Payments to Noteholders to Be Held in Trust.
(a) All payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Trust Accounts
pursuant to Sections 3.4 or 6.6 hereof shall be made on behalf of the Issuer by
the Indenture Trustee, and no amounts so withdrawn from the Collection Account
for payments of Notes shall be paid over to the Issuer under any circumstances,
except as provided in this Section 8.3, in Section 3.4 or Section 6.6, as the
case may be.
(b) In making payments hereunder, the Indenture Trustee will hold
all sums held by it for the payment of amounts due with respect to the Notes in
trust for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided.
(c) Except as required by applicable law, any money held by the
Indenture Agent in trust for the payment of any amount due with respect to any
Note shall not bear interest and if remaining unclaimed for two (2) years after
such amount has become due and payable to the Noteholder shall be discharged
from such trust and, subject to applicable escheat laws, and so long as no Event
of Default has occurred and is continuing, paid to the Issuer upon request;
otherwise, such amounts shall be redeposited in the Collection Account as
Available Funds, and such Noteholder shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment thereof (but only to the extent of
the amounts so paid to the Issuer), and all liability of the Indenture Trustee
or the Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee or the Paying Agent, before being
required to make any such repayment, shall cause to be published once, at the
expense and direction of the Issuer, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee or the Paying Agent shall
also adopt an employ, at the expense and direction of the Issuer, any other
reasonable means of notification of such repayment (including, but not limited
to, mailing notice of such repayment to Noteholders whose Notes have been called
but have not been surrendered for redemption or whose right to or interest in
moneys due and payable but not claimed is determinable) from the records of the
Indenture Trustee or of any Paying Agent, at the last address of record for each
such Noteholder.
62
(d) The Issuer will cause each Paying Agent to execute and deliver
to the Indenture Trustee an instrument in which such Paying Agent shall agree
with the Indenture Trustee (and if the Indenture Trustee is the Paying Agent, it
hereby so agrees), subject to the provisions of this Section 8.3, that such
Paying Agent will:
(i) give the Indenture Trustee notice of any occurrence that is, or
with notice or with the lapse of time or both would become, an Event of
Default by the Issuer of which it has actual knowledge in the making of
any payment required to be made with respect to the Notes;
(ii) at any time during the continuance of any such occurrence
described in clause (i) above, upon the written request of the Indenture
Trustee, pay to the Indenture Trustee all sums so held in trust by such
Paying Agent;
(iii) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(iv) comply with all requirements of the Code or any applicable
state law with respect to the withholding from any payments made by it on
any Notes of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such monies.
SECTION 8.4. Existence: Merger: Consolidation, etc.
(a) The Issuer will keep in full effect its existence, rights and
franchises as a statutory trust under the laws of the State of Delaware, and
will obtain and preserve its qualification to do business as a foreign business
trust in each jurisdiction in which such qualification is or shall be necessary
to protect the validity and enforceability of this Indenture, the Notes or any
of the Timeshare Loans.
(b) The Issuer shall at all times observe and comply in all material
respects with (i) all laws applicable to it, (ii) all requirements of law in the
declaration and payment of distributions, and (iii) all requisite and
appropriate formalities in the management of its business and affairs and the
conduct of the transactions contemplated hereby.
(c) The Issuer shall not (i) consolidate or merge with or into any
other Person or convey or transfer its properties and assets substantially as an
entirety to any other Person or (ii) commingle its assets with those of any
other Person.
63
(d) The Issuer shall not become an "investment company" or under the
"control" of an "investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (or any successor or amendatory statute), and
the rules and regulations thereunder (taking into account not only the general
definition of the term "investment company" but also any available exceptions to
such general definition); provided however, that the Issuer shall be in
compliance with this Section 8.4 if it shall have obtained an order exempting it
from regulation as an "investment company" so long as it is in compliance with
the conditions imposed in such order,
SECTION 8.5. Protection of Trust Estate: Further Assurances.
(a) The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance, and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively the assets comprising all or any portion
of the Trust Estate;
(ii) maintain or preserve the Lien of this Indenture or carry out
more effectively the purposes hereof,
(iii) publish notice of, or protect the validity of, any Grant made
or to be made by this Indenture and perfect the security interest
contemplated hereby in favor of the Indenture Trustee in each of the
Timeshare Loans and all other property included in the Trust Estate;
provided, that the Issuer shall not be required to cause the recordation
of the Indenture Trustee's name as Lien holder on the related title
documents for the Timeshare Properties so long as no Event of Default has
occurred and is continuing;
(iv) enforce or cause the Servicer to enforce any of the Timeshare
Loans in accordance with the Servicing Standard, provided, however, the
Issuer will not cause the Servicer to obtain on behalf of the Indenture
Trustee or the Noteholders, any Timeshare Property or to take any actions
with respect to any property the result of which would adversely affect
the interests of the Indenture Trustee or the Noteholders (including, but
not limited to, actions which would cause the Indenture Trustee or the
related Noteholders to be considered a holder of title,
mortgagee-in-possession, or otherwise, or an "owner" or "operator" of
Property not in compliance with applicable environmental statutes); and
(v) preserve and defend title to the Timeshare Loans (including the
right to receive all payments due or to become due thereunder), the
interests in the Timeshare Properties, or other property included in the
Trust Estate and preserve and defend the rights of the Indenture Trustee
in the Trust Estate (including the right to receive all payments due or to
become due thereunder) against the claims of all Persons and parties other
than as permitted hereunder.
64
(b) The Issuer will not take any action and will use its
commercially reasonable efforts not to permit any action to be taken by others
that would release any Person from any of such Person's material covenants or
obligations under any instrument or agreement included in the Trust Estate or
that would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in this Indenture or the Custodial
Agreement or such other instrument or agreement.
(c) The Issuer may contract with or otherwise obtain the assistance
of other Persons to assist it in performing its duties under this Indenture, and
any performance of such duties by a Person identified to the Indenture Trustee
in an Officer's Certificate of the Issuer shall be deemed to be action taken by
the Issuer, provided, however that no appointment of such Person shall relieve
the Issuer of its duties and obligations hereunder. Initially, the Issuer has
contracted with the Servicer, Indenture Trustee and the Custodian pursuant to
this Indenture to assist the Issuer in performing its duties under this
Indenture and the other Transaction Documents.
(d) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Transaction
Documents and in the instruments and agreements included in the Trust Estate.
(e) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without the
prior written consent of the Indenture Trustee and the Noteholders representing
at least 66-2/3% of the Adjusted Note Balance of each Class of Notes, amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any
Timeshare Loan (except to the extent otherwise provided in this Indenture or in
the Timeshare Loan Documents) or the Transaction Documents, or waive timely
performance or observance by the Servicer, the Indenture Trustee, the Custodian,
the Paying Agent or the Depositor under this Indenture; and (ii) that any such
amendment shall not (A) reduce in any manner the amount of, or accelerate or
delay the timing of, distributions that are required to be made for the benefit
of the Noteholders or (B) reduce the aforesaid percentage of the Notes that is
required to consent to any such amendment, without the consent of the
Noteholders of all the Outstanding Notes. If any such amendment, modification,
supplement or waiver shall be so consented to by the Indenture Trustee and the
Noteholders, the Issuer agrees, promptly following a request by the Indenture
Trustee, to execute and deliver, at its own expense, such agreements,
instruments, consents and other documents as the Indenture may deem necessary or
appropriate in the circumstances.
The Issuer, upon the Issuer's failure to do so, hereby irrevocably
designates the Indenture Trustee and the Servicer, severally, its agents and
attorneys-in-fact to execute any financing statement or continuation statement
or Assignment of Mortgage required pursuant to this Section 8.5; provided,
however, that such designation shall not be deemed to create a duty in the
Indenture Trustee to monitor the compliance of the Issuer with the foregoing
covenants, and provided, further, that the duty of the Indenture Trustee or the
Servicer to execute any
65
instrument required pursuant to this Section 8.5 shall arise only if a
Responsible Officer of the Indenture Trustee or the Servicer, as applicable, has
Knowledge of any failure of the Issuer to comply with the provisions of this
Section 8.5.
SECTION 8.6. Additional Covenants.
(a) The Issuer will not:
(i) sell, transfer, exchange or otherwise dispose of any portion of
the Trust Estate except as expressly permitted by this Indenture;
(ii) claim any credit on, or make any deduction from, the principal
of, or interest on, any of the Notes (other than amounts properly withheld
from such payments under the Code) or any applicable state law or assert
any claim against any present or former Noteholder by reason of the
payment of any taxes levied or assessed upon any portion of the Trust
Estate; or
(iii) engage in any business or activity other than as permitted by
this Indenture, the Trust Agreement and the other Transaction Documents
and any activities incidental thereto, or amend the Trust Agreement as in
effect on the Closing Date other than in accordance with Article XI
thereof;
(iv) issue debt of obligations under any indenture other than this
Indenture;
(v) incur or assume, directly or indirectly, any indebtedness,
except for such: indebtedness as may be incurred by the Issuer pursuant to
this Indenture, or guaranty any indebtedness or other obligations of any
Person (other than the Timeshare Loans), or own, purchase, repurchase or
acquire (or agree contingently to do so) any stock, obligations, assets or
securities of or any other interest in, or make any capital contribution
to, any other Person (other than the Timeshare Loans);
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (A) permit the validity or effectiveness of this Indenture or
any Grant hereby to be impaired, or permit the Lien of this Indenture to
be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations under
this Indenture, except as may be expressly permitted hereby, (B) permit
any lien, charge, security interest, mortgage or other encumbrance to be
created on or to extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds thereof
(other than tax liens, mechanics; liens and other liens that arise by
operation of law, in each case on any of the Resort Interests and arising
solely as a result of an act or omission of the related Obligor) other
than the Lien of this Indenture or (C) except as otherwise contemplated in
this Indenture, permit the Lien of this Indenture (other than with respect
to any Permitted Liens or such tax, mechanic's or other lien) not to
constitute a valid first priority security interest in the Trust Estate
66
(viii) take any other action or fail to take any actions which may
cause the Issuer to be taxable as an association pursuant to Section 7701
of the Code and the corresponding regulations, (b) a publicly traded
partnership taxable as a corporation pursuant to Section 7704 of the Code
and the corresponding regulations or (c) a taxable mortgage pool pursuant
to Section 7701(i) of the Code and the corresponding regulations; and
(ix) change the location of its principal place of business without
the prior notice to the Indenture Trustee and the Noteholders.
(b) Notice of Events of Defaults. Immediately upon the Issuer having
Knowledge of the existence of any condition or event which constitutes a Default
or an Event of Default or a Servicer Event of Default, the Issuer shall deliver
to the Indenture Trustee a written notice describing its nature and period of
existence and what action the Issuer is taking or proposes to take with respect
thereto.
(c) Report on Proceedings. Promptly upon the Issuer's becoming aware
of (i) any proposed or pending investigation of it by any governmental authority
or agency; or (ii) any pending or proposed court or administrative proceeding
which involves or is reasonably likely to involve the possibility of materially
and adversely affecting the properties, business, prospects, profits or
condition (financial or otherwise) of the Issuer, the Issuer shall deliver to
the Indenture Trustee a written notice specifying the nature of such
investigation or proceeding and what action the Issuer is taking or proposes to
take with respect thereto and evaluating its merits.
SECTION 8.7. Taxes.
The Issuer shall pay all taxes when due and payable or levied
against its assets, properties or income, including any property that is part of
the Trust Estate, except to the extent the Issuer is contesting the same in good
faith and has set aside adequate reserves in accordance with accounting
principles generally accepted in the United States for the payment thereof.
SECTION 8.8. Restricted Payments.
The Issuer shall not, directly or indirectly, (i) pay any dividend
or make any distribution (by reduction of capital or otherwise), whether in
cash, property, securities or a combination thereof, to the Owner Trustee or any
owner of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest to security in or of the Issuer, the Club
Originator, the Depositor or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however that the Issuer may make, or cause to be made, payments and
distributions to or on behalf of the Servicer, the Club Originator, the
Depositor, the Indenture Trustee, the Owner Trustee, the Noteholders and the
Certificateholders as contemplated by, and to the extent finds are available for
such purpose under, this Indenture, the Sale Agreement, the Trust Agreement or
the other Transaction Documents. The Issuer will not, directly or indirectly,
make or cause to be made payments to or distributions from the Collection
Account except in accordance with this Indenture and the other Transaction
Documents.
67
SECTION 8.9. Treatment of Notes as Debt for Tax Purposes.
The Issuer shall treat the Notes as indebtedness for all federal,
state and local income and franchise tax purposes.
SECTION 8.10. Further Instruments and Acts.
Upon request of the Indenture Trustee, the Issuer will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this indenture.
SECTION 8.11. [Reserved].
ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures.
(a) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Indenture Trustee,
for any of the following purposes:
(i) without the consent of any Noteholder; (x) to correct or amplify
the description of any property at any time subject to the Lien of this
Indenture, or to better assure, convey and confirm unto the Indenture
Trustee any property subject or required to be subjected to the Lien of
this Indenture; provided, such action pursuant to this clause (i) shall
not adversely affect the interests of the Noteholders in any respect; or
(1) to evidence and provide for the acceptance of
appointment hereunder by a successor Indenture Trustee
with respect to the Notes and to add to or change any of
the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the
trusts hereunder by more than one Indenture Trustee,
pursuant to the requirements of Section 7.9 hereof; or
(2) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent
with any other provision herein, or to make any other
provisions with respect to matters or questions arising
under this Indenture; provided that such action pursuant
to this clause (2) shall not adversely affect the
interests of any of the Holders of Notes.
(b) Notwithstanding anything to the contrary in this Section 9.1 or
this Indenture, no supplement as provided for in this Section 9.1 shall cause
the Issuer to fail to be
68
treated as a "qualified special purpose entity" as defined in Financial
Accounting Standards Board Statement No. 140.
(c) The Indenture Trustee shall promptly deliver, at least five (5)
Business Days prior to the effectiveness thereof, to each Noteholder and the
Rating Agencies, a copy of any supplemental indenture entered into pursuant to
this Section 9.1(a).
SECTION 9.2. Supplemental Indentures with Consent of Noteholders.
(a) With the consent of Holders representing at least 66-2/3% of the
Adjusted Note Balance of each Class of Notes then Outstanding and by Act of said
Noteholders delivered to the Issuer and the Indenture Trustee, the Issuer and
the Indenture Trustee may, pursuant to an issuer Order, enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Noteholders under this Indenture;
provided, that no supplemental indenture shall, without the consent of the
Holder of each Outstanding Note affected thereby,
(i) change the Stated Maturity of any Note or the amount of
principal payments or interest payments due or to become due on any
Payment Date with respect to any Note, or change the priority of payment
Thereof as set forth herein, or reduce the principal amount thereof or the
Note Rate thereon, or change the place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity;
(ii) reduce the percentage of the Outstanding Note Balance or
Adjusted Note Balance, the consent of the Noteholders of which is required
for any supplemental indenture, for any waiver of compliance with
provisions of this Indenture or Events of Default and their consequences;
(iii) modify any of the provisions of this Section 9.2 or Section
6.13 hereof except to increase any percentage of Noteholders required for
any modification or waiver or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Note affected thereby;
(iv) modify or alter the provisions of the proviso to the definition
of the term "Outstanding"; or
(v) permit the creation of any lien ranking prior to or on a parity
with the Lien of this Indenture with respect to any part of the Trust
Estate or terminate the Lien of this Indenture on any property at any time
subject hereto or deprive any Noteholder of the security afforded by the
Lien of this Indenture;
provided, no such supplemental indenture may modify or change any terms
whatsoever of the Indenture that could be construed as increasing the Issuer's
or the Servicer's discretion hereunder.
69
(b) The Indenture Trustee shall promptly deliver, at least five (5)
Business Days prior to the effectiveness thereof to each Noteholder and the
Rating Agencies, a copy of any supplemental indenture entered into pursuant to
Section 9.2(a) above.
SECTION 9.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture (a) pursuant to Section 9.1 of this Indenture or (b)
pursuant to Section 9.2 of this Indenture without the consent of each Holder of
the Notes to the execution of the same, or the modifications thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and (subject to Section 7.1 hereof) shall be, fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any
supplemental indenture which affects the Indenture Trustee's own rights, duties,
obligations, or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated, and delivered hereunder shall
be bound thereby.
SECTION 9.5. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Indenture Trustee, bear a notation in form approved by the Indenture Trustee
as to any matter provided for in such supplemental indenture. New Notes so
modified as to conform, in the opinion of the Indenture Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
ARTICLE X.
REDEMPTION OF NOTES
SECTION 10.1. Optional Redemption: Election to Redeem.
The Servicer shall have the option to redeem not less than all of
the Notes and thereby cause the early repayment of the Notes on any date after
the Optional Redemption Date by payment of an amount equal to the Redemption
Price and any amounts, fees and expenses that are required to be paid pursuant
to Section 6.6(b) hereof (unless amounts in the Trust Accounts are sufficient to
make such payments).
70
SECTION 10.2. Notice to Indenture Trustee.
The Servicer shall give written notice of its intention to redeem
the Notes to the Indenture Trustee at least fifteen (15) days prior to the
Redemption Date (unless a shorter period shall be satisfactory to the Indenture
Trustee).
SECTION 10.3. Notice of Redemption by the Servicer.
Notices of redemption shall be given by first class mail, postage
prepaid, mailed not less than for fifteen (15) days prior to the Redemption Date
to each Noteholder, at the address listed in the Note Register and to the Rating
Agencies. All notices of redemption shall state (a) the Redemption Date, (b) the
Redemption Price, (c) that on the Redemption Date, the Redemption Price will
become due and payable in respect of each Note, and that interest thereon shall
cease to accrue if payment is made on the Redemption Date and (d) the office of
the Indenture Trustee where the Notes are to be surrendered for payment of the
Redemption Price. Failure to give notice of redemption, or any defect therein,
to any Noteholder shall not impair or affect the validity of the redemption of
any other Note.
SECTION 10.4. Deposit of Redemption Price.
On or before the Business Day immediately preceding the Redemption
Date, the Servicer shall deposit with the Indenture Trustee an amount equal to
the Redemption Price and any amounts, fees and expenses that are required to be
paid hereunder (less any portion of such payment to be made from funds held in
any of the Trust Accounts).
SECTION 10.5. Notes Payable on Redemption Date.
Notice of redemption having been given as provided in Section 10.3
hereof and deposit of the Redemption Price with the Indenture Trustee having
been made as provided in Section 10.4 hereof, the Notes shall on the Redemption
Date, become due and payable at the Redemption Price, and, on such Redemption
Date, such Notes shall cease to accrue interest. The Indenture Trustee shall
apply all available funds in accordance with Section 6.6(b) hereof and the
Noteholders shall be paid the Redemption Price by the Indenture Trustee on
behalf of the Servicer upon presentment and surrender of their Notes at the
office of the Indenture Trustee. If the Servicer shall have failed to deposit
the Redemption Price with the Indenture Trustee, the principal and interest with
respect to each Class of Notes shall, until paid, continue to accrue interest at
their respective Note Rates. The Servicer's failure to deposit the Redemption
Price shall not constitute an Event of Default hereunder.
ARTICLE XI.
SATISFACTION AND DISCHARGE
SECTION 11.1. Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Notes herein
expressly provided for),
71
and the Indenture Trustee, on demand of, and at the expense of, the Issuer,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when:
(i) either:
(1) all Notes theretofore authenticated and delivered (other
than (A) Notes which have been destroyed, lost or stolen
and which have been replaced or paid as provided in
Section 2.5 hereof and (B) Notes for whose payment money
has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in
Section 8.3(c) hereof) have been delivered to the
Indenture Trustee for cancellation; or
(2) the final installments of principal on all such Notes
not theretofore delivered to the Indenture Trustee for
cancellation (x) have become due and payable, or (y)
will become due and payable at their Stated Maturity, as
applicable within one year, and the Issuer has
irrevocably deposited or caused to be deposited with the
Indenture Trustee in trust an amount sufficient to pay
and discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for
cancellation, for principal and interest to the date of
such deposit (in the case of Notes which have become due
and payable) or to the Stated Maturity thereof;
(ii) the Issuer and the Servicer have paid or caused to be paid all
other sums payable hereunder by the Issuer and the Servicer for the
benefit of the Noteholders and the Indenture Trustee; and
(iii) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
At such time, the Indenture Trustee shall deliver to the Issuer all cash,
securities and other property held by it as part of the Trust Estate other than
funds deposited with the Indenture Trustee pursuant to Section 11.l(a)(i) above,
for the payment and discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Issuer to the Indenture Trustee under Section
7.6 hereof and, if money shall have been deposited with the Indenture Trustee
pursuant to Section 1 1.1(a)(i) above, the obligations of the Indenture Trustee
under Sections 11.2 and 8.3(c) hereof shall survive.
SECTION 11.2. Application of Trust Money; Repayment of Money Held by
Paying Agent.
Subject to the provisions of Section 8.3(c) hereof, all money
deposited with the Indenture Trustee pursuant to Sections 11.1 and 8.3 hereof
shall be held in trust and applied by
72
the Indenture Trustee in accordance with the provisions of the Notes, this
Indenture and the Trust Agreement, to the payment, either directly or through a
Paying Agent, as the Indenture Trustee may determine, to the Persons entitled
thereto, of the principal and interest for whose payment such money has been
deposited with the Indenture Trustee:
In connection with the satisfaction and discharge of this Indenture,
all moneys than held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to the Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.2 hereof and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
SECTION 11.3. Trust Termination Date.
Upon the full application of (a) moneys deposited pursuant to this
Article 11 or (b) proceeds of the Timeshare Loans pursuant to Sections 3.4 or
6.6 hereof, the Trust Estate created by this Indenture shall be deemed to have
terminated and all Liens granted hereunder shall be released.
ARTICLE XII.
REPRESENTATIONS AND WARRANTIES AND COVENANTS
SECTION 12.1. Representations and Warranties of the Issuer.
The Issuer represents and warrants to the Indenture Trustee, the
Servicer, the Backup Servicer and the Noteholders as of the Closing Date, as
follows:
(a) Organization and Good Standing. The Issuer has been duly formed
and is validly existing and in good standing under the laws of the State of
Delaware, with power and authority to own its properties and to conduct its
business as presently conducted and has the power and authority to own and
convey all of its properties and to execute and deliver this Indenture and the
Transaction Documents and to perform the transactions contemplated hereby and
thereby;
(b) Binding Obligation. This Indenture and the Transaction Documents
to which it is a party have each been duly executed and delivered on behalf of
the Issuer and this Indenture and each Transaction Document to which it is a
party constitutes a legal, valid and binding obligation of the Issuer
enforceable in accordance with its terms except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights and by
general principles of equity;
(c) No Consents Required. No consent of, or other action by, and no
notice to or filing with, any Governmental Authority or any other party, is
required for the due execution, delivery and performance by the Issuer of this
Indenture or any of the Transaction Documents or for the perfection of or the
exercise by the Indenture Trustee or the Noteholders of any of their rights or
remedies thereunder which have not been duly obtained;
73
(d) No Violation. The consummation of the transaction contemplated
by this Indenture and the fulfillment of the terms hereof shall not conflict
with, result in any material breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
organizational documents of the Issuer, or any indenture, agreement or other
instrument to which the Issuer is a party or by which it is bound; nor result in
the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than this
Indenture);
(e) No Proceedings. There is no pending or, to the Issuer's
Knowledge, threatened action, suit or proceeding, nor any injunction, writ,
restraining order or other order of any nature against or affecting the Issuer,
its officers or directors, or the property of the Issuer, in any court or
tribunal, or before any arbitrator of any kind or before or by any Governmental
Authority (i) asserting the invalidity of this Indenture or any of the
Transaction Documents, (ii) seeking to prevent the sale and assignment of any
Timeshare Loan or the consummation of any of the transactions contemplated
thereby, (iii) seeking any determination or ruling that might materially and
adversely affect (A) the performance by the Issuer of this Indenture or any of
the Transaction Documents or the interests of the Noteholders, (B) the validity
or enforceability of this Indenture or any of the Transaction Documents, (C) any
Timeshare Loan, or (D) the Intended Tax Characterization, or (iv) asserting a
claim for payment of money adverse to the Issuer or the conduct of its business
or which is inconsistent with the due consummation of the transactions
contemplated by this Indenture or any of the Transaction Documents;
(f) Issuer Not Insolvent. The Issuer is solvent and will not become
insolvent after giving effect to the transactions contemplated by this Indenture
and each of the Transaction Documents;
(g) Name. The legal name of the Issuer is as set forth in the
signature page of this Indenture and the Issuer does not have any tradenames,
fictitious names, assumed names or "doing business as" names.
SECTION 12.2. Representations and Warranties of the Servicer.
The Servicer hereby represents and warrants to the Indenture
Trustee, the Issuer, the Backup Servicer and the Noteholders, as of the Closing
Date, the following:
(a) Organization and Authority. The Servicer:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Massachusetts;
(ii) has all requisite power and authority to own and operate its
properties and to conduct its business as currently conducted and as
proposed to be conducted as contemplated by the Transaction Documents to
which it is a party, to enter into the Transaction Documents to which it
is a party and to perform its obligations under the Transaction Documents
to which it is a party; and
74
(iii) has made all filings and holds all material franchises,
licenses, permits and registrations which are required under the laws of
each jurisdiction in which the properties owned (or held under lease) by
it or the nature of its activities makes such filings, franchises,
licenses, permits or registrations necessary, except where the failure to
make such filing will not have a material adverse effect on the Servicer
activities or its ability to perform its obligations under the Transaction
Documents.
(b) Place of Business. The address of the principal place of
business and chief executive office of the Servicer is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and there have been no other such
locations during the immediately preceding four months.
(c) Compliance with Other Instruments, etc. The Servicer is not in
violation of any term of its certificate of incorporation and by-laws. The
execution, delivery and performance by the Servicer of the Transaction Documents
to which it is a party do not and will not (i) conflict with or violate the
organizational documents of the Servicer, (ii) conflict with or result in a
breach of any of the terms, conditions or provisions of, or constitute a default
under, or result in the creation of any Lien on any of the properties or assets
of the Servicer pursuant to the terms of any instrument or agreement to which
the Servicer is a party or by which it is bound where such conflict would have a
material adverse effect on the Servicer's activities or its ability to perform
its obligations under the Transaction Documents or (iii) require any consent of
or other action by any trustee or any creditor of, any lessor to or any investor
in the Servicer.
(d) Compliance with Law. The Servicer is in material compliance with
all statutes, laws and ordinances and all governmental rules and regulations to
which it is subject, the violation of which, either individually or in the
aggregate, could materially adversely affect its business, earnings, properties
or condition (financial or other). The internal policies and procedures employed
by the Servicer are in material compliance with all applicable statutes, laws
and ordinances and all governmental rules and regulations. The execution,
delivery and performance of the Transaction Documents to which it is a party do
not and will not cause the Servicer to be in violation of any law or Ordinance,
or any order, rule or regulation, of any federal, state, municipal or other
governmental or public authority or agency where such violation would, either
individually or in the aggregate, materially adversely affect its business,
earnings, properties or condition (financial or other).
(e) Pending Litigation or Other Proceedings. Except as specified in
"RISK FACTORS" in the Offering Circular, there is no pending or, to the best of
the Servicer's Knowledge, threatened action, suit, proceeding or investigation
before any court, administrative agency, arbitrator or governmental body against
or affecting the Servicer which, if decided adversely, would materially and
adversely affect (i) the condition (financial or otherwise), business or
operations of the Servicer, (ii) the ability of the Servicer to perform its
obligations under, or the validity or enforceability of this Agreement or any
other documents or transactions contemplated under this Agreement, (iii) any
property or title of any Obligor to any Property or (iv) the Indenture Trustee's
ability to foreclose or otherwise enforce the Liens of the Timeshare Loans,
75
(f) Taxes. The Servicer has filed all tax returns (federal, state
and local) which are required to be filed and has paid all taxes related
thereto, other than those which are being contested in good faith or where the
failure to file or pay would not have a material adverse effect on the
Servicer's activities or its ability to perform its obligations under the
Transaction Documents.
(g) Transactions in Ordinary Course. The transactions contemplated
by this Agreement are in the ordinary course of business of the Servicer.
(h) Securities Laws. The Servicer is not an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(i) Proceedings. The Servicer has taken all action necessary to
authorize the execution and delivery by it of the Transaction Documents to which
it is a party and the performance of all obligations to be performed by it under
the Transaction Documents.
(j) Defaults. The Servicer is not in default under any material
agreement, contract, instrument or indenture to which it is a party or by which
it or its properties is or are bound, or with respect to any order of any court,
administrative agency, arbitrator or governmental body, which default would have
a material adverse effect on the transactions contemplated hereunder; and to the
servicer's Knowledge, no event has occurred which with notice or lapse of time
or both would constitute such a default with respect to any such agreement,
contract, instrument or indenture, or with respect to any such order of any
court, administrative agency, arbitrator or governmental body.
(k) Insolvency. The Servicer is solvent. Prior to the date hereof,
the Servicer did not, and is not about to, engage in any business or transaction
for which any property remaining with the Servicer would constitute an
unreasonably small amount of capital. In addition, the Servicer has not incurred
debts that would be beyond the Servicer's ability to pay as such debts matured.
(l) No Consents. No prior consent, approval or authorization of,
registration, qualification, designation, declaration or filing with, or notice
to any federal, state or local governmental or public authority or agency, is,
was or will be required for the valid execution, delivery and performance by the
Servicer of the Transaction Documents to which it is a party. The Servicer has
obtained all consents, approvals or authorizations of, made all declarations or
filings with, or given all notices to, all federal, state or local governmental
or public authorities or agencies which are necessary for the continued conduct
by the Servicer of its respective businesses as now conducted, other than such
consents, approvals, authorizations, declarations, filings and notices which,
neither individually nor in the aggregate, materially and adversely affect, or
in the future will materially and adversely affect, the business, earnings,
prospects, properties or condition (financial or other) of the Servicer.
(m) Name. The legal name of the Servicer is as set forth in the
signature page of this Indenture and the Servicer does not have any tradenames,
fictitious names, assumed names or "doing business as" names.
76
(n) Information. No document, certificate or report furnished by the
Servicer, in writing, pursuant to this Agreement or in connection with the
transactions contemplated hereby, contains or will contain when furnished any
untrue statement of a material fact or fails or will fail to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. There are no facts
relating to the Servicer as of the Closing Date which when taken as a whole,
materially adversely affect the financial condition or assets or business of the
Servicer, or which may impair the ability of the Servicer to perform its
obligations under this Agreement, which have not been disclosed herein or in the
certificates and other documents furnished by or on behalf of the Servicer
pursuant hereto or thereto specifically for use in connection with the
transactions contemplated hereby or thereby.
(o) Ratings. The ratings assigned to each of the Resorts as
specified in Exhibit I hereto is true and correct as of the Closing Date.
(p) ACH Form. The Servicer has delivered a form of the ACH Form
attached to the Sale Agreement to the Backup Servicer for its review.
SECTION 12.3. Representations and Warranties of the Indenture Trustee.
The Indenture Trustee hereby represents and warrants to the
Servicer, the Issuer, the Backup Servicer and the Noteholders as of the Closing
Date, the following:
(a) The Indenture Trustee is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States.
(b) The execution and delivery of this Indenture and the other
Transaction Documents to which the Indenture Trustee is a party, and the
performance and compliance with the terms of this Indenture and the other
Transaction Documents to which the Indenture Trustee is a party by the Indenture
Trustee, will not violate the Indenture Trustee's organizational documents or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of any material
agreement or other material instrument to which it is a party or by which it is
bound.
(c) Except to the extent that the laws of certain jurisdictions in
which any part of the Trust Estate may be located require that a co-trustee or
separate trustee be appointed to act with respect to such property as
contemplated herein, the Indenture Trustee has the full power and authority to
carry on its business as now being conducted and to enter into and consummate
all transactions contemplated by this Indenture and the other Transaction
Documents, has duly authorized the execution, delivery and performance of this
Indenture and the other Transaction Documents to which it is a party, and has
duly executed and delivered this Indenture and the other Transaction Documents
to which it is a party.
(d) This Indenture, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid and binding obligation
of the Indenture Trustee, enforceable against the Indenture Trustee in
accordance with the terms hereof, subject to (A) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
77
enforcement of creditors' rights generally and the rights of creditors of banks
and (B) general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
(e) The Indenture Trustee is not in violation of, and its execution
and delivery of this Indenture and the other Transaction Documents to which it
is a party and its performance and compliance with the terms of this Indenture
and the other Transaction Documents to which it is a party will not constitute a
violation of, any law, any order or decree of any court or arbiter, or any
order, regulation or demand of any federal, state or local governmental or
regulatory authority, which violation, in the Indenture Trustees good faith and
reasonable judgment, is likely to affect materially and adversely the ability of
the Indenture Trustee to perform its obligations under any Transaction Document
to which it is a party.
(f) No litigation is pending or, to the best of the Indenture
Trustee's knowledge, threatened against the Indenture Trustee that, if
determined adversely to the Indenture Trustee, would prohibit the Indenture
Trustee from entering into any Transaction Document to which it is a party or,
in the Indenture Trustee's good faith and reasonable judgment, is likely to
materially and adversely affect the ability of the Indenture Trustee to perform
its obligations under any Transaction Document to which it is a party.
(g) Any consent, approval, authorization or order of any court or
governmental agency or body required for the execution, delivery and performance
by the Indenture Trustee of or compliance by the Indenture Trustee with the
Transaction Documents to which it is a party or the consummation of the
transactions contemplated by the Transaction Documents has been obtained and is
effective.
SECTION 12.4. Multiple Roles.
The parties expressly acknowledge and consent to U.S. Bank National
Association, acting in the multiple roles of Indenture Trustee, the Paying
Agent, the successor Servicer (in the event the Backup Servicer shall not serve
as the successor Servicer) and the Custodian. U.S. Bank National Association
may, in such capacities, discharge its separate functions fully, without
hindrance or regard to conflict of interest principles, duty of loyalty
principles or other breach of fiduciary duties to the extent that any such
conflict or breach arises from the performance by U.S. Bank National Association
of express duties set forth in this Indenture in any of such capacities, all of
which defenses, claims or assertions are hereby expressly waived by the other
parties hereto, except in the case of negligence (other than errors in judgment)
and willful misconduct by U.S. Bank National Association.
SECTION 12.5. [Reserved].
SECTION 12.6. Covenants of the Club Trustee.
Until the date on which each Class of Notes has been paid in full,
the Club Trustee hereby covenants that:
78
(a) No Conveyance. The Club Trustee agrees not to convey any Resort
Interest (as defined in the Club Trust Agreement) in the Club relating to a
Timeshare Loan unless the Indenture Trustee shall have issued an instruction to
the Club Trustee pursuant to Section 8.07(c) of the Club Trust Agreement in
connection with its exercise of its rights as an Interest Holder Beneficiary (as
defined in the Club Trust Agreement) under Section 7.02 of the Club Trust
Agreement.
(b) Separate Corporate Existence. The Club Trustee shall:
(i) Maintain its own deposit account or accounts,
separate from those of any Affiliate, with commercial banking
institutions. The funds of the Club Trustee will not be
diverted to any other Person or for other than trust or
corporate uses of the Club Trustee, as applicable.
(ii) Ensure that to the extent that it shares the same
officers or other employees as any of its stockholders,
beneficiaries or Affiliates, the salaries of and the expenses
related to providing benefits to such officers and other
employees shall be fairly allocated among such entities, and
each such entity shall bear its fair share of the salary and
benefit costs associated with all such common officers and
employees.
(iii) Ensure that, to the extent that the Club Trustee
and the Servicer (together with their respective stockholders
or Affiliates) jointly do business with vendors or service
providers or share overhead expenses, the costs incurred in so
doing shall be allocated fairly among such entities, and each
such entity shall bear its fair share of such costs. To the
extent that the Club Trustee and the Servicer (together with
their respective stockholders or Affiliates) do business with
vendors or service providers when the goods and services
provided are partially for the benefit of any other Person,
the costs incurred in so doing shall be fairly allocated to or
among such entities for whose benefit the goods and services
are provided, and each such entity shall bear its fair share
of such costs. All material transactions between Club Trustee
and any of its Affiliates shall be only on an arms' length
basis.
(iv) To the extent that the Club Trustee and any of its
stockholders, beneficiaries or Affiliates have offices in the
same location, there shall be a fair and appropriate
allocation of overhead costs among them, and each such entity
shall bear its fair share of such expenses.
(v) Conduct its affairs strictly in accordance with the
Club Trust Agreement or its amended and restated articles of
incorporation, as applicable, and observe all necessary,
appropriate and customary corporate formalities, including,
but not limited to, holding all regular and special
stockholders', trustees' and directors' meetings appropriate
to authorize all trust and corporate action, keeping separate
and accurate minutes of its meetings, passing all resolutions
or consents necessary to authorize actions
79
taken or to be taken, and maintaining accurate and separate
books, records and accounts, including, but not limited to,
payroll and intercompany transaction accounts.
(c) Merger or Consolidation. The Club Trustee shall not consolidate
with or merge into any other corporation or convey, transfer or lease
substantially all of its assets as an entirety to any Person unless the
corporation formed by such consolidation or into which the Club Trustee, as the
case may be, has merged or the Person which acquires by conveyance, transfer or
lease substantially all the assets of the Club Trustee, as the case may be, as
an entirety, can lawfully perform the obligations of the Club Trustee hereunder
and executes and delivers to the Indenture Trustee an agreement in form and
substance reasonably satisfactory to the Indenture Trustee which contains an
assumption by such successor entity of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Club Trustee under this Indenture.
(d) Corporate Matters. Notwithstanding any other provision of this
Section and any provision of law, the Club Trustee shall not do any of the
following:
(i) engage in any business or activity other than as set
forth herein or in or as contemplated by the Club Trust
Agreement or its amended and restated articles of
incorporation, as applicable;
(ii) without the affirmative vote of a majority of the
members of the board of directors (or Persons performing
similar functions) of the Club Trustee (which must include the
affirmative vote of at least one duly appointed Independent
Director (as defined in the Club Trust Agreement)), (A)
dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent, (B)
consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent
to reorganization or relief under any applicable federal or
state law relating to bankruptcy, (D) consent to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or
a substantial part of its property, (E) make a general
assignment for the benefit of creditors, (F) admit in writing
its inability to pay its debts generally as they become due,
(G) terminate the Club Managing Entity as manager under the
Club Management Agreement or (H) take any corporate action in
furtherance of the actions set forth in clauses (A) through
(G) above; provided, however, that no director may be required
by any shareholder or beneficiary of the Club Trustee to
consent to the institution of bankruptcy or insolvency
proceedings against the Club Trustee so long as it is solvent;
(iii) merge or consolidate with any other corporation,
company or entity or sell all or substantially all of its
assets or acquire all or substantially all of the assets or
capital stock or other ownership interest of any other
corporation, company or entity; or
80
(iv) with respect to the Club Trustee, amend or
otherwise modify its amended and restated articles of
incorporation or any definitions contained therein in a manner
adverse to the Indenture Trustee or any Noteholder without the
prior written consent of the Agent.
(e) The Club Trustee shall not incur any indebtedness other than (i)
trade payables and operating expenses (including taxes) incurred in the ordinary
course of business or (ii) in connection with servicing Resort Interests
included in the Club's trust estate in the ordinary course of business
consistent with past practices; provided, that in no event shall the Club
Trustee incur indebtedness for borrowed money.
SECTION 12.7. Representations and Warranties of the Backup Servicer.
The Backup Servicer hereby represents and warrants to the Indenture
Trustee, the Issuer, the Servicer and the Noteholders, as of the Closing Date,
the following
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Arizona;
(ii) has all requisite power and authority to own and operate its
properties and to conduct its business as currently conducted and as
proposed to be conducted as contemplated by the Transaction Documents to
which it is a party, to enter into the Transaction Documents to which it
is a party and to perform its obligations under the Transaction Documents
to which it is a party; and
(iii) has made all filings and holds all material franchises,
licenses, permits and registrations which are required under the laws of
each jurisdiction in which the properties owned (or held under lease) by
it or the nature of its activities makes such filings, franchises,
licenses, permits or registrations necessary, except where the failure to
make such filing will not have a material adverse effect on the Backup
Servicer activities or its ability to perform its obligations under the
Transaction Documents.
(b) Place of Business. The address of the principal place of
business and chief executive office of the Backup Servicer is as set forth in
Section 13.3 and there have been no other such locations during the immediately
preceding four months.
(c) Compliance with Other Instruments, etc. The Backup Servicer is
not in violation of any term of its certificate of incorporation and by-laws.
The execution, delivery and performance by the Backup Servicer of the
Transaction Documents to which it is a party do not and will not (i) conflict
with or violate the organizational documents of the Backup Servicer, (ii)
conflict with or result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, or result in the creation of any
Lien on any of the properties or assets of the Backup Servicer pursuant to the
terms of any instrument or agreement to which the Backup Servicer is a party or
by which it is bound where such conflict would have a material adverse effect on
the Backup Servicer's activities or its ability to perform its obligations under
the Transaction Documents or (iii) require any consent of or other action by any
trustee or any creditor or any lessor to or any investor in the Servicer.
81
(d) Compliance with Law. The Backup Servicer is in material
compliance with all statutes, laws and ordinances and all governmental rules and
regulations to which it is subject, the violation of which, either individually
or in the aggregate, could materially adversely affect its business, earnings,
properties or condition (financial or other). The internal policies and
procedures employed by the Backup Servicer are in material compliance with all
applicable statutes, laws and ordinances and all governmental rules and
regulations. The execution, delivery and performance of the Transaction
Documents to which it is a party do not and will not cause the Backup Servicer
to be in violation of any law or ordinance, or any order, rule or regulation, of
any federal, state, municipal or other governmental or public authority or
agency where such violation would, either individually or in the aggregate,
materially adversely affect its business, earnings, properties or condition
(financial or other).
(e) Pending Litigation or Other Proceedings. There is no pending
or, to the best of the Backup Servicer's Knowledge, threatened action, suit,
proceeding or investigation before any court, administrative agency, arbitrator
or governmental body against or affecting the Backup Servicer which, if decided
adversely, would materially and adversely affect (i) the condition (financial or
otherwise), business or operations of the Backup Servicer, (ii) the ability of
the Backup Servicer to perform its obligations under, or the validity or
enforceability of this Agreement or any other documents or transactions
contemplated under this Agreement, (iii) any property or title of any Obligor to
any Property or (iv) the Indenture Trustee's ability to foreclose or otherwise
enforce the Liens of the Timeshare Loans.
(f) Taxes. The Backup Servicer has filed all tax returns (federal,
state and local) which are required to be filed and has paid all taxes related
thereto, other than those which are being contested in good faith or where the
failure to file or pay would not have a material adverse effect on the Backup
Servicer's activities or its ability to perform its obligations under the
Transaction Documents.
(g) Transactions in Ordinary Course. The transactions contemplated
by this Agreement are in the ordinary course of business of the Backup Servicer.
(h) Securities Laws. The Backup Servicer is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(i) Proceedings. The Backup Servicer has taken all action necessary
to authorize the execution and delivery by it of the Transaction Documents to
which it is a party and the performance of all obligations to be performed by it
under the Transaction Documents.
(j) Defaults. The Backup Servicer is not in default under any
material agreement, contract, instrument or indenture to which it is a party or
by which it or its properties is or are bound, or with respect to any order of
any court, administrative agency, arbitrator or governmental body, which default
would have a material adverse effect on the transactions contemplated hereunder;
and to the Backup Servicer's Knowledge, no event has occurred which with notice
or lapse of time or both would constitute such a default with respect to any
such
82
agreement, contract, instrument or indenture, or with respect to any such order
of any court, administrative agency, arbitrator or governmental body.
(k) Insolvency. The Backup Servicer is solvent. Prior to the date
hereof, the Backup Servicer did not, and is not about to, engage in any business
or transaction for which any property remaining with the Backup Servicer would
constitute an unreasonably small amount of capital. In addition, the Backup
Servicer has not incurred debts that would be beyond the Backup Servicer's
ability to pay as such debts matured.
(l) No Consents. No prior consent, approval or authorization of,
registration, qualification, designation, declaration or filing with, or notice
to any federal, state or local governmental or public authority or agency, is,
was or will be required for the valid execution, delivery and performance by the
Backup Servicer of the Transaction Documents to which it is a party. The Backup
Servicer has obtained all consents, approvals or authorizations of, made all
declarations or filings with, or given all notices to, all federal, state or
local governmental or public authorities or agencies which are necessary for the
continued conduct by the Backup Servicer of its respective businesses as now
conducted, other than such consents, approvals, authorizations, declarations,
filings and notices which, neither individually nor in the aggregate, materially
and adversely affect, or in the future will materially and adversely affect, the
business, earnings, prospects, properties or condition (financial or other) of
the Backup Servicer.
(m) Name. The legal name of the Backup Servicer is as set forth in
the signature page of this Indenture, and the Backup Servicer does not have any
tradenames, fictitious names, assumed names or "doing business as" names.
(n) Information. No document, certificate or report furnished by the
Backup Servicer, in writing, pursuant to this Agreement or in connection with
the transactions contemplated hereby, contains or will contain when furnished
any untrue statement of a material fact or fails or will fail to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. There are
no facts relating to the Backup Servicer as of the Closing Date which when taken
as a whole, materially adversely affect the financial condition or assets or
business of the Backup Servicer, or which may impair the ability of the Backup
Servicer to perform its obligations under this Agreement or any other
Transaction Document to which it is a party, which have not been disclosed
herein or in the certificates and other documents furnished by or on behalf of
the Servicer pursuant hereto or thereto specifically for use in connection with
the transactions contemplated hereby or thereby.
83
ARTICLE XIII.
MISCELLANEOUS
SECTION 13.1. Officer's Certificate and Opinion of Counsel as to
Conditions Precedent.
Upon any request or application by the Issuer (or any other obligor
in respect of the Notes) to the Indenture Trustee to take any action under this
Indenture, the Issuer (or such other obligor) shall furnish to the Indenture
Trustee:
(a) an Officer's Certificate (which shall include the statements set
forth in Section 13.2 hereof) stating that all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(b) at the request of the Indenture Trustee, an Opinion of Counsel
(which shall include the statements set forth in Section 13.2 hereof) stating
that, in the opinion of such counsel, all such conditions precedent and
covenants have been complied with.
SECTION 13.2. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 13.3. Notices.
(a) All communications, instructions, directions and notices to the
parties thereto shall be (i) in writing (which may be by telecopy, followed by
delivery of original documentation within one Business Day), (ii) effective when
received and (iii) delivered or mailed first class mail, postage prepaid to it
at the following address:
84
If to the Issuer:
BXG Receivables Note Trust 2002-A
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-0001
Attention: Corporate Trust Administration
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Akerman Senterfitt
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Club Trustee:
Vacation Trust, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Servicer
Bluegreen Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Vice President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Akerman Senterfitt
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Backup Servicer:
85
Concord Servicing Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to the Indenture Trustee, Paying Agent and Custodian:
U.S. Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services/Asset-Backed Administration
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Rating Agencies:
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Residential Mortgage Pass-Through Surveillance Group
Standard & Poor's, a division of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-0003
Attention: ABS Surveillance
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
(b) All communications and notices described hereunder to a
Noteholder shall be in writing and delivered or mailed first class mail, postage
prepaid or overnight courier at the address shown in the Note Register. The
Indenture Trustee agrees to deliver or mail to each Noteholder upon receipt, all
notices and reports that the Indenture Trustee may receive hereunder and under
any Transaction Documents. Unless otherwise provided herein, the Indenture
Trustee may consent to any requests received under such documents or, at its
option, follow the directions of Holders representing at least 66-2/3% of the
Adjusted Note Balance of each Class of Notes within 30 days after prior written
notice to the Noteholders. All notices to Noteholders (or any Class thereof)
shall be sent simultaneously. Expenses for such communications and notices shall
be borne by the Servicer.
SECTION 13.4. No Proceedings.
The Noteholders, the Servicer, the Indenture Trustee, the Custodian,
the Club Trustee and the Backup Servicer each hereby agrees that it will not,
directly or indirectly institute, or cause to be instituted, against the Issuer,
the Trust Estate or the Depositor any
86
proceeding of the type referred to in Sections 6.1(d) and (e) hereof, so long as
there shall not have elapsed one year plus one day after payment in full of the
Notes.
SECTION 13.5. Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein or in any other
Transaction Document to the contrary, it is expressly understood and agreed by
the parties hereto that (a) this Indenture is executed and delivered by
Wilmington Trust Company, not individually or personally, but solely as Owner
Trustee on behalf of the Issuer, in the exercise of the powers and authority
conferred and vested in it under the Trust Agreement, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as a personal representation, undertaking or
agreement by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer and the Trust Estate, and (c) under no circumstances
shall Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Issuer under this Indenture or any other related documents.
87
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
BXG RECEIVABLES NOTE TRUST 2002-A,
By: Wilmington Trust Company, as Owner
Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Financial Services Officer
BLUEGREEN CORPORATION,
as Servicer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
CONCORD SERVICING CORPORATION,
as Backup Servicer
By:
---------------------------------
Name:
Title:
VACATION TRUST, INC.,
as Club Trustee
By:
---------------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Indenture Trustee
By:
---------------------------------
Name:
Title:
[Signature Page to the Indenture]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
BXG RECEIVABLES NOTE TRUST 2002-A,
By: Wilmington Trust Company, as Owner Trustee
By:
----------------------------------------
Name:
Title:
BLUEGREEN CORPORATION,
as Servicer
By:
----------------------------------------
Name:
Title:
CONCORD SERVICING CORPORATION,
as Backup Servicer
By: /s/ ▇▇▇▇ ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Vice President & General Counsel
VACATION TRUST, INC.,
as Club Trustee
By:
----------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By:
----------------------------------------
Name:
Title:
[Signature Page to the Indenture]
86
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
BXG RECEIVABLES NOTE TRUST 2002-A,
By: Wilmington Trust Company, as Owner Trustee
By:
----------------------------------
Name:
Title:
BLUEGREEN CORPORATION,
as Servicer
By:
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
CONCORD SERVICING CORPORATION,
as Backup Servicer
By:
----------------------------------------
Name:
Title:
VACATION TRUST, INC.,
as Club Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Indenture Trustee
By:
----------------------------------------
Name:
Title:
(Signature Page to the Indenture]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
BXG RECEIVABLES NOTE TRUST 2002-A,
By: Wilmington Trust Company, as Owner Trustee
By:
-----------------------------------
Name:
Title:
BLUEGREEN CORPORATION,
as Servicer
By:
----------------------------------------
Name:
Title:
CONCORD SERVICING CORPORATION,
as Backup Servicer
By:
----------------------------------------
Name:
Title:
VACATION TRUST, INC.,
as Club Trustee
By:
----------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇
Title: Vice President
[Signature Page to the Indenture]
86